Several banks have begun petitioning the National Company Law Tribunal (NCLT) to enforce personal guarantees granted by defaulting firms' founders. According to banking sources, leading banks such as State Bank of India (SBI), Bank of Baroda (BOB), and Union Bank of India (UBI) have approached different NCLT benches to invoke the personal guarantees of 17 big defaulters such as Atul Punj of Punj Lloyd (Rs 3,000 crore), Sanjay Singal of Bhushan Power and Steel (Rs 47,150 crore), and Wadhawans of DHFL (Rs 79,000 crore). According to sources, banks have agreed that in order to invoke personal guarantees, only the main lender in each case would proceed to the NCLT. Banks have filed petitions before the NCLT Benches in Delhi, Ahmedabad, Kolkata, and Mumbai in all of these instances.
The top ten personal guarantors guaranteed a total debt of more than Rs 1.6 lakh crore. In May this year, the Supreme Court ruled that the government announcement permitting creditors, often financial institutions and banks, to sue personal guarantors under the Insolvency and Bankruptcy Code (IBC) on November 15, 2019, was 'legal and valid.'
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