Table of Contents
What is Supreme Court ruling on creditors?
Six months after it transferred all the cases related to personal insolvency to itself, the Supreme Court has ruled that creditors can proceed against promoters of defaulting companies to recover debt if such promoters have given personal guarantees to secure funds.
Are personal guarantors liable under IBC?
As per Section 128 of the ICA, “The liability of the surety is coextensive with that of the principal debtor unless the contract otherwise provides it.” The provisions relating to personal guarantors are provided under Part III of the Insolvency and Bankruptcy Code, 2016 (“IBC”).
Is section 243 of IBC notified?
The Supreme Court noted that Section 243, which provides for the repeal of the personal insolvency laws has not been notified. It was noted that Section 238 gives the IBC an overriding effect over the other prevailing enactments and may be this is the rationale for not notifying Section 243.
What is personal insolvency?
A Personal Insolvency Arrangement (PIA) is an insolvency solution for people with unsecured and secured debts. It is a formal agreement with creditors that will write off some unsecured debt and restructure any remaining secured debt, while keeping the person in their home where possible.
What is individual insolvency?
An individual is insolvent if they are unable to pay their debts. Sections 267 and 268 of the Insolvency Act 1986 set out circumstances in which an individual is deemed unable to pay their debts if one of their creditors presents a bankruptcy petition.
Why is a personal guarantee?
Providing a personal guarantee means that if the business becomes unable to repay the debt, the individual assumes personal responsibility for the balance. Personal guarantees provide an extra level of protection to credit issuers who want to make sure they will be repaid.
What is debt under IBC?
Section 3(11) defines ‘debt’ to mean “a liability or obligation in respect of a claim which is due from any person and includes a financial debt and operational debt.” The word ‘claim’ has been defined in Page 15 15 Section 3(6) to mean inter alia “a right to payment, whether or not such right is reduced to judgment.
What does personal guarantor mean?
A guarantor is a financial term describing an individual who promises to pay a borrower’s debt in the event that the borrower defaults on their loan obligation. Guarantors pledge their own assets as collateral against the loans.
What is a corporate guarantor?
The difference between corporate and personal guarantors is quite simple: a personal guarantor is an individual who agrees to take on the obligations of a debt for a debtor, whereas a corporate guarantor is a corporation that takes on payment responsibilities.
Is Provincial insolvency Act still valid?
(1) The Presidency Towns Insolvency Act, 1909 and the Provincial Insolvency Act, 1920 are hereby repealed.