a provision in a commercial real estate loan agreement that holds individual developers personally liable for the loan if their borrower company should file for bankruptcy.
The commercial real estate market is being hobbled by billions of dollars in distressed debt, and some experts are pointing to a provision in many loans — a so-called bad-boy guarantee — that they say is to blame for a large part of the backlog. . . .
This time around, many commercial mortgages included provisions that held developers personally liable for the loan if their companies filed for bankruptcy. As a result, foreclosures, in which the competing interests of many parties often play out in lengthy court battles, are now typical. . . .
The bad-boy guarantees, also known as springing guarantees, began appearing in the 1980s, but it was not until the early 1990s that they became conspicuous."
See article at: NYT 19Jan11 " 'Bad Boy Guarantees Snarl Billions in Real Estate Debt"