By John Hyde, Managing Director, Special Situations, Graphic Arts Advisors
The decision to fix, sell, or close a company that is treading water financially is never easy.
For many owners in the printing, mailing, and graphic communications industries, the weight of personal guarantees often makes the situation feel impossible.
I frequently hear from owners who say:
“I have no options. If I close, my guarantees will be called, and I’ll lose everything. My only choices are to keep paying, even though the business is failing, or file for bankruptcy.”
That “no-way-out” feeling is common—but it isn’t always true. While personal guarantees are legal contracts and cannot simply be erased, there is another pathway: amicable settlements.
What Do We Mean by “Amicable Settlement”?
An amicable settlement is not about “getting out of” a personal guarantee. Instead, it’s about negotiating a fair, practical resolution with creditors—outside of bankruptcy—that allows owners to move forward without losing everything.
Settlements are possible because creditors themselves face competing pressures. Their willingness to resolve depends on three critical variables: legal liability, collectability, and timing.
The Three Variables That Shape Settlements
1. Legal Liability
This is often the most challenging piece. What is the actual legal obligation under the guarantee? You’d be surprised how often lenders and borrowers disagree on the number.
Why? Loans and leases are frequently sold or transferred to multiple parties, and the paperwork doesn’t always follow cleanly. Creditors may rely on outdated or incorrect information. The first step in any settlement discussion is to carefully review the contracts and trace the obligations forward to establish the true liability.
2. Collectability
Many owners assume that if they have cash in the bank or equity in their home, creditors will never settle. That’s not the case. Collectability is only one factor in the equation. While strong personal assets may make negotiations more difficult, they don’t rule out the possibility of settlement.
The reality is that creditors weigh more than just whether they can collect. They must also consider whether it’s worth the time, expense, and uncertainty of pursuing the guarantor.
3. Timing
This is where the “secret sauce” lies. Timing can often outweigh the other two variables. Creditors are driven not just by contracts, but by how debts appear on their own books.
Factors such as:
- How long the guarantee has existed
- Whether the debt is in default (and for how long)
- Where the creditor stands in their financial calendar (month- or quarter-end)
All influence the appetite for settlement. Creditors are accountable to their boards, shareholders, and regulators. Sometimes, the best decision for them is to accept a reasonable settlement and move forward.
Where Do Personal Guarantee Settlements Come Up?
These situations commonly arise with:
- Bank loans
- Equipment lease deficiencies
- Merchant cash advances
- Credit cards
- Landlord lease obligations
- Supplier guarantees (such as paper or materials)
Each type of obligation has its own nuances, but they all fall under the same three-variable framework of legal, collectability, and timing.
Why Owners Shouldn’t Feel Stuck
For business owners under stress, it’s natural to think the only options are to fight to keep a struggling business alive or to declare bankruptcy. But in many cases, there is middle ground. With the right guidance, amicable settlements provide a viable path out from under the burden of personal guarantees.
At Graphic Arts Advisors, we’ve spent decades helping owners in the printing, mailing, and graphic communications industries navigate these exact challenges. By combining industry knowledge with financial expertise, we work to create outcomes that are fair to both creditors and owners—without the scorched-earth process of bankruptcy.
If your company is treading water and you’re worried about personal guarantees, know this: you are not alone, and you do have options.
John Hyde has more than 30 years as one of the leading consultants to the printing, mailing and graphics communications industries in the areas of mergers and acquisitions, non-bankruptcy debt restructuring, and orderly wind-down of assets and liabilities. Connect with GAA at www.graphicartsadvisors.com
