Personal guarantors may be part of cross-border insolvency framework

Taking lessons from recent big-ticket insolvency cases where creditors could not pursue the foreign assets of promoters, the government is actively considering bringing personal guarantors for corporate debtors under the purview of the cross-border insolvency regime.

The cross-border insolvency framework is yet to be notified under the Insolvency and Bankruptcy Code. So far, the regime under discussion was only for corporate insolvency resolution. The government wants to notify it together for both companies and personal guarantors for corporate debtors, according to official sources.

“Pursuing such cases under civil or criminal law is always cumbersome as the burden of proof is much more.