Case Law Details
Lalit Kumar Jain Vs Union of India (Supreme Court)
1. Supreme Court on Friday upheld provisions of the Insolvency and Bankruptcy Code (IBC) allowing lenders to pursue insolvency proceedings against promoter guarantors of companies facing Corporate Insolvency Resolution Process.
2. A bench of Justices L Nageswara Rao and Ravindra Bhat delivered the judgement. The ruling would allow banks to file personal bankruptcies against guarantors, even when the insolvency of firms is yet to be resolved.
3. During the hearing, Justice Ravindra Bhat said that,”The approval of resolution plan relating to the corporate debtor does not operate so as to discharge the liabilities of the personal guarantor. Writ petitions dismissed without cost.
4. In 2019, the Centre introduced a new provision in Insolvency and Bankruptcy Code, 2016, that allowed the banks to move an application for initiation of insolvency against personal guarantors to corporate debtors. The intention was to hold the promoters of the defaulter companies who had furnished personal guarantees for the loans taken by their firms, liable.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
Author Bio
