Does the Beverly Anns Cookie Guaranty remain in effect during bankruptcy proceedings?
Beverly_Anns_Cookie Franchise · 2025 FDDAnswer from 2025 FDD Document
I will remain obligated to pay on this Guaranty even if any other person who is obligated to pay the Debt, including the Borrower, has such obligation discharged in bankruptcy, foreclosure, or otherwise discharged by law.
- **5.
BANKRUPTCY.** If a bankruptcy petition should at any time be filed by or against the Borrower, the maturity of the Debt, so far as my liability is concerned, shall be accelerated and the Debt shall be immediately payable by me.
I acknowledge and agree that this Guaranty, and the Debt secured hereby, will remain in full force and effect at all times, notwithstanding any action or undertakings by, or against, you or against any Property, in connection with any obligation in any proceeding in the United States Bankruptcy Courts.
Such action or undertaking includes, without limitation, valuation of Property, election of remedies or imposition of secured or unsecured claim status upon claims by you, pursuant to the United States Bankruptcy Code, as amended.
In the event that any payment of principal or interest received and paid by any other guarantor, borrower, surety, endorser or co-maker is deemed, by final order of a court of competent jurisdiction, to have been a voidable preference under the bankruptcy or insolvency laws of the United States or otherwise, then my obligation will remain as an obligation to you and will not be considered as having been extinguished.
- **6.
REVOCATION.** I agree that this is an absolute and unconditional Guaranty.
I agree that this Guaranty will remain binding on me, whether or not there are any Debts outstanding, until you have actually received written notice of my revocation or written notice of my death or incompetence.
Source: Item 22 — CONTRACTS (FDD page 57)
What This Means (2025 FDD)
According to Beverly Anns Cookie's 2025 Franchise Disclosure Document, the Guaranty remains in effect during bankruptcy proceedings. The document specifies that the obligation to pay under the Guaranty will not be affected even if the borrower's debt is discharged in bankruptcy. This means that even if the franchisee (borrower) files for bankruptcy and their debt is discharged, the guarantor's obligation to pay remains.
Furthermore, if a bankruptcy petition is filed by or against the borrower, the maturity of the debt, concerning the guarantor's liability, will be accelerated, making the debt immediately payable by the guarantor. The Guaranty and the debt it secures will remain in full force and effect, regardless of any actions taken in the United States Bankruptcy Courts. This includes actions such as property valuation or claim status imposition.
Additionally, if any payment of principal or interest is recovered from another guarantor, borrower, surety, endorser, or co-maker as a voidable preference under bankruptcy or insolvency laws, the guarantor's obligation to Beverly Anns Cookie will remain and will not be considered extinguished. This ensures that Beverly Anns Cookie is protected against potential losses due to bankruptcy-related clawbacks.
In summary, the Guaranty is designed to be absolute and unconditional, remaining binding on the guarantor until written notice of revocation, death, or incompetence is received by Beverly Anns Cookie. This provides Beverly Anns Cookie with a strong assurance of payment, even in the event of the franchisee's bankruptcy.