DRT

Initiation of Bankruptcy process against a Personal Guarantor – KEB Hana Bank Vs. Mr. Rohit Nath -DRT Chennai Bench (DRT-II)

From the Section 121 of IBC it is clear that an application for bankruptcy of a debtor may be made by a creditor individually or jointly with other creditors or by a debtor, to the Adjudicating Authority under certain circumstances. In the case on hand the secured creditor has filed the application for bankruptcy under Rule 7(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019 to initiate Insolvency Resolution Process as against the Persona guarantor to the Corporate debtors. Further, it is not in dispute that the earlier proceedings initiated by the secured creditor had ended up with this Tribunal rejecting the Resolution Plan submitted by the Resolution Professional under Section 114(1) of the Insolvency and Bankruptcy Code, 2016. Therefore, as this Tribunal being the Adjudicating Authority had rejected the repayment plan under Section 114, the debtor and the creditors are entitled to file an application for bankruptcy under Chapter IV and therefore the present application of the applicant is maintainable and the secured creditor is entitled to file the application for bankruptcy under Section 123 of the Code.

Initiation of Bankruptcy process against a Personal Guarantor – KEB Hana Bank Vs. Mr. Rohit Nath -DRT Chennai Bench (DRT-II) Read Post »

If Secured Financial Creditors have assigned their entire debt from the Borrower to the Successful Resolution Applicant under a Resolution Plan, they cannot invoke the Personal Guarantees after approval of the Resolution Plan – State Bank of India Vs. Mr. Prashant S. Ruia – DRT Ahmedabad Bench (DRT-1)

It was argued on behalf of Personal Guarantors that as the entire debt of the principal borrower came to be assigned to the ArcelorMittal, no debt could be said to be due on the books of account of the Bank. In other words, the argument is that no debt exists as on date so far as the Applicant – Bank is concerned. The entire debt owed by the principal borrower to the Bank stood completely extinguished in light of the resolution plan. In the absence of any debt remaining to be paid to the Bank, the question of enforcing the personal guarantees in relation thereto would not survive.
The Tribunal held that a conjoint reading of the clauses of the Deed of Guarantee and the approved Resolution Plan reveals that the Secured Financial Creditors have assigned their entire debt from the Borrower (i.e.ESIL) to the resolution applicant (i.e.Arcelor) under the Resolution Plan and have also accepted the amounts paid to them by Arcelor in discharge of the total debt owed by the ESIL to such Financial Creditors. This factual matrix invariably leads to the singular conclusion that the debt owed by the ESIL to the said Financial Creditors stands fully and finally satisfied.

If Secured Financial Creditors have assigned their entire debt from the Borrower to the Successful Resolution Applicant under a Resolution Plan, they cannot invoke the Personal Guarantees after approval of the Resolution Plan – State Bank of India Vs. Mr. Prashant S. Ruia – DRT Ahmedabad Bench (DRT-1) Read Post »

The word used “may” under Section 99(2) cannot be construed as mandatory one and it gives only discretionary however to the Resolution professional – KEB Hana Bank Vs. Mr. Rohit Nath – DRT Chennai Bench (DRT-II)

By reading section 99(2), it is crystal clear that the resolution professional may require the debtor to furnish the details about the repayment and there is nothing to suggest that it is made mandatory to the resolution professional to call for from the debtor the details of repayment. The word used “may” cannot be construed as mandatory one and it gives only discretionary however to the Resolution professional. In view of section 99(2), where does not create a mandatory obligation on the RO, the contention of the respondent is that non- compliance of section 99(2) vitiates the proceedings is unfounded.

The word used “may” under Section 99(2) cannot be construed as mandatory one and it gives only discretionary however to the Resolution professional – KEB Hana Bank Vs. Mr. Rohit Nath – DRT Chennai Bench (DRT-II) Read Post »

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