'Bad Boy' Guaranties: Does the Punishment Fit the Crime?

While the "bad boy" guaranty has the practical effect of reducing the number of bankruptcy filings, this inability to file troubled companies for bankruptcy may prevent the efficient restructuring of distressed debt. Whether this is a positive development for either lenders or debtors remains to be seen.

33 minute read October 28, 2011 at 10:57 AM
By
Alan M. Christenfeld And Barbara M. Goodstein
'Bad Boy' Guaranties: Does the Punishment Fit the Crime?

At one time in the not-too-distant past, “bad boy” guaranties provided additional protection to lenders in the event of serious malfeasance by borrowers or guarantors, such as fraud or misappropriation of funds.

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