2022 (8) TMI 174 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Personal Guarantors to Corporate Debtor - HELD THAT - The present application has been filed in the prescribed proforma. Moreover, the compliance affidavit pursuant to order dated 07.03.2022 has been incorporated vide Diary No. 00487/2 dated 17.03.2022, whereby applicant stating that in terms of provision of Section 94(4) of I B Code, 2016 the applicant is not an undischarged bankrupt or not undergoing a fresh start process or not undergoing an insolvency resolution process or not undergoing a bankruptcy process. Also, in terms of the provisions of 94(5), no application has been admitted against the applicant during the period of 12 months preceding the date of submission of the present application under Section 94(1) of I B Code, 2016. After perusal of the report submitted by Resolution Professional, there does not appear any request of the Resolution Professional for issuance of instruction for the purpose of conducting negotiations between the debtors and the creditors for arriving at the repayment plan. Therefore, based on the reasons recorded in the report submitted by the Resolution Professional, the application i.e. CP(IB) No. 183/Chd/Hry/2021 filed under the provisions of Section 94 of IBC, 2016 is hereby admitted under Section 100 of the IBC, 2016. The Insolvency Resolution Process is initiated against the Applicant/Debtor and the moratorium is declared, which begins with the date of admission of the application and shall cease to have effect at the end of the period of 180 days, as provided under Section 101 of IBC, 2016. Petition allowed.

Issues Involved:
1. Initiation of Insolvency Resolution Process (IR Process) against the Personal Guarantor under Section 94 of the Insolvency and Bankruptcy Code, 2016.
2. Compliance with procedural requirements under the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtor) Rules, 2019.
3. Appointment and actions of the Resolution Professional.
4. Admission of the application and initiation of the moratorium period.
5. Public notice and claims registration process.
6. Preparation and submission of the repayment plan.
7. Conducting and reporting the meeting of creditors.

Detailed Analysis:

1. Initiation of Insolvency Resolution Process (IR Process):
The petition was filed by the Personal Guarantor under Section 94 of the Insolvency and Bankruptcy Code, 2016, seeking an order for the initiation of the IR Process against himself, who had extended a personal guarantee to the financial creditor, Central Bank of India, for a loan availed by the Corporate Debtor.

2. Compliance with Procedural Requirements:
The application was filed in the prescribed proforma, and the compliance affidavit was incorporated, stating that the applicant was not an undischarged bankrupt and no application had been admitted against him in the preceding 12 months. The Adjudicating Authority issued a limited notice to the creditors, and the Resolution Professional was appointed.

3. Appointment and Actions of the Resolution Professional:
The Resolution Professional sought detailed information from the Personal Guarantor, including personal assets, liabilities, and various financial documents. The Personal Guarantor provided the requested information, including details of guarantees extended, net worth certificate, income tax returns, and bank statements.

4. Admission of the Application and Initiation of Moratorium Period:
Based on the Resolution Professional's report, which recommended the admission of the application, the Adjudicating Authority admitted the application under Section 100 of the IBC, 2016. The IR Process was initiated, and a moratorium was declared, staying any pending legal actions or proceedings and prohibiting the transfer or disposal of the debtor's assets.

5. Public Notice and Claims Registration Process:
The Resolution Professional was directed to publish a public notice inviting claims from all creditors within 7 days. The notice was to be published in widely circulated newspapers and the necessary information provided under Section 102(2) of IBC, 2016.

6. Preparation and Submission of the Repayment Plan:
The debtor was required to prepare a repayment plan in consultation with the Resolution Professional, including provisions for the payment of the Resolution Professional's fee. The plan, along with the Resolution Professional's report, was to be submitted to the Adjudicating Authority within 21 days from the last date of submission of claims.

7. Conducting and Reporting the Meeting of Creditors:
If the Resolution Professional recommended summoning a meeting of creditors, it was to be conducted as per Sections 108 to 111 of IBC, 2016. The Resolution Professional was to prepare and submit a report of the meeting, detailing the repayment plan, to the Adjudicating Authority.

Conclusion:
The application filed under Section 94(1) of the IBC, 2016, was allowed and admitted, initiating the Insolvency Resolution Process against the Personal Guarantor. The Resolution Professional was directed to perform his duties in compliance with the code of conduct under Section 208 of the IBC, 2016.

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