Incidentally, provisions for starting bankruptcy proceedings against individuals have not yet been notified under IBC.“However, it is made clear that order of ‘Moratorium’ will be applicable only to the proceedings against the ‘Corporate Debtor’ and the ‘Personal Guarantor’, if pending before any court of law/tribunal or authority but the order of ‘Moratorium’ will not be applicable for filing application for triggering ‘Corporate Insolvency Resolution Process’ under Sections 7 or 9 or 10 of the Insolvency and Bankruptcy Code, 2016, against the ‘Guarantor’ or the ‘Personal Guarantor’ under Section 60(2),” NCLAT has said in its latest ruling.
“If ‘Corporate Insolvency Resolution Process’ has been initiated against the ‘Corporate Debtor’, the ‘Insolvency and Bankruptcy Resolution Process’ against the ‘Personal Guarantor’ can be filed under section 60(2) before the same adjudicating authority (National Company Law Tribunal) and not before the Debt Recovery Tribunal (DRT),” NCLAT chairperson S J Mukhopadhaya and member, judicial, Bansi Lal Bhat said.
State Bank of India (SBI) had moved the NCLAT to initiate the insolvency proceedings against the personal guarantors of Brilliant Alloys for a loan amounting to nearly Rs 2.5 crore after the NCLT’s Chennai bench ruled that it should not proceed against the personal guarantors till the moratorium period comes to an end. “If the guarantor is an individual (natural person), creditors can very well bring a bankruptcy application against such guarantor. But as of now individual bankruptcy provisions have not yet been brought into force though the provisions were amended in November 2017,” said K S Ravichandran of KSR&Co, Company Secretaries. “Once they are notified, the jurisdiction for individual guarantors also will be with the same NCLT that has jurisdiction over the corporate debtor,” he stated.
“In case the guarantee has been offered by another company or LLP (limited liability partnership), (qualifying as corporate guarantee), moratorium against the corporate debtor will not bar the creditor from initiating corporate insolvency resolution process,” he explained.