Personal Property of Guarantors Cannot Be Transferred During CIRP of Corporate Debtor: NCLAT
Live LawThe National Company Law Appellate Tribunal has held that the personal property of the Guarantors could not be transferred in the Corporate Insolvency Resolution Process of the Corporate Debtor, even though, their properties were mortgaged with the Financial Creditors.Officiating Chairperson AIS Cheema and Technical Member Alok Srivastava held under Section 61 of IBC that the Resolution. The National Company Law Appellate Tribunal has held that the personal property of the Guarantors could not be transferred in the Corporate Insolvency Resolution Process of the Corporate Debtor, even though, their properties were mortgaged with the Financial Creditors. The legal question that arose before the Tribunal was whether a CIRP against Corporate Debtor could be treated as Resolution Process against Personal Guarantors, so as to transfer personal properties of the Personal Guarantors in CIRP of Corporate Debtor. Courts' Findings: The Tribunal noted that the impugned Resolution Plan was approved on November 13, 2019 and Section 2 and provisions of Part-III of IBC came to be notified on November 15, 2019 enforcing Part III of IBC to limited extent of making it possible to enforce Resolution relating to personal Guarantors of the Corporate Debtor.