Insolvency Resolution Process initiated for Personal Guarantor to Corporate Debtor

The National Company Law Tribunal, Principal Bench, New Delhi, admitted an application for the Insolvency Resolution Process against a Personal Guarantor to a Corporate Debtor. The Tribunal appointed a Resolution Professional to manage the process, following State Bank of India's submission of the Guarantor's default in repayment and satisfaction of statutory requirements. Despite objections raised by the Guarantor, including lack of contract privity and discrepancies in debt amount claimed, the Tribunal declared a moratorium, directed the Resolution Professional to prepare a repayment plan, and called for creditors to register claims within a specified timeline.

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Issues:
Application for Insolvency Resolution Process against Personal Guarantor to Corporate Debtor.

Analysis:
1. The application was filed by State Bank of India under Section 95 r/w. Rule 7(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantor to Corporate Debtor) Rules, 2019, seeking initiation of the Insolvency Resolution Process against the Personal Guarantor who stood for the outstanding debt of the Corporate Debtor.

2. The Tribunal appointed a Resolution Professional to file a report under Section 99 of the Code, which was duly submitted by the Resolution Professional.

3. State Bank of India submitted that the Corporate Debtor failed to maintain financial discipline, leading to classification as Non-Performing Assets, and issued a legal Demand Notice to the Principal Borrower and Guarantors for repayment of the outstanding amount.

4. The Guarantor raised objections, including lack of Privity of contract with the Bank, time-barred demand notice, and discrepancies in the outstanding debt amount claimed.

5. The Resolution Professional recommended admission of the application under Section 95 of IBC, citing default in repayment by the Guarantor and satisfaction of the statutory requirements.

6. The Tribunal admitted the application, initiating the Insolvency Resolution Process against the Guarantor, declaring a moratorium, and directing the Resolution Professional to publish a public notice for creditors to register their claims within the specified timeline.

7. The Resolution Professional was directed to prepare a report on the repayment plan with details for the creditors and the debtor, ensuring compliance with the Code of conduct.

This detailed analysis covers the legal proceedings and key points of the judgment delivered by the National Company Law Tribunal, Principal Bench, New Delhi.

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