You paid the guarantee. Can you recover a share?

Paying the creditor has created a second recovery question

A director pays a supplier under a guarantee after the company closes. Another guarantor had said they would contribute, but now disputes the amount and says the settlement released everyone. The paying director needs the actual documents and legal advice before demanding an arbitrary half share.

Assemble the payment file

Collect the guarantee, creditor demand, balance calculation, settlement terms and proof of cleared payment. Identify exactly which liability was discharged and whether any amount remains.

Keep correspondence with the other guarantors and borrower. A payment receipt alone may not explain the rights preserved or released in the agreement.

Ask which recovery right applies

Discuss reimbursement from the borrower, contribution from co-guarantors and any associated security rights with a lawyer. The QLS practice note identifies these as possible guarantor rights, subject to terms and limitations.

Do not assume all signers owe an equal amount or that a right can be exercised immediately. Different limits, releases and unpaid creditor balances may affect the analysis.

Source: Queensland Law Society — Independent guarantee advice practice note

Evaluate evidence and recoverability

Prepare a schedule of the amount paid, the basis of the proposed claim and supporting records. Check the other party’s response and financial position through lawful means.

Compare likely recovery with legal cost and time. A strong claim against someone without accessible resources may require a different commercial decision from a straightforward disagreement over calculation.

Make a clear, advised proposal

If appropriate, send an accurate demand or settlement proposal through the chosen process. Specify the amount, basis and response requested without overstating rights or threatening steps you do not intend to take.

Preserve any relevant limitation or procedural dates with legal advice. If the borrower or co-guarantor is insolvent, ask about the appropriate claim process rather than treating direct collection as the only route.

Establish the right before choosing the recovery route

Preserve the guarantee, settlement and payment evidence.

Get advice on contribution, reimbursement and any restrictions.

Assess collectability before committing to recovery costs.

Call CRP today to coordinate support for assessing recovery after a guarantee payment.