Liability Of Personal Guarantors Under IBC

INTRODUCTION:

Recently a question arose before the Supreme Court of India in a batch of matters in the case of Lalit Kumar Jain vs. Union of India & Ors.,¹ regarding the vires and constitutionality of the notification dated 15.11.2019 issued by Government of India ('impugned notification'). The impugned notification effected certain provisions of the Insolvency & Bankruptcy Code, 2016 ('the Code') in relation to the personal guarantors. Pertinently, Part II of the Code provides the provisions for the insolvency resolution and liquidation of corporate persons, whereas Part III of the Code provides for the insolvency resolution and bankruptcy for individuals and partnership firms.