I have a client who provided a personal guarantee for his company who was a lessee under a 5 year lease.
The client went bankrupt last year. The company is abandoning the lease 2 years before the end of the term.
Is my client still liable under the guarantee for the landlord's loss arising from the early termination of the lease, or does his bankruptcy bring an end to his obligations under the guarantee he provided?
Thank you for the question.
The client is no longer liable as the bankruptcy ends their obligations under the guarantee provided.
The existence of the personal guarantee, being a provable debt at the time of bankruptcy, makes the landlord a creditor in the bankrupt estate and the debt the subject of the guarantee is extinguished upon discharge. See sections 82 and 153 of the Bankruptcy Act 1966 (Cth).
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