Navigating personal guarantor liability in insolvency: Transformative and transactional shifts in the legal framework

Title

Navigating personal guarantor liability in insolvency: Transformative and transactional shifts in the legal framework

Creator

Shaji, Angel; Shilpa, M.L.

Description

The liability of personal guarantors under Indias insolvency regime has undergone a significant transformation with the introduction of insolvency provisions under the Insolvency and Bankruptcy Code, 2016 (IBC). This research critically examines the evolving legal framework governing personal guarantors, analysing recent judicial pronouncements and legislative changes that have redefined their rights and obligations in relation to corporate debtors and creditors. The study explores how including personal guarantors in the insolvency process has streamlined creditor recoveries while providing structured financial resolution mechanisms for guarantors. Additionally, the paper assesses the cross-border insolvency framework, comparing India's approach with international insolvency regimes, particularly in the context of harmonisation efforts and global best practices. Through a doctrinal research methodology incorporating statutory analysis, judicial interpretations, and comparative legal studies, the research identifies key challenges, including due process concerns, enforcement inefficiencies, and complexities in cross-border insolvency cases. The findings indicate that while the evolving insolvency framework enhances creditor protection and financial recovery, it raises concerns regarding fairness and procedural safeguards for personal guarantors. The paper advocates for a balanced approach to insolvency laws, calling for targeted reforms to address enforcement gaps and ensure equitable treatment for all stakeholders. By analysing domestic and international perspectives, this study contributes to the discourse on personal guarantor insolvency and offers recommendations to enhance the efficacy and fairness of the resolution process. 2025 Malque Publishing. All rights reserved.

Source

Multidisciplinary Science Journal;Volume;7;Issue;8;Article No.;2025493;

Date

01-01-2025

Publisher

Malque Publishing

Subject

cross border insolvency; financial recovery; resolution; subrogation

Coverage

Shaji A., Christ Deemed to be University, Bangalore, India; Shilpa M.L., Christ Deemed to be University, Bangalore, India

Rights

All Open Access; Gold Open Access

Relation

ISSN: 26751240;

Format

online

Language

English

Type

Article

Identifier

https://doi.org/10.31893/multiscience.2025493

https://www.scopus.com/pages/publications/105000154648?origin=resultslist