The LLC is empty. The owner signed.

NY GEN. OBLIG. LAW § 5-701(a)(2) · CPLR § 3213

What a personal guarantee is, and why it changes everything.

A personal guarantee is a promise by an individual, usually the owner or principal, to pay a company's debt if the company does not. It sits outside the corporate shield. When the company defaults, you have two debtors instead of one: the entity, which may have nothing, and the person, who has a house, a car, personal accounts, and a strong interest in not being sued individually.

Guarantees show up in credit applications, vendor agreements, supply contracts, leases, and equipment financing. Many owners sign them on page four of a credit application and forget. If you extended credit to a business and had the principal sign anything, pull it now and read it. The difference between a $35,000 receivable owed by a defunct LLC and the same receivable owed by its owner personally is the difference between writing it off and collecting it.

The writing requirement.

New York's statute of frauds requires a promise to answer for the debt of another person to be in writing and signed by the person making the promise. The provision is General Obligations Law § 5-701(a)(2). In practice this means an oral assurance from the owner (“don't worry, I'll make sure you get paid”) is generally not an enforceable guarantee, however sincere it sounded. You need a signed document.

The writing does not have to be elaborate. A signature under a paragraph that says “the undersigned personally guarantees payment of all amounts owed by the Company” is enough. A line in a credit application, signed individually rather than as an officer, is enough. An email from the owner's personal account saying “I personally guarantee this invoice will be paid by the 30th” can be enough, since electronic signatures are recognized, though the cleaner the document the fewer arguments you will have.

There is a narrow exception, sometimes called the main-purpose rule, where a promise that mainly serves the promisor's own interest can be enforced without a writing. It is fact-specific and litigated, not something to rely on. Treat the rule as: no signed writing, no guarantee, and evaluate the claim on other theories.

Reading the guarantee you have.

Guarantees vary, and the words control. Things to check:

• Whose signature, in what capacity? If the owner signed only as “President, Acme LLC,” that is the company's signature, not a personal one. Look for a separate signature line, or language making clear the individual is bound personally.
• Payment or collection? A guarantee of payment lets you demand from the guarantor as soon as the company defaults. A guarantee of collection requires you to exhaust remedies against the company first. Most commercial guarantees are of payment and say so, often with words like “absolute and unconditional.”
• Scope. Does it cover all amounts owed, or only a specific contract or credit limit? Does it cover interest, fees, and collection costs? Many well-drafted guarantees add attorney's fees, which is valuable.
• Continuing or one-time? A continuing guarantee covers future invoices until revoked in writing. A one-time guarantee covers one transaction.
• Waivers. Guarantors often waive notice of default and defenses the company might have. If the guarantee says so, the owner cannot hide behind the company's disputes.
• Revocation. Check whether the owner ever sent written notice revoking a continuing guarantee, and when. Invoices after a valid revocation may not be covered.

A worked example.

A Westchester supplier opens a credit account for a Bronx restaurant group in 2023. The credit application includes a personal guarantee clause signed by the group's managing member, individually, with a separate signature line. Through 2025 the supplier delivers $58,000 of product; $41,000 is paid, $17,000 is not. In early 2026 the restaurant LLC stops ordering, the storefront closes, and the entity search shows it inactive. The managing member is now operating a new restaurant under a different LLC three blocks away.

Without the guarantee, the supplier is chasing a dead entity and considering whether a successor-liability claim is worth the cost. With the guarantee, the supplier demands $17,000 plus interest from the managing member personally. The guarantee covers all amounts owed on the account, is a guarantee of payment, and waives notice. The new restaurant is irrelevant; the person who signed is liable regardless of which LLC is currently open. That is a collectible claim, and a letter to the individual, at home, with the signed guarantee attached, tends to get a response that months of emails to the old LLC did not.

What a demand letter does here.

A demand on a guarantor is a distinct letter, addressed to the individual at a personal or home address, not just to the company. Ours includes:

• The guarantee itself, attached, with the operative language quoted and the signature identified.
• The company's default, documented: the invoices, the statement of account, the payments received, and the unpaid balance. Silence by the company also supports an account stated claim against it, which the guarantee then covers.
• The amount demanded from the guarantor personally: principal, interest at the contractual rate or New York's statutory 9% (see late payment interest), and fees if the guarantee provides for them.
• A statement that the guarantee is absolute, or otherwise, as its terms provide, and that demand is made under it.
• A deadline and the consequence: an action against the guarantor individually, and, where the guarantee qualifies, an expedited motion for judgment.

The letter goes to both the company and the guarantor, by mail and email. It is a flat fee. Owners who have let a company's bills slide often treat a personal demand very differently, because it is their own assets and credit at stake, and because a clean signed guarantee leaves little to argue about.

Suing on a guarantee: the fast track.

New York offers an accelerated procedure for claims based on an instrument for the payment of money only, under CPLR § 3213. Instead of a complaint and months of litigation, the creditor moves for summary judgment at the outset. Courts have applied this to unconditional guarantees of payment, where the guarantee plus proof of the underlying default establish the claim without needing outside evidence. Not every guarantee qualifies; one tied up with conditions or requiring proof of complex performance will not. But a simple, absolute guarantee of a fixed account balance is a strong candidate, and the prospect of a judgment within a few months rather than a few years is a significant part of the leverage the letter carries.

Smaller guaranteed balances can go to the commercial claims part like any other business claim; see commercial small claims in New York. The guarantor is sued there as an individual defendant. For which path fits, see demand letter vs. small claims.

No guarantee, but the LLC is a shell.

Vendors often ask whether they can go after the owner anyway when the company was obviously undercapitalized, commingled money, or was used to run up bills and close. New York does allow a creditor to reach owners by “piercing the corporate veil,” but the standard is demanding: complete domination of the entity by the owner, used to commit a wrong against the creditor. It is litigated case by case and rarely resolves by letter. Related theories, such as recovering money the owners transferred out of the company while it owed you, or holding a successor business liable, exist and are worth a consultation when the dollars justify it. None of them is a substitute for a signed guarantee, which is why the most useful thing on this page may be the advice to get one, on every credit account, before the next invoice goes out.

If there is no guarantee and the company is truly empty, the honest answer is often that the claim is not worth pursuing. We would rather say so than sell a letter that cannot collect. For the broader playbook on business receivables, including how to find and serve the right entity and when a letter is the wrong tool, see the commercial collections hub.

Deadlines.

A claim on a written guarantee is a contract claim with the usual six-year limitations period. The clock on the guarantee generally runs from the company's default and your demand, depending on the guarantee's terms, and can differ from the clock on the underlying invoice. Do not assume the two are the same; see statute of limitations for unpaid invoices and raise the guarantee's terms with counsel.