2022 (8) TMI 502 - Tri - Insolvency and Bankruptcy

Personal Guarantor's Insolvency Resolution Process Approved with Interim Moratorium

The Tribunal granted the application for initiating the Insolvency Resolution Process against the Personal Guarantor who defaulted on repaying the loan ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - Personal Guarantors to Corporate Debtor - existence of debt and dispute or not - HELD THAT:- The relevant documents annexed with the application and the affidavits of service placed on record have been examined. It is observed that prima facie, the respondent has committed default in making repayment of the loan amount of Rs. 2,59,70,606/- for which the respondent has given personal guarantee to the applicant financial creditor on the behalf of the corporate debtor. The demand notice has been served to the respondent/personal guarantor Ms. Ritu Bhatia by registered post, which was returned with the remark 'none resides'. It is further observed that vide the order dated 23.08.2021 of this Tribunal, notice was published in the Business Standard, Delhi Edition on 05.07.2022 as and by way of substituted service. It is made known to everyone that from the date of filing this Application (08.03.2021) by the Applicant/Financial Creditor, the interim-moratorium commences as is stipulated under Section 96(1)(a) of the Code, 2016 in relation to all the debts of the personal guarantor and shall cease to have effect on the date of admission of this Application and during the interim-moratorium period the following are prohibited. Petition admitted - List the matter on 23.09.2022. Issues involved:Initiating the Insolvency Resolution Process against a Personal Guarantor to a Corporate Debtor under the Insolvency and Bankruptcy Code, 2016.Analysis:1. Application for Insolvency Resolution Process: The application was filed by the Financial Creditor under Section 95(1) of the Code, 2016 to initiate the Insolvency Resolution Process against the Personal Guarantor who had provided a guarantee for a loan facility extended to the Corporate Debtor. The Financial Creditor invoked the personal guarantee due to non-realization of the sanctioned facility by the Corporate Debtor.2. Default by the Personal Guarantor: The Tribunal observed that the Personal Guarantor had committed default in repaying the loan amount for which the guarantee was provided. The demand notice issued to the Personal Guarantor was returned unserved, indicating a lack of response from the guarantor.3. Legal Proceedings and Notice: The Tribunal noted that the demand notice had been served to the Personal Guarantor through registered post, which was returned with the remark 'none resides.' Subsequently, a notice was published in a newspaper for substituted service as per the Tribunal's order.4. Interim Moratorium and Appointment of Resolution Professional: Referring to a judgment by the NCLAT, the Tribunal emphasized the need to give limited notice to the Personal Guarantor to secure their presence during the interim moratorium period. The Tribunal appointed a Resolution Professional to oversee the Insolvency Resolution Process and directed the professional to submit recommendations within the stipulated time frame.5. Prohibited Actions during Interim Moratorium: The Tribunal highlighted that during the interim moratorium period, legal actions or proceedings related to the debts of the Personal Guarantor were stayed, and creditors were prohibited from initiating legal actions or proceedings.6. Further Directions and Compliance: The Resolution Professional was directed to exercise all powers under Section 99 of the Code and submit a report to the Tribunal. The Applicant and their Counsel were instructed to serve copies of the Order to the Resolution Professional for compliance.In conclusion, the Tribunal's judgment focused on initiating the Insolvency Resolution Process against the Personal Guarantor, ensuring compliance with legal procedures, and appointing a Resolution Professional to oversee the process in accordance with the provisions of the Insolvency and Bankruptcy Code, 2016.