Tribunal grants insolvency application against personal guarantor for outstanding debt under Insolvency and Bankruptcy Code

The tribunal allowed the application under Section 95 of the Insolvency and Bankruptcy Code against the personal guarantor for the outstanding debt owed by the corporate debtor. It found a default by the guarantor in fulfilling the debt, appointed a resolution professional, and declared the commencement of an interim moratorium to protect the guarantor's assets. The judgment ensured compliance with the Code's provisions and addressed the issues effectively.

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Issues:
- Application under Section 95 of the Insolvency and Bankruptcy Code, 2016 against a personal guarantor.
- Default in fulfilling debt owed to the corporate debtor.
- Appointment of a resolution professional.
- Commencement of interim moratorium.

Analysis:
1. Application under Section 95 of the Insolvency and Bankruptcy Code, 2016 against a personal guarantor:
The State Bank of India filed an application under Section 95 of the Insolvency and Bankruptcy Code against a personal guarantor, Mrs. Asha Mittal, for the outstanding debt of Rupees 209,61,09,614 owed by the corporate debtor, M/s. Hitech Grain Processing Pvt. Ltd. The application sought to initiate insolvency resolution process against the personal guarantor, as authorized by the financial creditor, State Bank of India.

2. Default in fulfilling debt owed to the corporate debtor:
The tribunal found that there was a default on the part of the personal guarantor, Mrs. Asha Mittal, in fulfilling the debt owed to the corporate debtor, M/s. Hitech Grain Processing Pvt. Ltd. The deed of guarantee dated 06.06.2017 specified the obligations of the guarantor, and the tribunal concluded that the guarantor had not met these obligations, leading to the initiation of insolvency proceedings against her.

3. Appointment of a resolution professional:
The tribunal approved the appointment of Mr. Sunil Kumar Kabra as the resolution professional in the insolvency resolution process of Mrs. Asha Mittal. Mr. Kabra was proposed by the applicant and was confirmed by the bench for this critical role. The resolution professional was directed to exercise all powers as per Section 99 of the Insolvency and Bankruptcy Code and provide recommendations with reasons for acceptance or rejection of the application within the specified time frame.

4. Commencement of interim moratorium:
Upon allowing the application under Section 95 of the Code, the tribunal declared the commencement of an interim moratorium as per Section 96(1) of the Code from the date of filing. This moratorium stayed any pending legal actions or proceedings related to the debts of the personal guarantor and prevented creditors from initiating new legal actions during this period. The appointment of a resolution professional was deemed critical during this phase to safeguard the assets of the personal guarantor and ensure compliance with the provisions of the Code.

In conclusion, the tribunal's judgment addressed the issues of default by the personal guarantor, the appointment of a resolution professional, and the commencement of an interim moratorium in a comprehensive manner, ensuring adherence to the legal framework of the Insolvency and Bankruptcy Code, 2016.

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