NCLAT Allows Insolvency of Personal Guarantors in Phoenix ARC Case

The National Company Law Appellate Tribunal (NCLAT) allowed appeals by Phoenix ARC, setting aside the NCLT order and admitting insolvency petitions against personal guarantors Rajendra and Hema Salot.
The court held that an acknowledgment of debt by the corporate debtor in its 2019-20 financial statements extended the limitation period for initiating insolvency against the personal guarantors.
The NCLAT clarified that proceedings under the IBC and SARFAESI Act can run concurrently, and a SARFAESI notice does not automatically invoke a personal guarantee.
The tribunal calculated a fresh limitation period from the date of the corporate debtor's financial acknowledgment, deeming the insolvency petitions filed in October 2023 to be within the limitation period.