In practice, guarantors limit contractual use of a certain percentage of the donor`s net inventory value (book value) in intergroup guarantees, even if they have no hazard. The guarantee should be based on the actual value (not the book value) of the assets, regardless of the outstanding debts at the time. Limited recourse debt allows the lender to recover only the assets mentioned in the original loan agreement. This type of prescription debt gives the lender limited recourse to the borrower`s other assets if it is behind the debt. If the borrower is late in payments, the lender can exercise its rights with respect to collateral. The lender`s cash flow is limited to these guarantees. It is significant that the Court did not distinguish between deliberate misrepresentation and innocent misrepresentation. It can therefore be concluded that a possible misrepresentation of a guarantee could be sufficient for a borrower to be personally held liable in the context of a non-recourse loan. Rather, the Court of Appeal focused on the expected importance of “acceptance” under the security agreement between Wells Fargo and Titan Leasing, and not on the language of the lease. The Court of Appeal found that, pursuant to the safety agreement, Wells Fargo relies on the assertion that Ameristeel is in fact satisfied with the locomotive and will therefore make lease payments under the lease agreement. Titan Leasing was aware that Ameristeel had expressly refused the condition of the locomotive and therefore presented this guarantee against Wells Fargo. On the basis of this misrepresentation, the Court of Appeal found that Titan Leasing had to repay Wells Fargo.
A bond through a limited company must be notified to the company whose shares are mortgaged. As part of the Ontario government`s ongoing efforts to update and modernize business law, more than 30 provincial laws have been amended by legislation to modernize various laws that are managed or are covered by the Ministry of Government Services (formerly Bill 152) (the “law”). The Personal Property Security Act (PPSA) is one of the laws substantially amended by law. This abbreviated article briefly highlights some of the most important changes that have practical and everyday significance. Definition of “debtors” The Act extends the definition of “debtor” to a person who “owns or holds rights to security, including a taker or successor to a debtor as collateral.” The new definition expressly provides that the person who owes the payment or performance of the guaranteed obligations may be different from the person who holds or holds rights to the guarantees. From a practical point of view, this will compensate for the need for a guarantee on the part of a person who holds guarantees if the only reason for this guarantee is to give the insured party the opportunity to obtain a valid interest in the security of these guarantees. For example, when a shareholder of a borrower is required to pawn shares to the borrower as collateral for a loan, but there is no need for anything else to guarantee debt, we often get a “limited remedy guarantee” to create a bond that can be guaranteed by the seizure of shares. The extension of the definition of the debtor contained in the law allows such a shareholder to grant only a guarantee without having to give a guarantee of limited recourse. Leases for more than one year Another significant change to the PPSA in the Act is that the PPSA will apply to leases for more than one year.