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Individual insolvency rules: Breach of personal guarantee is quite severe

The law can help keep a check on instances where loans are given not on the basis of the debtor's creditworthiness, but because of a personal guarantor

Topics
Insolvency and Bankruptcy Code | Individual bankruptcy | NCLAT

Geetika Srivastava 



IBC, COMPANIES, insolvency, NPA, SMEs, MSME, NCLT, NCLAT,
Representative image

Come December 1, the Regulations for Insolvency Resolution and Bankruptcy Proceedings of Personal Guarantors will come into effect. The rules state that proceedings against a corporate debtor and a personal guarantor can be heard simultaneously by the same Bench of the bankruptcy court. To begin with, the mechanism deals with one of the three classifications — personal guarantors to corporate debtors. Rules for partnership firms, and proprietorship firms and other individuals would follow soon. Geetika Srivastava explains the implications for businesses and promoters:

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First Published: Sun, November 24 2019. 21:53 IST

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