Court grants interim moratorium against personal guarantor under Insolvency & Bankruptcy Code

The court granted the application filed by a financial creditor under Section 95 of the Insolvency & Bankruptcy Code, declaring an interim moratorium against the personal guarantor and appointing a Resolution Professional. Despite providing an opportunity for the guarantor to present grievances, the guarantor's liability in relation to a loan facility availed by the corporate debtor was addressed. The court clarified that the interim moratorium commenced from the application filing date, staying legal actions against the debts. The Insolvency and Bankruptcy Board of India was directed to verify any disciplinary proceedings against the proposed Resolution Professional. The application was listed for IBBI's recommendation under Section 97(2) of the Code.

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Issues:
1. Application filed under Section 95 of the Insolvency & Bankruptcy Code by a financial creditor seeking orders under Sections 96 and 97(1) of the Code.
2. Opportunity provided to the guarantor to represent grievances.
3. Personal guarantor's liability in the context of a resolution plan approved for the corporate debtor.
4. Declaration of interim moratorium against the personal guarantor under Part-III of the Code.
5. Direction sought against IBBI for verification of disciplinary proceedings against the Resolution Professional.
6. Clarification on the commencement of interim moratorium and stay on legal actions against the debts.
7. Listing the application for IBBI's recommendation under Section 97(2) of the Code.

Analysis:
1. The judgment pertains to an application filed by a financial creditor under Section 95 of the Insolvency & Bankruptcy Code, seeking orders under Sections 96 and 97(1) of the Code. The application involves the declaration of interim moratorium against a personal guarantor and the appointment of a Resolution Professional for submission of a report, as per the provisions of the Code.

2. Despite the clear provision for ordering as per the respective sections, an opportunity was provided to the guarantor to present any grievances. The guarantor appeared through counsel but was not present during subsequent proceedings, leading to considerations regarding the guarantor's involvement and representation in the case.

3. The judgment addresses the liability of a personal guarantor, Shagufta Khan, in relation to a loan facility availed by the corporate debtor, M/S. Multiwal Pulp and Board Mills Pvt Ltd. The resolution plan for the corporate debtor has been approved, raising questions about the guarantor's obligations and potential implications in the insolvency resolution process.

4. In line with the provisions of Part-III of the Code, the applicant creditor sought the declaration of an interim moratorium against the personal guarantor from the filing date of the application. This step is crucial in initiating legal actions against the guarantor and ensuring compliance with the insolvency resolution framework for individuals and partnership firms.

5. The adjudicating authority directed the Insolvency and Bankruptcy Board of India (IBBI) to verify any disciplinary proceedings pending against the proposed Resolution Professional. This direction under Section 97(1) of the Code underscores the importance of appointing a qualified and compliant professional to oversee the resolution process effectively.

6. The judgment clarifies that the interim moratorium is deemed to have commenced from the application filing date, staying all legal actions against the debts. This decision ensures the protection of the debtor's interests and prevents creditors from initiating actions that could disrupt the resolution proceedings. Additionally, IBBI is tasked with providing information on any disciplinary proceedings against the Resolution Professional.

7. Lastly, the application is listed for IBBI's recommendation under Section 97(2) of the Code, highlighting the procedural steps involved in the insolvency resolution process. The Registry is directed to communicate the order to IBBI for the necessary actions, emphasizing the coordination and cooperation required among stakeholders in insolvency cases.

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