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2022 (7) TMI 142 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Personal Guarantors to Corporate Debtor - no counter claim filed by respondents despite opportunity provided - Section 94 of Insolvency of Bankruptcy Code, 2016 read with Rule 6(1) of the Insolvency Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtor) Rules, 2019 - HELD THAT - The Resolution Professional recommended to accept the application filed under Section 94 of the IBC, 2016 for initiation of Insolvency Resolution Process in respect of Avasarala Venkateswara Rao, Personal Guarantor to the Corporate Debtor - Despite of opportunity counter not filed by the respondents. Thus the contentions as made in the application remain unrebutted. The report of the Resolution Professional also has been neither questioned nor complied with. In this backdrop, on careful perusal of record, it is found that the petition filed by the personal guarantor for initiation of Insolvency resolution process against her, prima facie, not collusive. There are no reasons to dismiss the Petition. The Petitioner/Debtor herein has proposed the name of Shri Ramachander Rao Bikumalla, Insolvency Professional to act as Resolution Professional, who has given his consent in Form-A - petition admitted - moratorium declared.
Issues:
Initiation of Insolvency Resolution Process against Personal Guarantor under Section 94 of Insolvency and Bankruptcy Code, 2016. Analysis: Issue 1: Initiation of Insolvency Resolution Process The petition was filed under Section 94 of the Insolvency and Bankruptcy Code, 2016 seeking the initiation of the Insolvency Resolution Process against the Personal Guarantor of a company who had defaulted on loans. The Corporate Debtor had defaulted on loan repayments, leading to its liquidation. The financial creditors had invoked the SARFEASI Act and enforced the security interest extended by the Personal Guarantor. The Personal Guarantor, in his petition, admitted to extending personal property as security for the debt and requested the initiation of the Insolvency Resolution Process. The Tribunal granted interim-moratorium and appointed an Interim Resolution Professional, who recommended the admission of the petition. Issue 2: Consideration of Insolvency Resolution Process The main issue before the Tribunal was whether the Insolvency Resolution Process could be ordered against the Personal Guarantor. The Petitioner admitted the default in repayments and had given a personal guarantee for the outstanding debt of the Corporate Debtor. The Resolution Professional recommended accepting the application for initiating the Insolvency Resolution Process. The Tribunal carefully examined the report of the Resolution Professional, finding it unrebutted and not collusive. Despite the absence of a counter from the respondents, the Tribunal found no reason to dismiss the petition. Issue 3: Tribunal's Decision and Orders After considering the facts and the recommendations, the Tribunal admitted the petition filed under Section 94 of the Insolvency and Bankruptcy Code, 2016. Consequently, the Insolvency Resolution Process was initiated against the Personal Guarantor, and a moratorium was declared. The Resolution Professional was directed to publish a public notice inviting claims from creditors. The Resolution Professional was tasked with preparing a list of creditors, developing a repayment plan, and convening a meeting of creditors if necessary. The Tribunal emphasized compliance with the Code of Conduct provided under Section 208 of the IBC, 2016. In conclusion, the Tribunal found merit in the petition for initiating the Insolvency Resolution Process against the Personal Guarantor, and accordingly, issued orders for the commencement of the process, ensuring creditor participation and adherence to the legal framework outlined in the Insolvency and Bankruptcy Code, 2016.
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