Personal Guarantors Under The Insolvency And Bankruptcy Code, 2016

The Supreme Court of India in Lalit Kumar Jain vs. Union of India & Ors.[1] has dismissed a challenge to a notification dated 15.11.2019 issued by the Ministry of Corporate Affairs,[2] which brought into force the following provisions of the Insolvency and Bankruptcy Code (hereinafter referred to as the 'Code'), 2016: Clause (e) of Section 2Section 78 (except with regard to fresh start process) and Section 79Sections 94 to 187 (both inclusive)Clause (g) to clause (i) of sub-section...

Complete Re-Appointment Process Of NCLT/NCLAT Members Within 2 Months : Supreme Court Directs Centre

The Supreme Court on Monday directed the Central government to complete the process of reappointment of members of NCLT and NCLAT at the earliest, and not later than two months. In respect of the process to initiate for filling up the existing vacancies for which a search cum selection committee has to be constituted, the Court has directed the selection process to be initiated at...

Lenders To Initiate Insolvency Proceedings Against Personal Guarantors

With the recovery proceedings under the Insolvency and Bankruptcy Code, 2016 ("Code") not moving at the pace that it should, the Government, on November 15, 2019 came out with a new provision that empowered banks to move an application for initiation of insolvency against personal guarantors, who are usually promoters of big business houses. The intention was to hold liable the promoters of the defaulter companies who had furnished personal guarantees for the loans taken by their...

Book Review- Emergence Of Commercial Justice Insolvency And Arbitration By Vivek Sood

Indian economy was often called a debtor's paradise and a creditor's hell till the Insolvency & Bankruptcy Code (IBC) 2016 came into being. While companies went bust over decades, the creditors and employees have been at the receiving end. Delays in insolvency resolution would often work in favour of the bankrupt entity where its management would stay in control of daily...

'Incorporated With Fraudulent Motive, Invoking Arbitration Against Antrix Not Bona Fide' : NCLT Orders Winding Up Of Devas Multimedia

The National Company Law Tribunal, Bengaluru bench, has ordered the forcible liquidation and winding up of Devas Multimedia by allowing a petition filed Indian Space Research Organization's commercial arm Antrix Corporation Limited.The Tribunal held that Devas was incorporated in a "fraudulent manner to carry out unlawful purposes" and its management resorted to "fraudulent activities"...

An Analysis Of The Supreme Court Verdict On Insolvency And Bankruptcy Of Personal Guarantors Of A Corporate Debtor

The Ministry of Corporate Affairs, in the bask of implementing the Insolvency and Bankruptcy Laws in India notified and brought into force the provisions of insolvency of personal guarantors of the corporate debtor[1]vide notification dated 15th November, 2019[2] ("Notification"). After publication of the Notification, many promoters and directors who were also the personal guarantors for their companies were served with demand notices by the Banks and Financial Institutions proposing to...

NCLAT Directs Partial Temporary Relaxation On Physical Filing, Modifies SOP For Allowing E Filing In View Of Covid

Taking note of the recent surge in Covid 19 situation, the National Company Law Appellate Tribunal has directed partial temporary relaxation in physical filing as per its earlier Standard Operating Procedure dated January 3, 2021 by allowing e filing of appeals, replies, IAs, rejoinders etc.The notice issued by the Registrar on Monday in this regard reads thus:"It is directed by the...

IBC - Approval Of Resolution Plan Does Not By Itself Discharge Liabilities Of Personal Guarantor Of Corporate Debtor: Supreme Court

The Supreme Court has held that the approval of a resolution plan does not ipso facto discharge a personal guarantor of a corporate debtor.The release or discharge of a principal borrower from the debt owed by it to its creditor, by an involuntary process, i.e. by operation of law, or due to liquidation or insolvency proceeding, does not absolve the surety/guarantor of his or her liability,...

Supreme Court Upholds IBC Provisions Applicable To Personal Guarantors Of Corporate Debtors-Read Judgment

The Supreme Court today upheld the provisions of Insolvency and Bankruptcy Code, 2016 which applies to personal guarantors of corporate debtors.The bench comprising Justices L. Nageswara Rao and S. Ravindra Bhat approval of a resolution plan relating to a corporate debtor does not operate so as to discharge the liabilities of personal guarantors (to corporate debtors). The bench dismissed...

Delhi High Court Issues Notice In Plea Seeking Modification Of NCLAT's SOP By Allowing Only E-Filing In View Of Second Covid Wave

The Delhi High Court on Thursday issued notice in a plea seeking directions on the National Company Law Appellate Tribunal (NCLAT Principal Bench at Delhi) to modify its SOP dated January 3, 2021 by allowing only electronic filing in view of the prevalent situation amid second Covid wave.A single judge bench comprising of Justice Rekha Palli issued notice in the plea filed by Advocate...

A Critical Analysis Of RPFC Telangana Vs. Vandana Garg And Ors. Of NCLAT, Chennai Bench

A recent order dated 12th May 2021 by the NCLAT Chennai Bench in Regional Provident Fund Commissioner Vs. Vandana Garg and Ors. [CA (AT) (Ins.) No.50 of 2021] prompted me to have this write-up about the order. At the outset, I am of the humble view that this order requires reconsideration. The RPF Commissioner, Telangana filed the appeal before NCLAT Chennai Bench under the Insolvency and Bankruptcy Code, 2016 to obtain an order for inclusion of total claim of Provident fund dues from...

Takeaways For The Indian Cross-Border Insolvency Regime In Light Of COVID-19

The COVID-19 pandemic is a crisis unlike any other. It has wreaked havoc on the economies of many countries around the world. As COVID-19 spreads, several companies have been negatively affected, and others have come to a halt. The vast number of major corporate downturns in the last two years have involved multiple jurisdictions, rendering foreign insolvencies common, rather than something rare. Cross-border insolvency refers to a scenario in which an insolvent debtor has assets in...