New credit culture

A big step by SC in allowing banks to chase personal guarantors

Last week, a two-judge Bench of the Supreme Court upheld a notification issued by the Union government in November 2019. The notification clarified that the Insolvency and Bankruptcy Code (IBC) would be applicable to companies in which the promoters had signed personal guarantees for loans in the past. Understandably, the notification was challenged by several promoters in various courts. The government notification had said that even if a resolution plan was agreed upon between the company and its creditors through the IBC process — with the lenders, presumably, taking a haircut in the course of the plan — that did