Indiabulls Housing Finance renews its personal insolvency plea against Zee’s Subhash Chandra, citing unresolved disputes related to guarantees for Vivek Infracon. The case, argued at the National Company Law Tribunal, is set for a subsequent hearing on March 4.
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On Wednesday, Indiabulls Housing Finance (IBHF) has reignited the personal insolvency plea against Zee Entertainment Enterprises Limited (ZEEL) chairman emeritus, Subhash Chandra, concerning guarantees provided to Vivek Infracon. During a session at the National Company Law Tribunal (NCLT) on February 28, IBHF’s lawyer, Sumesh Dhawan, passionately presented the case, anticipating a subsequent hearing on March 4.
Currently under NCLT scrutiny is the report submitted by Chandra’s resolution professional, Raj Kamal Sarogi.
Despite Chandra’s claim of settling the dispute, IBHF contends that no resolution has materialized even after several months, compelling them to revive the personal insolvency plea. The plea, filed under the Insolvency and Bankruptcy Code, 2016 (IBC), originated in 2022 when a Rs 170 crore loan extended to Vivek Infracon by IBHF turned into non-performing assets.
Chandra initially argued that the NCLT lacked jurisdiction over an individual’s insolvency. On May 30, 2022, the tribunal asserted its authority, appointing a resolution professional to assess Indiabulls’ application. However, legal complexities arose as provisions related to personal guarantees under IBC faced Supreme Court challenges. The apex court, in November 2023, upheld the validity of these provisions, giving companies the green light to revive cases against personal guarantors. Seizing this opportunity, IBHF resurrected the plea.
A personal guarantor, as defined, assures a lender in writing that a company will repay its loan or credit facility. In cases where the company defaults, the lender has the right to seize the personal assets of the guarantor. In 2019, the government incorporated new IBC provisions, empowering creditors or resolution professionals to pursue applications under IBC to enforce personal guarantees.
For instance, if a company is in insolvency resolution, and its promoter provided a personal guarantee to lenders, they, either independently or through the resolution professional, can file an insolvency plea against the promoter. NCLT will then appoint another resolution professional to represent the personal guarantor, evaluating factors like loan nature, default amount, and the guarantor’s role. Based on the report, NCLT will decide whether the personal guarantor enters insolvency, potentially attaching their assets for loan recovery.
