480 insolvency cases filed so far against personal guarantors: Insolvency regulator
The provisions for insolvency resolution and bankruptcy relating to personal guarantors to corporate debtors came into force in December 2019. Ever since, 480 applications have been filed for initiation of insolvency proceedings against personal guarantors as of 30 September 2021, according to the quarterly newsletter released by the Insolvency and Bankruptcy Board of India (IBBI).
Out of 80 such applications, 37 applications have been filed by the debtors themselves and 443 have been filed by creditors under Section 94 and 95, respectively.
Total debt involved in these cases amounts to Rs 68,814 crore of which the guarantee on Rs 61,745 crore was given by personal guarantors.
As many as 464 applications are being heard in NCLT and 16 of them being heard in Debt recovery tribunals (DRTs).
Anil Syal, the chief executive officer and promoter of Flywheel Logistics Private Limited (FLPL), was one of the first personal guarantors against whom personal insolvency proceedings was initiated. The New Delhi bench of the National Company Law Tribunal (NCLT) admitted an insolvency application against Syal on 28 October 2020.
Syal was personal guarantor for a loan of Rs 40 crore from Union Bank of India to Flywheel Logistics.
Besides committing defaults in making payment of Rs 40 crore to Union Bank of India, Syal had also failed to make payment of Rs 2.75 crore to one Rangoli International, Rs 2.65 crore to various individuals, apart from payment against various personal and credit card loans.
In one of the high-profile cases, State Bank of India (SBI) had tried initiating individual insolvency proceedings against Anil Ambani. This after the loan accounts of Reliance Communication (Rs 565 crore) and Reliance Infratel Ltd (Rs 635 crore) tuned NPAs. Anil Ambani had given personal guarantee against these loans.
The Supreme Court in September 2020 had dismissed SBI’s plea against initiating individual insolvency proceedings.
Also Read: Trials and tribulations of personal insolvency regime in India
