Guarantee Management in Insolvency
Usually, guarantees become a pressing problem for the bank in the event of insolvency of a corporate customer.
External guarantee management, in cooperation with the business administrators, building engineers, architects and construction lawyers appointed by the guarantee manager, may prevent the unjustified drawdown of a guarantee.
In case of an insolvency of a company, our goals are:
- To protect guarantors from unjustified claims
- To rescind guarantees as quickly as possible and without any claims
These goals we achieve with our Active Bond Management, i.e.
- Timely and objective evaluation
- Direct personal contact with beneficiaries, preferably prior to an impending claim
- Worldwide readiness for action, due to international network
- Immediate on-site visit of the project - worldwide
- 100% consensus of interest between the guarantor and the Bond Manager!
Experience during recent years has shown that taking a proactive approach - rather than merely waiting for the inevitable drawdown of the guarantee - has provably reduced the risks for the banks.
Cost advantages are of particular importance in this respect. A performance fee may be agreed with the guarantee manager. This means that the guarantee manager will only be paid a fee if he was successful, whereas law firms have to be paid even if the guarantee is drawn at a full 100 %. All costs - such as expenses, expert costs and legal costs - are borne by the guarantee manager.
The guarantee manager will not provide legal advice, but will offer commercial and technical consultancy services. For the legal issues, the guarantee manager will, at his own cost, resort to the services of the law firm HERMANN Rechtsanwälte Wirtschaftsprüfer Steuerberater.
Another important aspect for the bank is that an objective third party will assess the guarantee drawdown, so that if, for instance, credit securities are exploited, outsiders cannot criticise the exploitation of securities.
Practice has also shown that the guarantee manager, even though he was assigned by the bank, is nevertheless perceived as an objective third party, so that better results can be achieved during negotiations.
Please note: The guarantee manager's aim is not to prevent justified drawdowns of guarantees. Rather, the objective is to reduce, or completely exclude, the guarantee-related risks in the event of unjustified drawdowns.