Exhibit 99.2


                                    GUARANTY

          GUARANTY dated as of June 7, 2001, by Golden Books Family
Entertainment, Inc., a Delaware corporation and a debtor and a
debtor-in-possession (the "Guarantor"), in favor of The CIT Group/Business
Credit, Inc., a Delaware corporation, as agent ("Agent") for the Lenders named
in the Revolving Credit and Term Loan Agreement dated of even date herewith,
among The CIT Group/Business Credit, Inc. and other lenders party thereto (the
"Lenders"), the Agent, Foothill Capital Corporation as Co-Agent and
Documentation Agent, and Golden Books Publishing Company, Inc. (the "Borrower")
as Borrower (as the same may from time to time be amended, modified or
supplemented, the "Loan Agreement"); capitalized terms used herein and not
otherwise defined herein shall have the meanings attributed thereto in the Loan
Agreement)).

          The Agent, Co-Agent and the Lenders have agreed to extend loans (the
"Loans") and certain other financial accommodations, including, without
limitation, assisting in the issuance of the Letters of Credit to the Borrower
pursuant to, and subject to the terms and conditions of, the Loan Agreement. The
obligation of the Lenders under the Loan Agreement to extend such Loans and to
assist the Borrower in obtaining Letters of Credit is conditioned on the
execution and delivery by the Guarantor of a guaranty in the form hereof of the
Obligations (such Obligations to include, without limitation, the due and
punctual payment and performance of (a) the obligation of the Borrower to pay
the principal of and interest on the Loans, when and as due, whether at
maturity, by acceleration, upon one or more dates set for prepayment or
otherwise, (b) indebtedness of the Borrower at any time and from time to time
under any Letters of Credit, and (c) all other obligations of the Borrower at
any time and from time to time under the Loan Agreement and the other Loan
Documents).

          Accordingly, in consideration of the premises and in order to induce
the Agent, the Co-Agent and the Lenders to make Loans and extend other financial
accommodations under the Loan Agreement, the Guarantor hereby agrees as follows:

          Section 1. Guaranty. The Guarantor hereby irrevocably and
unconditionally guarantees the punctual payment when due, whether at stated
maturity, by acceleration or otherwise, and the punctual performance, of all
present and future Obligations of the Borrower (the foregoing being herein
referred to as the "Guaranteed Obligations"); provided, however, that anything
to the contrary notwithstanding, the maximum liability of the Guarantor
hereunder and under the other Loan Documents shall not exceed an amount equal to
the largest amount that would not render the Guarantor's obligations hereunder
subject to avoidance under Section 548 of the United States Bankruptcy Code or
any equivalent provision of the law of any state.

          Section 2. Waiver. The Guarantor hereby absolutely, unconditionally
and irrevocably waives, to the fullest extent permitted by law, (i) promptness,
diligence, notice of acceptance and any other notice with respect to this
Guaranty, (ii) presentment, demand of payment, protest, notice of dishonor or
nonpayment and any other notice with respect to the Guaranteed Obligations,
(iii) any requirement that the Agent, the Co-Agent or Lenders protect, secure,
perfect or insure any security interest or Lien or any property subject thereto
or exhaust any right or take any action against the






Borrower or any other person or any Collateral, and (iv) any other action, event
or precondition to the enforcement of this Guaranty or the performance by the
Guarantor of the obligations hereunder.

          Section 3. Guaranty Absolute. (a) The Guarantor guarantees that, to
the fullest extent permitted by law, the Guaranteed Obligations will be paid or
performed strictly in accordance with their terms, regardless of any law,
regulation or order now or hereafter in effect in any jurisdiction affecting any
of such terms or the rights of the Agent, the Co-Agent or any Lender with
respect thereto.

          (b) No invalidity, irregularity, voidability, voidness or
unenforceability of the Loan Agreement, the Notes, or any other Loan Document or
any other agreement or instrument relating thereto, or of all or any part of the
Guaranteed Obligations or of any security therefor shall affect, impair or be a
defense to this Guaranty.

          (c) This Guaranty is one of payment and performance and not collection
and the obligations of the Guarantor under this Guaranty are independent of the
Obligations of the Borrower, and a separate action or actions may be brought and
prosecuted against the Guarantor to enforce this Guaranty, irrespective of
whether any action is brought against the Borrowers or whether the Borrower is
joined in any such action or actions.

          (d) The liability of the Guarantor under this Guaranty shall be
absolute and unconditional irrespective of:

               (i) any change in the manner, place or terms of payment or
     performance, and/or any change or extension of the time of payment or
     performance of, renewal or alteration of, any Obligation, any security
     therefor, or any liability incurred directly or indirectly in respect
     thereof, or any other amendment or waiver of or any consent to departure
     from the Loan Agreement or the Notes or any other Loan Document, including
     any increase in the Guaranteed Obligations resulting from the extension of
     additional credit to the Borrower or any of its subsidiaries or otherwise;

               (ii) any sale, exchange, release, surrender, realization upon any
     property by whomsoever at any time pledged or mortgaged to secure, or
     howsoever securing, all or any of the Guaranteed Obligations, and/or any
     offset thereagainst, or failure to perfect, or continue the perfection of,
     any Lien in any such property, or delay in the perfection of any such Lien,
     or any amendment or waiver of or consent to departure from any other
     guaranty for all or any of the Guaranteed Obligations;

               (iii) any exercise or failure to exercise any rights against the
     Borrower or others (including the Guarantor);

               (iv) any settlement or compromise of any security for any
     Obligation, or any liability (including any of those hereunder) incurred
     directly or indirectly in respect thereof or hereof, and any subordination
     of the payment of all or any part thereof to the payment of any



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     Obligation (whether due or not) of the Borrower to creditors of the
     Borrower other than the Guarantor;

               (v) any manner of application of Collateral, or proceeds thereof,
     to all or any of the Guaranteed Obligations, or any manner of sale or other
     disposition of any Collateral for all or any of the Guaranteed Obligations
     or any other assets of the Borrower or any of its subsidiaries;

               (vi) any change, restructuring or termination of the existence of
     the Borrower or any of its subsidiaries; or

               (vii) any other agreements or circumstance of any nature
     whatsoever which might otherwise constitute a defense available to, or a
     discharge of, this Guaranty and/or obligations of the Guarantor hereunder,
     or a defense to, or discharge of, the Borrower or any other person or party
     relating to this Guaranty or the obligations of the Guarantor hereunder or
     otherwise with respect to the Loans, Letters of Credit or other financial
     accommodations to the Borrower.

          (e) The Agent may at any time and from time to time (whether or not
after revocation or termination of this Guaranty) without the consent of, or
notice (except as shall be required by applicable statute and cannot be waived)
to, the Guarantor, and without incurring responsibility to the Guarantor or
impairing or releasing the obligations of the Guarantor hereunder, apply any
sums by whomsoever paid or howsoever realized to any Guaranteed Obligation
regardless of what Guaranteed Obligations remain unpaid.

          (f) This Guaranty shall continue to be effective or be reinstated, as
the case may be, if claim is ever made upon the Agent, the Co-Agent or any
Lender for repayment or recovery of any amount or amounts received by the Agent,
the Co-Agent or such Lender in payment or on account of any of the Guaranteed
Obligations and the Agent, the Co-Agent or such Lender repays all or part of
said amount by reason of any judgment, decree or order of any court or
administrative body having jurisdiction over the Agent, the Co-Agent or such
Lender or the respective property of each, or any settlement or compromise of
any such claim effected by the Agent, the Co-Agent or such Lender with any such
claimant (including the Borrower), then and in such event the Guarantor agrees
that any such judgment, decree, order, settlement or compromise shall be binding
upon the Guarantor, notwithstanding any revocation hereof or the cancellation of
any note (including the Notes) or other instrument evidencing any Obligation,
and the Guarantor shall be and remain liable to the Agent, the Co-Agent and/or
such Lender hereunder for the amount so repaid or recovered to the same extent
as if such amount had never originally been received by the Agent, the Co-Agent
or such Lender.

          Section 4. Continuing Guaranty. This Guaranty is a continuing one and
shall (i) remain in full force and effect until the indefeasible payment and
satisfaction in full of the Guaranteed Obligations, (ii) be binding upon the
Guarantor, its successors and assigns, and (iii) inure to the benefit of, and be
enforceable by, the Agent and its successors, transferees and assigns. All
obligations to which this Guaranty applies or may apply under the terms hereof
shall be conclusively presumed to have been created in reliance hereon.



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          Section 5. Representations, Warranties and Covenants. The Guarantor
hereby represents, warrants and covenants to and with the Agent that:

          (a) The Guarantor has the corporate power to execute and deliver this
     Guaranty and, as specified in the Interim Bankruptcy Order to incur and
     perform its obligations hereunder;

          (b) The Guarantor has duly taken all necessary corporate action to
     authorize the execution, delivery and performance of this Guaranty and to
     incur and perform its obligations hereunder;

          (c) Except for Bankruptcy Court approval, no consent, approval,
     authorization or other action by, and no notice to or of, or declaration or
     filing with, any governmental or other public body, or any other Person, is
     required for the due authorization, execution, delivery and performance by
     the Guarantor of this Guaranty or the consummation of the transactions
     contemplated hereby;

          (d) This Guaranty has been duly authorized, executed and delivered by
     the Guarantor and constitutes the legal, valid and binding obligation of
     the Guarantor, and is enforceable against the Guarantor in accordance with
     its terms, except as enforcement thereof may be subject to the effect of
     any applicable bankruptcy, insolvency, reorganization, moratorium or
     similar law affecting creditors' rights generally, and general principles
     of equity (regardless of whether such enforcement is sought in a proceeding
     in equity or at law);

          (e) No event referred to in Section 9.01 of the Loan Agreement has
     occurred and is continuing; and

          (f) The Guarantor will take all necessary action to ensure the
     Borrower's compliance with the terms and conditions of the Loan Agreement
     and will perform all its obligations as a Loan Party under the Loan
     Agreement.

          Section 6. Expenses. The Guarantor will upon demand reimburse the
Agent for any sums, costs, and expenses which the Agent may pay or incur
pursuant to the provisions of this Guaranty or in negotiating, executing,
perfecting, defending, protecting or enforcing this Guaranty or in enforcing
payment of the Guaranteed Obligations or otherwise in connection with the
provisions hereof, including court costs, collection charges, travel expenses,
and reasonable attorneys' fees, together with interest thereon as specified in
Section 12 hereof.

          Section 7. Terms. (a) All terms defined in the UCC and used herein
shall have the meanings as defined in the UCC, unless the context otherwise
requires.

          (b) The words "include," "includes" and "including" shall be deemed to
be followed by the phrase "without limitation".



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          (c) All references herein to Sections and subsections shall be deemed
to be references to Sections and subsections of this Guaranty unless the context
shall otherwise require.

          Section 8. Amendments and Modification. No provision hereof shall be
modified, altered or limited except by written instrument expressly referring to
this Guaranty and to such provision, and executed by the party to be charged.

          Section 9. Subrogation. The Guarantor will not exercise any rights
which it may acquire by way of subrogation hereunder, by any payment made by it
hereunder or otherwise, until the Loan Agreement is terminated and all of the
Obligations and all other expenses to be paid by the Guarantor pursuant hereto
shall have been satisfied in full. If any amount shall be paid to the Guarantor
on account of such subrogation rights at any time when all of the Obligations
and all such other expenses shall not have been paid in full or the Loan
Agreement is not terminated, such amount shall be held in trust for the benefit
of the Agent, shall be segregated from the other funds of the Guarantor and
shall forthwith be paid over to the Agent to be applied in whole or in part by
the Agent against the Obligations, whether matured or unmatured, and all such
other expenses in accordance with the terms of the Loan Agreement.

          Section 10. Remedies Upon Default; Right of Set-Off. (a) Subject to
the Orders, upon the occurrence and during the continuance of any Event of
Default, the Agent may, without notice to or demand upon the Borrower or the
Guarantor, declare any Guaranteed Obligations immediately due and payable, and
shall be entitled to enforce the obligations of the Guarantor hereunder.

          (b) Upon such declaration by the Agent, the Agent, the Co-Agent and
any Lender is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by the Agent, the Co-Agent or any Lender to
or for the credit or the account of the Guarantor against any and all of the
obligations of the Guarantor now or hereafter existing under this Guaranty,
whether or not the Agent, the Co-Agent or such Lender shall have made any demand
under this Guaranty and although such obligations may be contingent and
unmatured. The Agent agrees promptly to notify the Guarantor after any such
set-off and application, provided that the failure to give such notice shall not
affect the validity of such set-off and application. The rights of the Agent,
the Co-Agent and Lenders under this Section 10 are in addition to other rights
and remedies (including other rights of set-off) which the Agent, the Co-Agent
and Lenders may have.

          Section 11. Statute of Limitations. Any acknowledgment or new promise,
whether by payment of principal or interest or otherwise and whether by the
Borrower or others (including the Guarantor), with respect to any of the
Guaranteed Obligations shall, if the statute of limitations in favor of the
Guarantor against the Agent, the Co-Agent or Lenders shall have commenced to
run, toll the running of such statute of limitations and, if the period of such
statute of limitations shall have expired, prevent the operation of such statute
of limitations.



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          Section 12. Interest. All amounts payable from time to time by the
Guarantor pursuant to Section 6 hereunder shall bear interest at the Default
Rate.

          Section 13. Rights and Remedies Not Waived. No act, omission or delay
by the Agent shall constitute a waiver of its rights and remedies hereunder or
otherwise. No single or partial waiver by the Agent of any default hereunder or
right or remedy which it may have shall operate as a waiver of any other
default, right or remedy or of the same default, right or remedy on a future
occasion.

          Section 14. Admissibility of Guaranty. The Guarantor agrees that any
copy of this Guaranty signed by the Guarantor and transmitted by telecopier for
delivery to the Agent shall be admissible in evidence as the original itself in
any judicial or administrative proceeding, whether or not the original is in
existence.

          Section 15. Notices. All notices, requests and demands to or upon the
Agent or the Guarantor under this Agreement shall be in writing and given as
provided in the Loan Agreement.

          Section 16. Counterparts. This Guaranty may be executed in any number
of counterparts and by the different parties hereto on separate counterparts,
each of which when so executed and delivered shall be an original and all of
which shall together constitute one and the same agreement.

          Section 17. CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL; ETC. (a)
ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY MAY BE BROUGHT IN
THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF AMERICA FOR THE
SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS GUARANTY,
THE GUARANTOR HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID
COURTS. THE GUARANTOR HEREBY IRREVOCABLY WAIVES, IN CONNECTION WITH ANY SUCH
ACTION OR PROCEEDING, (i) TRIAL BY JURY, (ii) TO THE EXTENT IT MAY EFFECTIVELY
DO SO UNDER APPLICABLE LAW, ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING
OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH
RESPECTIVE JURISDICTIONS AND (iii) THE RIGHT TO INTERPOSE ANY SET-OFF,
COUNTERCLAIM OR CROSS-CLAIM (UNLESS SUCH SET-OFF, COUNTERCLAIM OR CROSS-CLAIM
COULD NOT, BY REASON OF ANY APPLICABLE FEDERAL OR STATE PROCEDURAL LAWS, BE
INTERPOSED, PLEADED OR ALLEGED IN ANY OTHER ACTION).

          (b) The Guarantor irrevocably consents to the service of process of
any of the aforementioned courts in any such action or proceeding by the mailing
of copies thereof by certified mail, postage prepaid, to the Guarantor at its
address determined pursuant to Section 15 hereof.



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          (c) Nothing herein shall affect the right of the Agent to serve
process in any other manner permitted by law or to commence legal proceedings or
otherwise proceed against the Guarantor in any other jurisdiction.

          (d) The Guarantor hereby waives presentment, notice of dishonor and
protests of all instruments included in or evidencing any of the Guaranteed
Obligations, and any and all other notices and demands whatsoever (except as
expressly provided herein).

          Section 18. GOVERNING LAW. THIS GUARANTY AND THE GUARANTEED
OBLIGATIONS SHALL BE GOVERNED IN ALL RESPECTS BY THE LAWS OF THE STATE OF NEW
YORK APPLICABLE TO CONTRACTS EXECUTED AND TO BE PERFORMED IN SUCH STATE, WITHOUT
GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF.

          Section 19. Captions; Separability. (a) The captions of the Sections
and subsections of this Guaranty have been inserted for convenience only and
shall not in any way affect the meaning or construction of any provision of this
Guaranty.

          (b) If any term of this Guaranty shall be held to be invalid, illegal
or unenforceable, the validity of all other terms hereof shall in no way be
affected thereby.

          Section 20. Acknowledgment of Receipt. By execution hereof, the
Guarantor acknowledges receipt of a copy of this Guaranty and each of the Loan
Documents.

                  [Remainder of Page Intentionally Left Blank]



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          IN WITNESS WHEREOF, the Guarantor has duly executed or caused this
Guaranty to be duly executed in the State of New York as of the date first above
set forth.

                                    GOLDEN BOOKS FAMILY ENTERTAINMENT, INC.,
                                    a debtor and a debtor-in-possession


                                    By: /s/ Colin Finkelstein
                                        --------------------------------
                                        Name:   Colin Finkelstein
                                        Title:  Chief Financial Officer



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