Insolvency proceedings against personal guarantors- A missed opportunity?

Published On: 22/04/2020

Authors:

After a lapse of almost 3 (three) years, Ministry of Corporate Affairs (the 'MCA') finally issued a notification dated November 15, 2019 (the 'Notification') that renders insolvency and bankruptcy proceedings against personal guarantors to be governed by the Insolvency and Bankruptcy Code, 2016 (the 'Code'). The said notification stipulated December 01, 2019 as the date for the provisions to come into force (the 'Commencement Date'). The Notification brought a wave of joy amongst the creditors as the expectation rested on greater accountability of the personal guarantors with maximization of value to the creditors. INDUSLAW's Mohit Chadha, Vaishnavi Rao and Swati Mittal discuss how in light of the judgment titled 'Vishnu Kumar v. Piramal Enterprises' ('Piramal Enterprise Case') passed by the Honorable National Company Law Appellate Tribunal ('NCLAT') and other procedural shortcomings, it might perhaps still be a distant dream to reach the pockets of personal guarantors in a manner akin to the intent of the legislature.