The insolvency regulator is training its guns on personal guarantors to recover bad loans. Nudging the new breed of insolvency professionals to attach assets of guarantors is not a good idea. It goes against the grain of limited liability. The reason is simple.
At risk, is only the risk capital that the promoter has invested in the enterprise. For an entrepreneur to risk her familys future to get a loan is absurd. There should be no personal liability on the promoter beyond risk capital that she has invested in.
Personal guarantees are mostly given by directors who are in the management of companies, and banks insist on these guarantees ostensibly to check the tendency of promoters to exploit legal delays. More likely, bankers are abdi…
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