SC upholds Centre's notification permitting banks to proceed against personal guarantors under IBC

The Supreme Court had transferred the petitions from the High Courts to itself on the request made by the government.

The Supreme Court on Friday upheld a government move to initiate proceedings under the Insolvency and Bankruptcy Code against personal guarantors, usually promoters of big business houses, to corporate debtors facing corporate insolvency resolution process. In a judgment which will ring loud and clear across the business community, a Bench of Justices L. Nageswara Rao and S. Ravindra Bhat held that the of the Centre allowing creditors, usually financial institutions and banks, to move against personal guarantors under the was “legal and valid”. The notification of November 15, 2019 invoking IBC against personal guarantors was challenged before several High Courts initially. The Supreme Court had transferred the petitions from the High Courts to itself on the request made by the government.