SC upholds notification allowing banks to proceed against personal guarantors under the IBC

The Supreme Court of India has upheld the validity of a November 2019 notification by the Central Government, permitting creditors to proceed against personal guarantors under the Insolvency and Bankruptcy Code (IBC). Under the notified Rules, the IBC provides that where an application of insolvency resolution or liquidation proceedings is pending before the National Company Law Tribunal (NCLT), an application relating to insolvency resolution or liquidation or bankruptcy of a corporate guarantor or a personal guarantor can be filed before the Tribunal as well. Insolvency resolution, liquidation or bankruptcy proceedings of a corporate guarantor or a personal guarantor of a corporate debtor pending in any court or tribunal will stand transferred to the NCLT at that stage.