🔍 What Happened

The National Company Law Tribunal ruled that personal guarantors remain liable even if the corporate debtor undergoes insolvency proceedings.

🧾 Summary

The tribunal held that personal guarantees provided by promoters or directors do not automatically dissolve once corporate insolvency proceedings begin or conclude. Creditors retain the right to proceed against personal guarantors independently. This ruling strengthens creditor confidence and discourages misuse of corporate structures to avoid personal liability. It also serves as a caution for promoters who casually provide guarantees without fully understanding long-term implications.

🟢 Public Takeaway

If you’ve signed as a personal guarantor, insolvency of the company does not wipe out your responsibility.