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Contribution Agreements: Joint Liability and Rights of Contribution Under Loan Guaranties

Partial Guaranties, Nonrecourse Carveouts, Asserting Defenses

Recording of a 90-minute premium CLE webinar with Q&A

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Conducted on Tuesday, July 7, 2020

Recorded event now available

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This CLE course will analyze the contribution obligations of co-guarantors after a borrower defaults on a loan and how a contribution agreement can clarify those obligations. The panel will discuss various actions or circumstances which should be addressed, including partial guaranties, bad acts which trigger carveout guaranties, the effect of waivers and defenses, and the death or insolvency of a guarantor.


When there are multiple guarantors of a loan, the law regarding the portion of the obligation that each guarantor is obligated to pay is often different from what the guarantors would have agreed upon if they had considered the issue at the time they closed the loan. A well-drafted contribution agreement is critical in establishing obligations among guarantors and their rights regarding contribution.

Most guarantees provide for joint and several liability, and the co-guarantors are generally obligated to contribute equally to payment of the debt regardless of their relative roles in the transaction. Counsel can tailor the contribution agreement to reflect each guarantor's contribution obligation based on its ownership percentage in the borrower, management role, partial guaranty provisions in the guaranty, and other factors.

The contribution agreement should address any recalculation of shares in the event of the death or insolvency of a guarantor. Where the liability is based on a violation of nonrecourse carveouts, it should apportion liability based on who among the guarantors committed bad acts or took other actions triggering liability. The parties should also have a clear understanding of their contribution obligations if, after the lender commences an action, they disagree on whether to assert defenses.

Listen as our authoritative panel discusses these and other issues associated with contribution agreements and the rights of contribution under loan guaranties.



  1. Contribution obligations generally, absent a contribution agreement
  2. Factors to consider in apportioning contribution obligations
    1. Benefit obtained from the transaction
    2. Ownership percentage
    3. Management role
  3. Partial guarantees
  4. Carveout guaranties
  5. Tax considerations
  6. Waivers and defenses


The panel will review these and other key issues:

  • Absent a written agreement, what is the common assumption as to contribution obligations when there are multiple guarantors?
  • What are the factors to consider in allocating liability under a contribution agreement?
  • How should the death or insolvency of a guarantor impact contribution obligations?
  • How should parties account for the bad acts of one guarantor?


Hayhurst, Ren
Ren R. Hayhurst

Ren RH Legal Consultants

Mr. Hayhurst’s professional life has focused for over 30 years on all aspects of lender and borrower...  |  Read More

Kaufman, Michael
Michael W. Kaufman

Day Pitney

Mr. Kaufman has over 15 years of experience assisting clients with a range of financing matters. His practice involves...  |  Read More

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