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

New Delhi: The Supreme Court on Friday upheld the validity of the Centre’s notification allowing banks to proceed against personal guarantors for recovery of loans given to a company under the Insolvency and Bankruptcy Code (IBC). A bench comprising justices L Nageswara Rao and S Ravindra Bhat held that approval of resolution plan under the IBC does not discharge personal guarantors of their liability towards the banks. “In the judgment, we have upheld the notification,” Justice Bhat said while reading out the conclusion of the judgement which decided as many as 75 petitions pertaining to the validity of the notification. Petitioners had challenged the 15 November, 2019, notification issued under the IBC and other provisions in as far as they relate to personal guarantors to corporate debtors. Upholding the validity of the notification, the top court ruled that initiation of an insolvency resolution plan for a company does not absolve corporate guarantees given by individuals from paying up the dues to financial institutions.