Ex-Chairperson of IBBI-Mr Sahoo [ & Mr Raghav Pande ] elaborately discuss how bank guarantee — particularly in IBC parlance–should be evaluated [1] Personal guarantee works before the default occurs [2] The guarantee discourages excessive risk taking, mitigates moral hazard and aligns the promoter’s interests more closely with those of the lender and the company [3] Thus a guarantee has two kinds of value– Its ex-post value is the additional recovery it can provide after default– Its ex-ante value is the discipline it creates before default -[4] A guarantee is not magic collateral –it is not meaningless paper either. It is simultaneoulsly a risk allocation mechnism , an incentive value may operate long before defaualt.[5] What that guarantee was actually worth before distress and after distress–therefore, becomes the right question—Courtesy BS