The Supreme Court, under IBC, allowed banks to file personal bankruptcies against guarantors of companies facing Corporate Insolvency Resolution Process.
A bench of Justices L Nageswara Rao and Ravindra Bhat delivered the judgement.
In 2019, the Centre introduced a new provision in Insolvency and Bankruptcy Code, 2016, which allowed the banks to file bankruptcy cases against India’s top business tycoons including Anil Ambani, Kapil Wadhawan and Sanjay Singal.
IBC was introduced to allow banks to move an application for initiation of insolvency against personal guarantors to corporate debtors.
Many promoters had moved different high courts challenging the new provisions, aguing that the promoters alone should not be held liable for the default on debt repayment.
In October, the Supreme Court transferred to itself a batch of writ petitions pending before different high courts challenging the provisions of IBC with regard to personal insolvency.