No Bar to Creditors in Enforcing Personal Guarantees signed on behalf by trust: NCLAT

The NCLAT has ruled that creditors can enforce personal guarantees signed on behalf of trusts. The judgment clarifies that personal guarantees, even when signed by trustees on behalf of the trust, are legally binding and enforceable. This ruling ensures that creditors have the ability to recover dues in cases where the guarantor defaults on the loan or obligation. It also reinforces the importance of personal guarantees in lending agreements, providing creditors with additional security. The decision is significant for the financial sector, particularly in ensuring that trusts cannot avoid liability by claiming that personal guarantees signed on their behalf are not enforceable.