Personal Guarantee

Indian Contract Act, 1872 — Section 126; IBC, 2016 — Section 95

A guarantee provided by an individual (typically a director or promoter) to repay a borrower company's loan obligations. Upon company default, the bank can proceed against the guarantor's personal assets. Under the IBC (Section 95), a financial creditor can file an insolvency application against a personal guarantor of a corporate debtor, without waiting for the CIRP of the corporate debtor to conclude.