The National Company Law Tribunal (NCLT) Chennai Bench has restrained State Bank of India from selling the assets of the personal guarantor of Veesons Energy Systems during the moratorium period granted under the insolvency process.
The NCLT had ordered initiation of insolvency proceedings against the firm and State Bank of India, which accounted for 70% of the company’s total debt of ₹100 crore, also submitted its claim under the process.
Against the SBI loan, the promoter and managing director V. Ramakrishnan had given personal guarantee. In normal course of business, banks invoke personal guarantee if the loans are not paid. During the insolvency process, SBI tried to the sell the assets of the promoter given as personal guarantee. Mr. Ramakrishnan moved the NCLT against the move.
The NCLT ruled in favour of Mr. Ramakrishnan and said in case a guarantor’s personal property is sold to realise part of the dues from the company, it would create a charge on assets of the company and also amount to encumbering the properties of the corporate debtor (Veesons Energy).
The Insolvency and Bankruptcy Code of 2016 states that when a company is going through an insolvency proceedings, transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein is prohibited.
“The move will end up violating the provisions of the code during the moratorium period said, C.S. Dhanapal, Senior Partner, S. Dhanapal and Associates.
