A business loan can put more than just the company’s finances at risk. If a lender asks an owner to personally guaranty some of the borrowing, the consequences can haunt them long after the business runs into trouble. That was the case in a dispute involving Texas beverage maker Holy Kombucha, after a lender came after one of its co-owners over a guaranty signed as part of a loan restructuring. On Oct. 30, 2026, the Texas Sixth Court of Appeals upheld a judgment against Theresa Pham for $619,419.50 to Montgomery Capital Partners IV, LP. The award was $500,000 in damages and $119,419.50 in pre-judgment interest. The decision upheld the trial court’s finding that Pham’s guaranty was still in place when the company defaulted.
How the guaranty was triggered
According to the Texas Sixth Court of Appeals, Montgomery Capital Partners loaned $2 million to Holy Kombucha, Inc., partially owned by Pham and Leandro Bienati, in January 2021. After a first default, the company entered into a forbearance agreement in December of that year. Under the agreement the lender agreed to provide the business with a $500,000 draw facility. As part of the agreement, Pham was required to sign a personal guaranty. At the time of the loan, the original loan balance was $2,044,544.92. Pham’s liability was limited by the guaranty to the lesser of $500,000 or the total principal advances made under the new draw facility. It also provided that her obligation would terminate when the aggregate of the principal and interest outstanding on the original loan and draw facility fell to or below the stated balance. The company burned cash and defaulted again in April 2024. Montgomery then sued Pham for breach of the guaranty.
Dispute over whether the obligation was extinguished
One key question was whether Pham’s personal guaranty had already been extinguished. She argued the draw facility was paid off in April 2022 and the conditions to terminate her obligation were therefore met. The Texas Sixth Court of Appeals looked at the payment history and correspondence that was offered at trial. Holy Kombucha had paid down a substantial amount on the draw facility, but the lender claimed there remained some interest owed. It also held that the guaranty covered the net balance of the original term loan and the draw facility and not just the draw facility. The lender prevailed at the trial court. The results showed that the total guaranty debt never fell below the threshold of $2,044,544.92. The appeals court found the evidence was sufficient to support that finding and rejected Pham’s argument that the warranty had expired.
Why the decision was upheld
Pham also took issue with where the lawsuit was filed, the admission of a loan balance sheet and how interest was calculated. But the Texas Sixth Court of Appeals said those arguments offered no reason to overturn the judgment. As to venue, the court said Pham had not made a timely request for a hearing on her motion to move the case to Dallas County. Her objection to the venue was therefore waived. The guaranty also provided the lender the right to initiate proceedings in other jurisdictions, including the court where it filed the case. The court also admitted in evidence a balance sheet showing the advances on the loan, repayments and interest accrued. It said the lender’s representative had provided adequate proof of how the records were kept. Pham’s separate objections to disclosure rules had not been properly raised at trial. She also challenged the award of interest, but that was rejected because she did not make that argument in the trial court. The judgment awarded pre-judgment interest at a contractual rate of 16 per cent compounded daily. There was a dissent though. Justice Jeff Rambin disagreed with the majority opinion on the balance sheet, arguing that the document was created for litigation purposes shortly before the trial and therefore should not have been admitted as a routine business record. The majority disagreed but affirmed the trial court's judgment and the award of $619,419.50 against Pham.
