Personal Guaranties Enforced Against Business Owners
Owners who co-sign company loans should track guaranty caps and interest, since a Texas court just enforced $619,419.50 against one guarantor.
Updated on Nov. 7, 2026 in Corporate Finance
Live Poll
Would you personally guarantee a business loan for a company you co-own?
The Texas Sixth Court of Appeals upheld a $619,419.50 judgment against Theresa Pham for Montgomery Capital Partners IV, LP, enforcing a personal guaranty tied to a defaulted loan to Holy Kombucha, Inc. The ruling matters for owners who sign personal guaranties on company debt, which can be enforced against them personally.
Why it matters
The dispute shows how a personal guaranty can outlast a business's own loan arrangements, with the guarantor left liable after the company defaulted. The court's rejection of the claim that the draw facility was paid off in 2022 underscores how important clear loan-balance records are when a guaranty is in play.
The judgment combines the $500,000 guaranty cap with $119,419.50 in interest accrued at a contractual 16 percent rate compounded daily, against an original $2 million loan. The total guarantied debt was $2,044,544.92 at the forbearance agreement, which the trial court found never fell below the threshold.
The players
Montgomery Capital Partners IV, LP
A private lender that extended a $2 million loan to Holy Kombucha and enforced the personal guaranty against Pham.
Texas Sixth Court of Appeals
The state intermediate appellate court that upheld the trial court's judgment against Pham.
Holy Kombucha, Inc.
A Texas beverage company partially owned by Theresa Pham and Leandro Bienati that defaulted on its loan.
The details
Montgomery Capital Partners loaned $2 million to Holy Kombucha, Inc. in January 2021, and Theresa Pham signed a personal guaranty limited to the lesser of $500,000 or total draw advances. After the company defaulted and entered a forbearance agreement, Pham argued the draw facility was paid off in April 2022, which she said extinguished her obligation. The court admitted a balance sheet showing advances, repayments and accrued interest, and rejected that argument.
Timeline
January 2021: Montgomery Capital loaned $2 million to Holy Kombucha.
December 2021: Holy Kombucha entered a forbearance agreement after a first default.
April 2024: Holy Kombucha defaulted again, and Montgomery sued Pham.
October 30, 2026: The Texas Sixth Court of Appeals upheld the $619,419.50 judgment.
Market Landscape
Texas courts enforce personal guaranties according to their stated caps and terms, so the $500,000 limit set in Pham's guaranty became the damages figure. The case sits within the lender-and-guarantor pattern common to small private loans to closely held companies.
Owners who sign personal guaranties should treat the guaranty cap and the underlying loan balance as separate exposures to track. Confirm with qualified counsel whether a draw facility payoff or forbearance agreement changes that exposure before relying on it.
The takeaway
Any owner signing a personal guaranty should keep complete loan-balance and payment records, since a court will rely on the lender's documentation when the guarantor disputes the amount owed. Review any guaranty cap, interest rate and payoff terms with a qualified attorney or accountant before the company's next financing.
Further reading
For related background, see Corporate Finance coverage of how lenders and guarantors structure and enforce company debt in Texas.
Source note: This article includes information reported by The Times of India.
Live Poll
Would you personally guarantee a business loan for a company you co-own?
