IBC rule on personal guarantees no help to promoters blaming managers

Payment of bank loans by a company is an obligation under the contract law and fraud by professionals is a criminal matter, says government official.

Promoters of several Indian companies, who are accusing their professional managers of fraud and diversion of company funds, will not get any respite from the insolvency and bankruptcy code (IBC) as lenders invoke their personal guarantees. 

“While personal guarantees come under the contract law, the litigation against former employees will come under the criminal law. A promoter can’t link the two,” said a top Indian government official.

The official said the payment of bank loans by the company is an obligation under the contract law and the other (fraud by professionals) is a criminal matter. "These two matters are against