Lenders, reeling under the pressure of recovering dues from insolvent companies, have run into another wall. The National Company Law Appellate Tribunal has ruled that lenders cannot invoke guarantees given by promoters while the borrower is facing insolvency proceedings.
State Bank of India was amongst the many lenders that initiated proceedings against guarantors to recover its dues. But the introduction of the Insolvency and Bankruptcy Code put a spoke in the wheels. In one such case, after the insolvency proceedings had started against Veesons Energy Systems, the promoter and director of the company V Ramakrishnan approached the Chennai bench of the National Company Law Tribunal to halt SBIs proceedings initiated against him in …
Read the full article at: https://www.bloombergquint.com/law-and-policy/2018/03/10/guarantees-under-insolvency-law-good-news-for-promoters-bad-news-for-lenders
