In order to carry out day-to-day operations or invest in new plant or equipment, a business owner may borrow money from a financial institution. According to the existing federal and Texas laws, the business must repay the loan according to the terms and conditions of the loan agreement. However, it is not uncommon for the business that borrowed the money to default on the loan and face legal action from the creditor. Sadly, such situations can cause the business and the business's owner to face major difficulties if the situation is not handled properly.
A recent incident in Texas is a good example of such a situation. According to a news report, the Community Bank of Texas recently filed a lawsuit in which it is accusing a consulting corporation and its owner of breach of contract and fiduciary negligence. The lawsuit alleges the consulting company borrowed $45,000 and signed a promissory note in November 2013. The lawsuit further alleges that the contract was personally guaranteed by the owner of the consulting firm. A news report on the lawsuit does not indicate the nature of the claimed fiduciary negligence.