Supreme Court upholds validity of main provisions of Personal Guarantors’ Insolvency Resolution of IBC Code,
Supreme Court on Nov 2023 upheld few IBC Provisions of the IBC which were challenged on grounds of being violative of fundamental rights like the right to equality of those against whom insolvency proceedings are initiated. Topmost Court start hearing of Pleas Challenging Insolvency and Bankruptcy Code, 2016 Provisions on Personal Guarantor's Insolvency Resolution related to Section 95 to 100 IBC cannot be held as unconstitutional.
Above Court upheld the constitutionality of few changes made to the Insolvency and Bankruptcy Code, in 2019 related to the Personal Guarantors’ Insolvency Resolution.
A bench comprising Chief Justice & justices held as valid the IBC provisions related to the Personal Guarantors’ Insolvency Resolution, which do not grant an opportunity of hearing to personal guarantors before insolvency petitions of creditors are admitted for hearing in the National Company Law Tribunal Court in the event of default in repayment of outstanding loans or dues.
Creditors may start insolvency proceedings or bankruptcy procedures against personal guarantors under Section 95 of the IBC. Creditors may opt to work this individually, jointly with others, or through a resolution professional, whom they choose.