Whether moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 applicable to the property of personal guarantor?
Yes, the moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 (" Code") will not only be applicable to the property of a corporate debtor but also to the property of the personal guarantor.
February 28, 2018 in the case of State Bank of India v/s Mr. V. Ramakrishnan and Veesons Energy Systems Private Limited.
WHETHER SECTION 14 OF THE INSOLVENCY AND BANKRUPTCY CODE, 2016, WHICH PROVIDES FOR A MORATORIUM FOR THE LIMITED PERIOD MENTIONED IN THE CODE, ON ADMISSION OF AN INSOLVENCY PETITION, WOULD APPLY TO A PERSONAL GUARANTOR OF A CORPORATE DEBTOR?
The Supreme Court observed that protection of moratorium under Section 14 is applicable only to corporate debtor and not personal guarantor. The Court observed that Section 60(1) of the Code, which provided that the adjudicating authority in relation to the insolvency resolution and liquidation of both corporate debtors and personal guarantors shall be the NCLT.
State Bank of India vs. V. Ramakrishnan and Ors. (14.08.2018 - SC) : MANU/SC/0849/2018
Whether the property not owned by the Corporate Debtor comes within the protective umbrella of "moratorium" under section 14 of the Code?
Plain language of the section is that on the commencement of the insolvency process the 'Moratorium" shall be declared for prohibiting any action to recover or enforce any security interest created by the Corporate Debtor in respect of "its" property. The property not owned by the corporate debtor does not come within the protective umbrella of moratorium under section 14 of the Code.
Alpha & Omega Diagnostics (India) Ltd. Vs. Asset Reconstruction Company of India Ltd. & ORS. NCLAT MANU/NL/0092/2017