---
title: "If Your Company Is Petitioned, What Happens to Your Personal Guarantee?"
url: https://windinguppetitionsolicitors.co.uk/if-your-company-is-petitioned-what-happens-to-your-personal-guarantee/
date: 2026-10-09
modified: 2026-10-09
lang: en
author: "Winding-up Petition Lawyer"
description: "A winding-up petition is presented against the company, not you, but a personal guarantee can still put your assets at risk. Learn when a lender can call it, the bankruptcy risks and what directors should check before paying."
categories:
  - "Debt Recovery"
  - "Insolvency"
  - "Insolvency Act 1986"
  - "Winding-Up Petitions"
tags:
  - "Bankruptcy Petition"
  - "director personal guarantee"
  - "director personal liability (existing)"
  - "guarantor liability"
  - "opposing winding up petition (existing)"
  - "personal guarantee"
  - "personal guarantee insolvency"
  - "statutory demand personal guarantee"
  - "statutory demand set aside (existing)"
  - "winding up petition guarantee"
image: https://windinguppetitionsolicitors.co.uk/wp-content/uploads/If-Your-Company-Is-Petitioned-What-Happens-to-Your-Personal-Guarantee-1024x576.png
word_count: 1423
---

# If Your Company Is Petitioned, What Happens to Your Personal Guarantee?

A [winding-up petition](https://lexlaw.co.uk/winding-up-petition-lawyers/) is presented against the company, not against you. But if you signed a personal guarantee, the petition can still put your own assets in play, sometimes before the court has heard the case. How the two interact decides what you can safely do next.

## Short Answer: The Company Is Separate, but Your Guarantee Is Not

A limited company is a separate legal person, so a winding-up petition against it does not make you personally liable for its debts. A personal guarantee is different. It is a separate contract between you and the creditor, and it sits outside the company's limited liability. Neither the petition nor a later [winding-up order](https://windinguppetitionsolicitors.co.uk/winding-up-consequences/) cancels it. If the company cannot pay, the creditor may look to you.

What the petition changes is the timing. Many loan agreements and trading terms treat the presentation of a petition as an event of default, which can allow the creditor to demand the whole debt from the company and, in turn, from you as guarantor. The petition can therefore start a second set of consequences that runs on a different clock from the court's.

## Why a Petition Can Trigger the Guarantee

Whether you are exposed depends on the documents, not on the petition alone. Three things matter most.

The first is the default clause. Facility agreements commonly list a [winding-up petition](https://lexlaw.co.uk/winding-up-petition-lawyers/) as an event of default. Some carve out petitions that are frivolous or vexatious, or that are dismissed or withdrawn within a short period. Many do not, and the difference can decide whether the lender is entitled to act at all.

The second is the [demand](https://lexlaw.co.uk/solicitors-london/tag/statutory-demand/). Most guarantees make your liability depend on a written demand made in the form and manner the document requires. Errors in the demand, the sum claimed or the way it was served are worth checking before anything is paid.

The third is the nature of your promise. Many [guarantees](https://lexlaw.co.uk/solicitors-london/tag/personal-guarantee/) are drafted so that you are liable as a primary obligor or under an indemnity, which lets the creditor claim from you without first pursuing the company. Where several directors signed, liability is usually joint and several, so the creditor can choose which of you to pursue for the whole sum.

## What the Creditor Can Do to You Personally

If the guarantee is called and you do not pay, the creditor can sue you on it like any other debt. Where the sum is clear, it may instead serve a [statutory demand](https://lexlaw.co.uk/set-aside-statutory-demand-insolvency-legal-advice/) on you personally. You then have 21 days to pay, secure or compromise the debt. If you do not, the creditor can present a bankruptcy petition against you, provided the debt is at least £5,000 (section 267 of the Insolvency Act 1986).

The window to react is short. An application to [set the demand aside](https://windinguppetitionsolicitors.co.uk/statutory-demand-set-aside-lawyers-london-hmrc/) must be made within 18 days of service. A director who spends the first fortnight concentrating on the company's petition can find that the personal deadline has almost gone. The statutory demand and the petition against the company are separate proceedings, and each needs its own diary entry.

## Points to Check Before You Pay

A guarantee is not always as strong as the lender assumes, and a demand is not the same as a debt you must pay. Four points are worth testing first.

The guarantee itself may be defective. To be enforceable, a guarantee must be in writing and signed by the guarantor ([section 4 of the Statute of Frauds 1677](https://www.legislation.gov.uk/aep/Cha2/29/3/section/IV)). Where the paperwork is incomplete or the signature is disputed, that is the first thing to examine.

The way it was obtained may matter. A guarantee given under undue influence or because of a misrepresentation can be unenforceable, particularly where a partner or relative guaranteed the debts of a business they did not run. The House of Lords set out the steps a lender should take in those cases in [*Royal Bank of Scotland v Etridge (No 2)* [2001] UKHL 44](https://publications.parliament.uk/pa/ld200102/ldjudgmt/jd011011/etridg-1.htm).

The underlying deal may have changed. If the creditor and the company varied their agreement without your consent, a true guarantor can be discharged unless the change was unsubstantial or could not have prejudiced you. Most commercial guarantees contain wording that excludes this rule, so everything turns on the clause.

The debt itself may be [genuinely disputed](https://windinguppetitionsolicitors.co.uk/opposing-a-winding-up-petition/). A substantial dispute between the company and the creditor is the usual ground on which a petition is dismissed. Whether you can rely on the same dispute against your own guarantee depends on whether you signed a true guarantee or an indemnity, which is again a question of wording.

## Protecting Your Own Assets

When a guarantee is called, the temptation is to move property into a spouse's name or to pay selected creditors first. Both carry risk. A transfer for less than its value can be challenged if you are later made bankrupt, with a look-back of up to five years ([section 339 of the Insolvency Act 1986](https://www.legislation.gov.uk/ukpga/1986/45/section/339)). A transfer made to put assets beyond a creditor's reach can be challenged under section 423, and that section has no fixed look-back period. A liquidator or the Official Receiver may also examine such transfers if a [director's wider conduct](https://windinguppetitionsolicitors.co.uk/risks-for-directors/) is looked at later.

If you do pay under the guarantee, you will usually have a claim against the company for the amount. But if the company is wound up, that claim ranks as an unsecured one, and recovery is often small. It is worth weighing that before paying from personal funds.

## Practical Steps Before the Hearing

Start with the paperwork: the guarantee, the loan or supply agreement, every variation, and every demand or letter the creditor has sent. Most of the questions above can only be answered from those documents.

Be careful what you put in writing to the creditor. Informal admissions, or promises to pay sent by email in the first days of panic, can undermine a defence later.

Open a line to the [creditor](https://lexlaw.co.uk/solicitors-london/tag/creditors/) early. A short standstill or forbearance agreement can pause action against you personally while the petition is dealt with, and a creditor who sees a credible plan may be more willing to agree one. Where the petition cannot be resolved straight away, an [adjournment](https://windinguppetitionsolicitors.co.uk/obtaining-an-adjournment-adjourning-winding-up-petition-lawyers-london/) can buy the time to do so.

Finally, take advice on the petition and the guarantee together. A settlement that resolves the petition can reduce or fix your personal exposure, and a concession on the guarantee can weaken the company's position at the hearing. The two should not be handled by advisers who never speak to each other.

## How LEXLAW Can Help

A petition and a personal guarantee are two problems that arrive together, and they are usually easier to manage when one team sees both. [Our solicitors and barristers](https://lexlaw.co.uk/our-people/) advise at the same first conference, so the company's position at the petition hearing and your personal position under the guarantee are looked at side by side. We act for directors and for creditors, which means we know how a lender is likely to approach a demand before it is made.

If you have signed a [personal guarantee](https://windinguppetitionsolicitors.co.uk/risks-for-directors/) and a petition has been presented or threatened, speak to us before you respond to the creditor's demand or make any payment. Our [winding-up petition solicitors](https://windinguppetitionsolicitors.co.uk/expert-advice/) will tell you where you stand and what can be done.

### Frequently Asked Questions (FAQ's)

**Does a winding-up petition against my company make me personally liable?**
No. The company is a separate legal person. You are exposed only if you have given a personal guarantee or incurred some other personal liability.

**Can the lender call on my guarantee before the petition is heard?**
Possibly. If the documents treat the presentation of a petition as an event of default and the creditor makes a valid demand, the guarantee can be called before any hearing takes place.

**Does the company going into liquidation release me from the guarantee?**
No. A guarantee is designed to survive the insolvency of the company. You are released only if the creditor agrees, you pay, or a valid defence applies.

**Can I be made bankrupt because of a personal guarantee?**
Yes. A creditor owed at least £5,000 can serve a statutory demand and, if it is not paid or set aside within the time allowed, petition for your bankruptcy. The deadline to apply to set the demand aside is 18 days.

**If I pay under the guarantee, can I get the money back from the company?**
You will usually have a claim against the company. In a liquidation that claim is unsecured and is often paid only in part, so recovery should not be assumed.