New Delhi, 21 May.
Adv. Jitender Kumar Jain Advocate & Insolvency Professional
Advocate & Insolvency Professional
Supreme Court said promoters or directors who have furnished personal guarantees will still be on the hook if a company is taken to bankruptcy court or goes into liquidation. The ruling clears the way for banks to attach the personal assets of Reliance Group’s Anil Ambani, Dewan Housing Finance Ltd’s Kapil Wadhawan, Videocon Group’s Venugopal Dhoot and Bhushan Power & Steel’s Sanjay Singal among others.
Creditors can initiate insolvency proceedings against such persons in the National Company Law Tribunal (NCLT), the court said Friday, upholding a government notification of November 2019. Ambani, Wadhawan, Dhoot and Singal had challenged proceedings against them under the Insolvency and Bankruptcy Code (IBC) to recover loans for which they had given personal guarantees. They had argued that the resolution process would discharge them of all personal liabilities and guarantees and that the government was wrong to issue a notification that permitted lenders to initiate separate insolvency proceedings against them. Their case was argued by senior advocate Harish N Salve. The banks were represented by attorney general KK Venugopal and solicitor general Tushar Mehta. State Bank of India (SBI) was represe “Approval of a resolution plan does not ipso facto discharge a personal guarantor of his or her liabilities under the contract of guarantee,” said a two-judge bench, comprising justices L Nageswara Rao and Ravindra Bhatt. “Approval of a resolution plan does not ipso facto discharge a personal guarantor of his or her liabilities under the contract of guarantee,” said a two-judge bench, comprising justices L Nageswara Rao and Ravindra Bhatt.
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