Woodsmill Park Limited Partnership borrowed $6.2 million secured by real property in Chicago, Illinois. Bill and Brian Bruce and Matthew O’Malley signed guaranties to meet Woodsmill’s obligation on the loan. Woodsmill defaulted on the payments. Northbrook Bank & Trust Company filed an action in an Illinois state court against Woodsmill and the Bruces to foreclose on the property. The defendants agreed to resolve the claim in exchange for a deed in lieu of foreclosure (conveying their interest in the property to the bank without a foreclosure) and a promise to pay the difference between the value of the property and the unpaid amount of the loan. The parties stipulated, “Nothing in this Agreement shall release or reduce O’Malley’s obligations under O’Malley’s Guaranty.” [ Northbrook Bank & Trust Co. v. O’Malley, 2017 IL App (1st) 160438-U (2017)] (See Laws Assisting Creditors.) 

(a) How does the agreement between Northbrook, Woodsmill, and the Bruces affect O’Malley’s guaranty? Explain. 

(b) Using the IDDR approach, evaluate the ethics of Northbrook, Woodsmill, and the Bruces in agreeing to the stipulation concerning O’Malley.