For commercial loans, we use an "Intent to Guarantee" form (just like an Evidence of Joint Intent) to document the willingness of guarantors who are not principals in a business.

Here's my question: We have a situation in which we granted credit several years ago to a company, and obtained unlimited guarantees on the principals in the business (it is a closely held corporation). Now, we are extending additional credit to the same corporation, but one principal shareholder has bought out the others. We still have unlimited guarantees on them in the file. Do we need to evidence their intent to guarantee the new debt, now that they are no longer principals in the company? Or, does the fact that they signed unlimited guarantees, several years before the Reg B amendments, make this a moot point?

At a minimum, you shouldn't count on those guarantees in your credit analysis for the new debt. The guarantors would probably fight you in court should you try to collect.

In similar situations, counsel recommended that we notify the guarantor of the new debt - which of course prompted them to state in writing that they would not guarantee any new debt as they were no longer involved in the firm.

It can be a sticky situation in which you usually can't win (or its not worth it to win due to legal costs of going to court to collect).

I'm with Kaybee on this one. You should do a whole new loan package, new guarantee forms and send a letter to the old guarantors releasing them from their responsibility under the old unlimited guarantees.