Banks Have Inherent Power To Classify Account Of Personal Guarantor As NPA During Moratorium Period: NCLT New Delhi

The National Company Law Tribunal (NCLT) ruled that a bank’s application against a personal guarantor under Section 95 of the Insolvency and Bankruptcy Code (IBC) is maintainable. The case involved a bank seeking insolvency resolution against a personal guarantor for a corporate debtor’s loan. The guarantor argued that the application was not maintainable as the corporate debtor was already undergoing insolvency proceedings. The NCLT found that the bank’s application was valid, as the IBC allows for simultaneous proceedings against corporate debtors and their personal guarantors. This decision clarifies the scope of Section 95, ensuring that creditors can pursue claims against guarantors independently of the corporate insolvency process.