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2021 (10) TMI 591 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Personal Guarantors to Corporate Debtors - existence of debt and dispute or not - HELD THAT - It is pertinent to mention that as per part-III of Form-C, the total debt from the personal guarantor, by way of personal guarantee given to M/s. Bank of India, including interest as on 31.01.2021, amounts to ₹ 113,83,35,138.07/-. It is made known to everyone that on the date of filing this Application by the Applicant/Creditor, the interim-moratorium commences, as stipulated under Section 96(1)(a), in relation to all the debts of the personal guarantor and shall cease to have effect on the date of admission of this Application. List the matter for further proceedings in the case on 17.11.2021.
Issues:
Application filed by Financial Creditor under Section 95 of the Insolvency and Bankruptcy Code, 2016 against Personal Guarantor of Corporate Debtor. Outstanding debt due from Corporate Debtor. Failure of Corporate Debtor to adhere to terms of Working Capital Consortium Agreement. Admission of CIRP proceedings against Corporate Debtor. Liquidation of Corporate Debtor. Demand Notice issued to Personal Guarantor. Interim-moratorium period and its implications. Appointment of Resolution Professional. Powers and duties of Resolution Professional. Next hearing date. Analysis: The judgment pertains to an application filed by the Financial Creditor, M/s. Bank of India, under Section 95 of the Insolvency and Bankruptcy Code, 2016, against the Personal Guarantor of the Corporate Debtor, 'M/s. Shree Raj Mahal Jewellers Private Limited', seeking to initiate the Insolvency Resolution Process due to an outstanding debt of ?113.83 crores as of 31.01.2021. The Financial Creditor appointed a Resolution Professional to file the application in accordance with the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019. The Counsel for the Applicant highlighted that the Corporate Debtor availed loans from a consortium of lenders, including Bank of India, for business purposes, and failed to maintain financial discipline, leading to the account being declared as an NPA. Subsequently, CIRP proceedings were initiated against the Corporate Debtor, and upon the failure to approve a Resolution Plan, liquidation was ordered, with a Liquidator appointed for the Corporate Debtor. A Demand Notice was issued by the Financial Creditor to the Personal Guarantor in accordance with the rules, indicating the unpaid debt due from the Corporate Debtor. The total debt from the Personal Guarantor to the Financial Creditor, including interest as of 31.01.2021, amounted to ?113.83 crores. The judgment also outlined the implications of the interim-moratorium period, during which legal actions related to the debt were stayed, and creditors were prohibited from initiating legal proceedings. The Resolution Professional appointed in the matter was tasked with exercising powers under the Code, making recommendations for the acceptance or rejection of the application, and providing a report to the Applicant/Creditor. The Resolution Professional was directed to serve the order and relevant documents for compliance, with the matter listed for further proceedings on a specified date. In conclusion, the judgment addressed various legal aspects related to insolvency proceedings, debt recovery from Personal Guarantors, the role and responsibilities of the Resolution Professional, and the procedural steps to be followed in the case.
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