Section 6.29 Upstream Guaranties or Transfers

• Library: Bankruptcy Practice (2007 Ed. + 2015 Cum Supp)

2. (§6.29) Upstream Guaranties or Transfers

An upstream guaranty or transfer is a guaranty, or transfer of assets for security, made by a subsidiary for the benefit of the parent corporation. Usually, the solvent subsidiary guarantees the debt of the parent corporation to the lender or the subsidiary pledges its assets as security for the parent’s loan. If the subsidiary files bankruptcy within one year, the trustee may avoid the guaranty or the granting of the security interest in the debtor’s assets...