Ontario Barrister and Solicitor Practice Exam

What must a PPSA secured lender do to enforce payment from a guarantor parent company?

1. Exhaust all recourse against the debtor first

2. Nothing, they can proceed directly against the guarantor

3. Obtain court permission

4. Publish a notice in a major newspaper

The correct answer is: Nothing, they can proceed directly against the guarantor

A PPSA secured lender can typically proceed directly against the guarantor parent company without first exhausting all recourse against the debtor. This is because a security agreement between the lender and the parent company provides the necessary authority to enforce payment from the guarantor parent company. Option A is incorrect because it implies that the lender must first try to collect payment from the debtor before going to the guarantor, which is not always the case with PPSA security. Option C is incorrect because court permission is not required in most cases, although there may be some exceptions. Similarly, option D is incorrect because publishing a notice in a major newspaper is not a common requirement for enforcing payment from a guarantor parent company in PPSA secured lending.