Personal Guarantors default on debt repayment, Tribunal grants Insolvency Resolution, mandates compliance

The Tribunal found the Personal Guarantors in default for failing to repay debts to the Creditor Bank. Consequently, the petitions filed by State Bank of India under Section 95(1) of the Insolvency and Bankruptcy Code were allowed. The Tribunal initiated interim-moratorium under Section 96(1)(a) of the IBC, appointed an Insolvency Resolution Professional, and directed specific actions to be taken. Compliance reports were mandated, and the Resolution Professional was given responsibilities and timelines to follow as per the I & B Code, 2016.

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Issues Involved:
Petitions filed by State Bank of India under Section 95(1) of the Insolvency and Bankruptcy Code, 2016 against Personal Guarantors of Corporate Debtor M/s. Orma Marble Palace Private Limited.

Detailed Analysis:
1. Background and Facts: The Corporate Debtor received credit facilities from the State Bank of Travancore, which later merged with State Bank of India. The Personal Guarantors executed Deeds of Guarantees for the credit facilities. Due to default, the Loan Accounts became NPA on 28.05.2018.

2. Demand and Recovery Efforts: Creditors issued a demand notice under Section 13(2) of the SARFAESI Act, followed by filing an Original Application before the Debts Recovery Tribunal for recovery. Despite an OTS proposal, the outstanding dues remained unpaid.

3. Legal Provisions: Section 95 of the I & B Code, 2016 was quoted, emphasizing the creditor's right to initiate insolvency resolution process. The Petitioners complied with the necessary requirements under Section 95(4).

4. Findings and Conclusion: The Tribunal found a default on the part of the Personal Guarantors for not fulfilling debts owed to the Creditor Bank. Consequently, the Tribunal allowed the petitions and issued directions, including the commencement of interim-moratorium under Section 96(1)(a) of the IBC.

5. Orders Issued: The Tribunal appointed an Insolvency Resolution Professional, initiated the interim-moratorium period, and directed the Resolution Professional to carry out specified functions. An advance payment was ordered to be made to the Resolution Professional, and further proceedings were scheduled for a later date.

6. Final Directives: The Registry was instructed to communicate the order to all relevant parties, and compliance reports were to be submitted. The Resolution Professional was given specific responsibilities and timelines to adhere to as per the provisions of the I & B Code, 2016.

This comprehensive analysis outlines the legal proceedings, findings, and directives issued by the Tribunal in response to the petitions filed by the State Bank of India against the Personal Guarantors of the Corporate Debtor M/s. Orma Marble Palace Private Limited under the Insolvency and Bankruptcy Code, 2016.

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