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2021 (4) TMI 637 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Contract of Guarantee - bankruptcy process against the Respondents/Personal Guarantors - Section 60 (2) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - The Financial Creditor had filed the petition under Section 7 of IBC against the Corporate Debtor and Corporate Debtor is in Liquidation. The Liquidation proceedings is going on - Now the Financial Creditor has filed application to proceed against the Guarantors to the Corporate Debtor in Liquidation. Hence it is essential to bring here the provisions of Section 95 of IBC Part III, Insolvency Resolution and Bankruptcy for Individuals and Partnership Firms for disposal of this I.A. It is clear that if the FC desires to file an Application Initiating Insolvency Resolution Process against the Guarantors, the FC needs to file proper application under Section 95 of IBC 2016 before this Bench complying the related provisions including 14 days notice, servicing of the Application to the Debtor etc. Application disposed off.
Issues Involved:
1. Initiation of bankruptcy process against Personal Guarantors under Section 60(2) of the Insolvency and Bankruptcy Code (IBC), 2016. 2. Default in repayment of debt by the Corporate Debtor and invocation of personal guarantees. 3. Compliance with Section 95 of IBC for initiating insolvency resolution process against the Guarantors. Issue-wise Detailed Analysis: 1. Initiation of Bankruptcy Process Against Personal Guarantors: The Applicant sought orders to initiate the bankruptcy process against the Respondents, who are the personal guarantors for the credit facilities granted to the Corporate Debtor. The Respondents defaulted in repaying the debt under the Contract of Guarantee, making them liable under Section 60(2) of the Insolvency and Bankruptcy Code, 2016. The Applicant, a scheduled commercial bank, sanctioned credit facilities of INR 10.33 crores to the Corporate Debtor, which were revised and extended until 2016. The Corporate Debtor failed to complete a hotel project due to an earthquake, leading to a revised project cost and subsequent defaults in repayment. 2. Default in Repayment of Debt by the Corporate Debtor and Invocation of Personal Guarantees: The Corporate Debtor defaulted in operating the accounts as per the terms and conditions of the credit facilities, leading to the account being classified as a Non-Performing Asset on November 30, 2016. The Corporate Debtor suffered huge losses and was unable to pay the debts, resulting in the initiation of Corporate Insolvency Resolution Process (CIRP) on 21.12.2018. After failing to reach a resolution, the Corporate Debtor went into liquidation on 06.09.2019. The Applicant invoked the personal guarantees furnished by the Respondents on 08.09.2020, but the Respondents failed to make the payments. Consequently, the Applicant claimed an aggregate sum of ?38,63,02,841/- from the Corporate Debtor and the Respondents, jointly and severally. 3. Compliance with Section 95 of IBC for Initiating Insolvency Resolution Process Against the Guarantors: The Tribunal highlighted the necessity of complying with Section 95 of IBC for initiating insolvency resolution against the Guarantors. Section 95 outlines the procedure for a creditor to apply for initiating an insolvency resolution process, including submitting details and documents related to the debt, evidence of default, and providing a copy of the application to the debtor. The Tribunal emphasized that the Financial Creditor (FC) must file a proper application under Section 95, including a 14-day notice and servicing of the application to the debtor. Order: The Tribunal disposed of the application with observations that the Financial Creditor must comply with the provisions of Section 95 of IBC to initiate insolvency proceedings against the Guarantors. The application was not admitted as it did not meet the necessary procedural requirements under Section 95 of IBC.
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