The Insolvency and Bankruptcy Code, 2016 foresees Insolvency Proceedings, restructuring, and insolvency resolution of corporate persons, partnership firms and individuals in a time-bound manner. The main purpose of Insolvency and Bankruptcy Code is to maximize the value of assets of such persons, to promote entrepreneurship, to increase the availability of credit and stabilizing the interests of all stakeholders.
These rules describe the process and forms of making applications for initiating insolvency resolution and bankruptcy proceedings against personal guarantors to Corporate Debtors, withdrawal of such applications, inviting claims from the creditors, etc.
(i) The Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Regulations, 2019, specifying the particulars of the insolvency resolution process for personal guarantors to Corporate Debtors, including: (a) Eligibility to act as a resolution professional for an insolvency resolution process (b) Manner of receipt and verification of claims of creditors (c) Manner of preparation of the list of creditors, holding the meetings of the creditors and voting in the meeting; (d) Contents of the repayment plan (e) The procedure of filing of an application for issuance of the discharge order, etc. (ii) The Insolvency and Bankruptcy Board of India (Bankruptcy Process for Personal Guarantors to Corporate Debtors) Regulations, 2019 specifying the particulars of the bankruptcy procedure for personal guarantors to corporate debtors, including:
(a) Eligibility to act as a bankruptcy trustee for the bankruptcy process; (b) Manner of preparation of reports and timeline for submission by the bankruptcy trustee; (c) Manner of collating claims and formation of a committee of creditors, holding meetings of the committee and voting in the meeting; and (d) Manner of realization of assets of the bankrupt and its distribution, etc. Thus, on the failure of the insolvency process, the creditors have the right to start bankruptcy proceedings against the Guarantor just as liquidation is ordered in the case of corporate debtors where the resolution process fails.
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