Case Law Details
Axis Trustee Services Limited Vs Brij Bhushan Singal (Delhi High Court)
Delhi High Court held that the interim moratorium under Section 96 Insolvency and Bankruptcy Code in respect of one of the guarantors would not ipso facto apply against a co-guarantor.
Facts- A Facility Agreement dated 14th April, 2011 was executed between Bhushan Steel and various financial creditors. Pursuant to the said Facility Agreement, the plaintiff was appointed as the security agent vide Security Agent Agreement dated 18th May, 2011 to look after the beneficial interest of the lenders. The repayment obligations of Bhushan Steel were secured by way of a personal guarantee given jointly by the guarantors, being the defendants no.1 and 2.
Bhushan Steel defaulted in repayment of the principal installments under the Facility Agreement from 30th April, 2015 as also on the payment of interest. Upon default, personal guarantee was invoked by the plaintiff acting in his capacity as a security agent vide Invocation Notice dated 8th November, 2017.
CIRP was initiated against Bhushan Steel before the Principal Bench of NCLT vide order dated 26th July, 2017. In the said proceedings, the Financial Creditors filed a claim for the outstanding amounts in terms of the Facility Agreement. An amount of EUR 156,929,177.43 was admitted by the Resolution Professional of Bhushan Steel as the financial debt owed to the Financial Creditor. As a part of the Resolution Plan dated 3rd February, 2018, approved by the NCLT on 15th May, 2018, a total amount of EUR 92,178,068.70 was received by the Financial Creditor on 29th and 30th May, 2018. In terms of Clause 8.7.3(vi) of the approved Resolution Plan, Financial Creditors of Bhushan Steel were given right to recover any unresolved financial debt, owed by the borrower, from the guarantors in terms of the personal guarantee issued by them.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
Author Bio
