There is no California law that requires guarantees for commercial loans, but I am involved in a situation where in connection with the negoiation of a commercial work out, the lender is trying to take the position that a guarantee is required by federal regulators as part of a work out under the interagency “delay and pray” commercial workout guidance that came out last October:
That guidance gives some considerable emphasis to consideration of “The prospects for repayment support from any financially responsible guarantors” as a way for commercial lenders to modify without taking a write down on underwater assets.
