Can a non director's collateral be used if the account is declared NPA?

Company can go for resolution plan ,subject to procedure prescribed in IBC , You as a shareholder has provided personal guarantee to bank by authorising to one of the director through valid POA ,If bank Invoke SARFAESI then guarantor property may also come under it ,but i think first recovery point shall be from company's collateral and if that amount is insufficient then guarantor and his collateral shall be used for balance recovery , you have to check CHG-1 filed with ROC by company for particular loan ,as a shareholder you also have a right to propose for voluantry liquidation of company to request to current board and by calling EOGM and with due process...

Disclaimer- Views expressed are for educational purpose only...

Thanks for the useful response.

Since none of the directors were willing to run the business, a set of new directors came forward to take over the company. However they too couldn't operate the factory due to various reasons. They paid EMI for a few months and have stopped paying for 3 months or so. But the bank still has the properties pledged by the original directors.

Would the original directors collateral still be valid for the bank to go after?

Wouldn't the new directors be responsible for the NPA and the bank loans?

Since the new directors are well known industrialists, wouldn't the NPA affect their credit scores and jeopordize their other loans with the other banks?

Unfortunately the original partners have invested heavily in the factory besides giving personal assets as collateral.

We not only lost all the money we invested, but are at more risk for the collateral as well.

Pleaes advise.

Thank you.

Can you inbox me some details about the company ? like Name ,CIN no? otherwise option available either to go through IBC mode or M&A ? Director is personally not responsible unless otherwise default occured due to fraud ,negligence ,misuse, siphoning off etc.like during this crisis time many loans become NPA due to operational ,cos business etc...even though if bank invoke SARFAESI then first liability is always of company (the original charged assets)and if any recovery is due then guarantee come to play ,unless the guarantee is duly released it shall be liability disregarding that one who provide it ,has lost control or other factor ...Now you are shareholder (majority ), lastly only IBC/CIRP through NCLT is a possible way ,if winding up or resolution plan required.

*Disclaimer*