2022 (1) TMI 565 - Tri - Insolvency and Bankruptcy

Initiation of CIRP Proceedings against the Personal Guarantor - Personal Guarantor has defaulted in payment of the dues within the statutory period of 14 days from the service of the demand notice - application has been filed through the Resolution Professional - HELD THAT - It is clear that from the date of filing of this application i.e., 23.09.2021 by the Applicant, Interim Moratorium commences as stipulated under Section 96(1) of the Code in relation to all the debts of the Personal Guarantor. During the Interim Moratorium period (i) any pending legal action or proceedings in respect of any debt shall be deemed to have been stayed; and (ii) the creditors of the debtor shall not initiate any legal action or proceedings in respect of any debt. As per Section 96(3) of the Code, the provisions of sub-section 96(1) shall not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator. The Applicant is directed to serve the copy of this order along with copy of the Application and documents immediately on the Resolution Professional and the Insolvency and Bankruptcy Board of India and file proof of service including dispatch and delivery thereof. Also, a copy of this Order and Application shall be served on the Personal Guarantor for limited purpose of presence on the next date of hearing and to be informed about the commencement of moratorium. The Personal Guarantor is directed to cooperate with the Resolution Professional appointed hereunder and provide all relevant information to the concerned Resolution Professional. The Resolution Professional is directed to exercise all the powers as enumerated under Section 99 of the Code read with Rules made thereunder - List the matter for further proceedings in this case on 31.01.2022.

Summary

Issues:
Initiation of Insolvency Resolution Process against a Personal Guarantor under the Insolvency and Bankruptcy Code, 2016.

Analysis:
The State Bank of India filed an application seeking to initiate the Insolvency Resolution Process against a Personal Guarantor who had guaranteed loans availed by a Corporate Debtor. The Corporate Debtor had defaulted on its credit facility, leading to the need for resolution. The application was filed under Section 95 of the Insolvency and Bankruptcy Code, 2016, along with Rule 7(2) of the Insolvency and Bankruptcy Rules, 2019. The total debt from the Personal Guarantor was stated to be approximately ?34,78,76,322. A Demand Notice was sent to the Personal Guarantor, and the application highlighted the default in payment by the Personal Guarantor within the statutory period.

The Tribunal acknowledged the initiation of the Interim Moratorium period as per Section 96(1) of the Code, which stays any legal actions or proceedings related to the debts of the Personal Guarantor. The appointment of a Resolution Professional, in this case, Smt. Reshma Mittal, was confirmed to safeguard the assets of the Personal Guarantor and manage the resolution process effectively. The Resolution Professional was directed to serve relevant parties with copies of the order and application, ensuring cooperation from the Personal Guarantor and the provision of necessary financial information.

Furthermore, the Resolution Professional was instructed to exercise powers under Section 99 of the Code and make recommendations on the application within the stipulated time frame. The Resolution Professional was required to provide a copy of the report to the Creditor once filed before the Authority. The matter was listed for further proceedings on a specified date, emphasizing the procedural steps to be followed in the Insolvency Resolution Process against the Personal Guarantor.