Personal Guarantors Of Corporate Debtors Under IBC Regime From Dec 1

The Centre has taken the next big step in insolvency reforms by bringing personal guarantors to corporates (corporate debtors) within the fold of the Insolvency and Bankruptcy Code from December 1.

- KR Srivats

The Ministry of Corporate Affairs (MCA) has come up with a set of rules extending the scope of the IBC to personal guarantors of corporate debtors.

Simply put, resolution of personal guarantors to corporates will be available from December 1. This would benefit both the banks and the personal guarantors in minimising litigation, say experts.

Speaking to BusinessLine, Insolvency and Bankruptcy Board of India (IBBI) Chairman MS Sahoo said resolution of personal guarantors under the IBC would complement the insolvency resolution of the corporate debtor and put personal guarantors and corporate guarantors on the same level playing field.

The new regime will be prospective and invoked when there is a default, Sahoo said. “Further, the law of limitation applies,” he added.