Subhash Chandra Enters Insolvency On Indiabulls' Plea
IBC allows creditors or a company's resolution professional to enforce personal guarantees through insolvency proceedings.
The National Company Law Tribunal admitted Subhash Chandra into insolvency on Monday on the plea filed by Indiabulls Housing Finance Ltd. in 2022. As a result, all litigation against him will be halted and he will not be able to dispose of his assets. A resolution professional will now manage creditor claims for repayment.
IBHF petitioned for personal insolvency against Chandra after a Rs 170-crore loan to Vivek Infracon Pvt. defaulted. On May 30, 2022, the NCLT confirmed its jurisdiction to adjudicate and designated a resolution professional to assess Indiabulls' request. However, the proceedings stalled when certain 2019 provisions, pertaining to personal guarantees under the Insolvency and Bankruptcy Code, faced a legal challenge in the Supreme Court.
As per the rules under challenge, IBC allowed creditors or a company's resolution professional to enforce personal guarantees through insolvency proceedings. This meant that if a company in insolvency has a promoter who guaranteed loans, creditors can independently or through the resolution professional file for insolvency against the promoter.
The Supreme Court's decision in November 2023 validates these amendments, allowing companies like IBHF to reinitiate legal proceedings against personal guarantors.