Tribunal Orders CIRP & Liquidation Against Personal Guarantors: Ex-parte Order Issued

The Tribunal granted the application filed under Section 95(1) of the Insolvency and Bankruptcy Code, 2016 against Personal Guarantors of Corporate Debtors under Liquidation. Orders for Commencement of Corporate Insolvency Resolution Process (CIRP) and subsequent Liquidation were issued for both Corporate Debtors. The Respondent was notified but did not participate in the proceedings, leading to an ex-parte order. An Interim Resolution Professional was appointed, and the Financial Creditor was directed to provide the IRP with the necessary documents for preparing a report under Section 99 of the IBC, 2016. Further proceedings were scheduled for the submission of the IRP's Report.

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Issues:
1. Application filed under Section 95(1) of the Insolvency and Bankruptcy Code, 2016 against Personal Guarantors of Corporate Debtors under Liquidation.
2. Verification of demand, execution of Deed of Guarantee, and default date for initiating proceedings.
3. Notice sent to Respondent, ex-parte order, and principles of natural justice.
4. Appointment of Interim Resolution Professional and preparation of Report under Section 99 of IBC, 2016.

Analysis:
1. The application was filed under Section 95(1) of the Insolvency and Bankruptcy Code, 2016 against the Personal Guarantors of two Corporate Debtors under Liquidation. Orders for Commencement of CIRP and subsequent Liquidation were passed for both Corporate Debtors by the Tribunal on specific dates.

2. The State Bank of India, Coimbatore Stressed Assets Management Branch, represented by Assistant General Manager Mr. Murugan, filed the application. The demand on the personal guarantor was made on 17.11.2021, and the Deeds of Guarantee executed on specific dates were enclosed with the application. The Demand Notice under Rule 7(1) of the Insolvency and Bankruptcy Rules, 2019, along with the Record of Default, supported the initiation of proceedings based on the default date of 17.04.2016.

3. The Respondent was duly notified, but no representation was made during the hearing. Consequently, the Respondent was set ex-parte, and no application was filed to set aside this order. The Tribunal referred to the principles of natural justice and a judgment by the NCLAT regarding the process to be followed after filing an application under Section 95 of the IBC, 2016.

4. The Financial Creditor recommended an Interim Resolution Professional (IRP) for the case. The Tribunal directed the Financial Creditor to serve a copy of the application to the IRP for preparing the required Report under Section 99 of the IBC, 2016. The Resolution Professional was instructed to examine the application and submit a report within the specified timeframe. The matter was scheduled for further proceedings on a specific date for the filing of the IRP's Report.

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