A corporation is an artificial person that is created by governmental action. The corporation exists in the eyes of the law as a person, separate and distinct from the persons who own the corporation (i.e., the stockholders). This means that the property of the corporation is not owned by the stockholders, but by the corporation. Debts of the corporation are debts of this artificial person, and not of the persons running the corporation or owning shares of stock in it. The shareholders cannot normally be sued as to corporate liabilities. However, in this guaranty, the stockholders of a corporation are personally guaranteeing the debt of the corporation in which they own shares.
West Virginia continuing guaranty of business indebtedness by corporate stockholders is a legal agreement that aims to secure loans or debts incurred by a business entity through the personal liability of its stockholders. This type of guaranty provides lenders with an additional layer of assurance by holding stockholders responsible for the repayment of debts in the event that the business defaults. Key Features: 1. Corporate Stockholder Liability: Under the West Virginia continuing guaranty, corporate stockholders assume personal liability for the business's indebtedness. This means that if the business is unable to repay its debts, the stockholders become personally responsible for the outstanding amounts. 2. Continuing Obligations: The guaranty remains in effect until all the guaranteed debts are fully repaid, unless specifically terminated by agreement or as otherwise provided by law. It covers both existing and future obligations, ensuring that stockholders remain liable for any new debts incurred by the business. 3. Limited Liability Company (LLC) Stockholders: The guaranty is not limited to corporations only; it extends to stockholders of LCS. This allows lenders to seek personal liability from stockholders in different business structures. 4. Multiple Stockholders: The guaranty may involve multiple stockholders, each guaranteeing a specific portion of the business's indebtedness. The agreement can outline the proportionate liability of each stockholder, ensuring a fair distribution of responsibility. Types of West Virginia Continuing Guaranty: 1. Unlimited Guaranty: In this type of guaranty, stockholders accept unrestricted personal liability for all existing and future debts of the business. Lenders prefer this type of guaranty as it provides maximum protection and assurance. 2. Limited Guaranty: With this type, stockholders' liability is limited to a specific amount or portion of the business's indebtedness. This often comes with a predetermined cap or a fixed dollar amount, protecting stockholders from excessive liability. 3. Specific Obligation Guaranty: In certain cases, a guaranty may be limited to guaranteeing a particular loan or debt without extending to all business obligations. This type of guaranty allows stockholders to mitigate their personal liability by excluding unrelated debts. 4. Revocable Guaranty: This type of agreement provides the stockholders with the ability to revoke or terminate their personal guaranty upon fulfilling specific conditions or requirements specified within the contract. It offers some flexibility to stockholders in managing their liability. Understanding the West Virginia continuing guaranty of business indebtedness by corporate stockholders is crucial for businesses seeking financing and corporate stockholders willing to assume personal accountability for the company's obligations. By having a clear knowledge of the different types and the implications, businesses can make informed decisions to protect both their interests and those of their stockholders.
