Kapil Kumar, a prominent businessman, had provided personal guarantees to several financial institutions for loans extended to his company, "KK Enterprises Limited", institutions invoked Kapil's personal guarantees and i

CS Professional · Insolvency and Bankruptcy - Law and Practice · PYQS · June 2025
Kapil Kumar, a prominent businessman, had provided personal guarantees to several financial institutions for loans extended to his company, "KK Enterprises Limited", institutions invoked Kapil's personal guarantees and initiated insolvency proceedings against him under the Insolvency and Bankruptcy Code, 2016 (IBC, 2016), specifically under the provisions related to personal guarantors to corporate debtors. Kapil challenged the validity of these proceedings, arguing that the notification bringing personal guarantors within the ambit of the IBC was arbitrary and discriminatory. On this background, mentioning relevant provisions of the IBC, 2016 and applicable case laws answer the following questions: What is the significance of Section 1(3) of the IBC, 2016 in this case?

Answer & Explanation:

Section 1(3) of the Insolvency and Bankruptcy Code 2016 grants the Central Government the authority to implement different sections of the IBC at different times. This power was used to bring the provisions concerning personal guarantors into effect. Specifically, a notification in November 2019 made Part III applicable to personal guarantors, bringing them within the IBC's purview.

Topics: Personal Guarantors

Open in Interactive Practice Hub · Full Practice Hub · Chapter Weightage · More in this subject

Related Questions in this Topic