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CS Professional · Insolvency and Bankruptcy - Law and Practice · Bankruptcy Order for Individuals and Partnership Firms

Tarun, an individual debtor, is a personal guarantor to a corporate debtor. Which statement correctly reflects how the IBC's application clause treats him?

Tarun falls under the separate clause for personal guarantors to corporate debtors. The Code's application section lists them apart from partnership and proprietorship firms and from individuals, because the individuals clause expressly excludes persons already covered as personal guarantors.

  1. AHe falls under the clause covering personal guarantors to corporate debtors, separate from the clause covering other individualsCorrect
  2. BHe is covered only under the clause for partnership and proprietorship firms
  3. CHe is excluded from the Code entirely
  4. DHe is covered under the clause for individuals, which expressly includes personal guarantors

Explanation

Section 2 lists personal guarantors to corporate debtors in clause (e) and, in clause (g), individuals other than persons referred to in clause (e). So personal guarantors are a distinct category and are not within the general individuals clause.

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