There are a number of circumstances in which the liability of a guarantor which has guaranteed the obligations of one or more borrowers of a loan facility will be terminated, revoked, discharged, extinguished or reduced. The most straightforward scenarios in which the liability of a guarantor under a guarantee is terminated are where either:

1. •

   the guaranteed obligation is performed by the principal and the guarantee is discharged, or

2. •

   the guarantor performs its obligations under the guarantee

This Practice Note looks at:

1. •

   how a guarantee is terminated in such circumstances

2. •

   the advantages of entering into a deed of release in those scenarios, and

3. •

   the effect of insolvency Clawback on the discharge of a guarantee through Performance by the principal

It is important to note that there are a number of other circumstances in which the liability of a guarantor will terminate. For example, the guarantee could terminate because:

1. •

   the parties agree to release the guarantor—for more information, see Practice Note: Releasing guarantors by agreement between the parties

2. •

   the