A corporate debtor may have guarantors, who could be corporates or individuals. So far, the resolution of corporate guarantors was available under the IBC. Now, even resolution of personal guarantors is also available. By a notification dated 15th November 2019, Central Government has brought personal Insolvency into force with effect from 1st December 2019 under IBC, 2016.
With Due Effect, personal guarantors will be forced to face the wrath and impending doom if their companies are unable to repay their debts. This means lenders can drag these guarantors under IBC, 2016 alongside their companies if the companies are incapable of paying their debts. The new rules and regulations have proved to be a boon for creditors as now they can saunter their way not only against the principal borrower but also the personal guarantor before the (“NCLT”).
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