A replacement bank guarantee may leave two instruments to account for
Verify whether a replacement bank guarantee actually displaced the earlier instrument, identifying dual outstanding security and obtaining issuer confirmation without assuming cancellation.
Corporate Recovery Partners
01 / 06
The replacement document may not close the earlier one
Your records show a replacement bank guarantee issued for the builder's project, but the earlier instrument is still listed. The builder has now failed. Give both documents to the lawyer and ask the issuer to confirm their status promptly. Do not assume the word replacement in an internal email establishes that only one instrument remains capable of affecting the company.
Find the request for the new guarantee, the issued documents and the correspondence about returning or cancelling the earlier one. Record the references separately. Identify which party held the original and whether there is actual cancellation confirmation. A scan attached to an email may show what was issued without showing what the bank later cancelled.
CommBank lists specified events for cancellation of its guarantee product. Ask your own issuer what applies to the instruments concerned and what its records show. Do not apply another bank's checklist as the rule for your facility. Have the lawyer assess the underlying contract and any proposed step before giving instructions that could affect security obligations.
Imagine a contractor supplying a reduced guarantee after a project milestone while expecting the builder to return the larger original. The new instrument is delivered, but the expected return is not documented. That gap deserves urgent investigation. The example does not establish that both instruments remain effective; it identifies why issue of the new document is not enough evidence of the old one's end.
Ask the lawyer and bank how to resolve any outstanding instrument or claim concern. Do not forge a beneficiary confirmation, destroy an original or represent a requested release as completed. Keep the liquidator or other relevant practitioner informed through the proper process where the beneficiary's position has changed. Preserve all correspondence about the intended exchange.
Record each instrument as outstanding, cancelled or unresolved only on reliable evidence. Note any continuing fee or collateral effect separately. The immediate aim is a complete account of the transition between securities. That gives the adviser a better basis for assessing exposure than a single register entry that removed the older guarantee as soon as a replacement was printed.
