26th October 2020

Confidant Classes

A Premier Judicial Service Coaching

Insolvency proceedings against Anil Ambani

The Mumbai National Company Law Court (NCLT) authorized the opening of insolvency proceedings against Anil Ambani after two companies promoted by him failed to pay the quotas of Rs 1200 million they had borrowed at the State Bank. of India (SBI). The insolvency process will begin against Ambani for giving a personal guarantee against the loans given to his companies.

Is this a personal insolvency case against Anil Ambani?

  • The case is important because it is one of the first insolvency cases against an executive of a large group of companies.
  • In 2015, Reliance Communications Limited (RCom) and Reliance Infratel Limited (RITL) promoted by Anil Ambani approached SBI’s strategic project finance business unit and requested two loans of Rs 565 crore and Rs 635 crore respectively.
  • Anil Ambani provided a personal guarantee equivalent to the loan amount of 1200 rupees, which was disbursed in 2016.
  • By not repaying the credit granted to RCom and RITL, State Bank invoked the personal guarantee provided by Ambani.
  • However, before the same could be applied, both companies were declared insolvent in an application filed by Ericsson India Private Limited.
  • Since the companies were admitted to bankruptcy, all of the company’s loans and assets, as well as the promoters, have been placed under moratorium.
  • The Insolvency and Bankruptcy Code (IBC) also did not contain provisions relating to personal insolvency.
  • The rules for opening personal insolvency were notified last year in December.

What is the personal insolvency process?

  • As the NCLT authorized the appointment of an Interim Resolution Professional (IRP) in this matter, SBI will now approach the IRP with a list of assets provided by Ambani as personal collateral when their companies applied for the loan.
  • In the case of banks that provide loans with personal collateral, the guarantor must provide a list of assets whose value is equal to the total amount of the loan granted. In the event of non-payment of these assets, these guarantees can be invoked.
  • For example, if Ambani’s assets are worth Rs 2,000 crore and the bank’s receivables are worth Rs 1,200 crore, it is possible that the bank will recover all of its payments.
  • However, if Ambani claims to have personal wealth less than the value of the personal guarantee he gave him, the banks will have to be happy with what they get.

What happens to Anil Ambani once the insolvency process is finalized?

  • Similar to commercial insolvency proceedings, an entrepreneur is free to start with a clean slate after the end of personal insolvency proceedings against him.
  • Lenders will only be able to recover their down payments from the security deposited or personal property belonging to that person.
  • However, all or part of the goods mentioned in the list provided at the time of sanctioning of the loan, even if they are transferred to another person, can also be seized and sold.
  • Ambani will be free to manage other businesses which are not insolvent or which can pay their debts and obligations on time.
Judiciary FAQ’s Download

Judiciary FAQ’s Download

WWW.CONFIDANTCLASSES.IN-1Download
Read More
Daily NEWS Summary: 23.10.2020

Daily NEWS Summary: 23.10.2020

Shivraj Singh Chouhan is the latest to promise free Covid-19 vaccine Ahead of the 28-seat Assembly by-elections in Madhya Pradesh,…
Read More
Daily NEWS Summary: 22.10.2020

Daily NEWS Summary: 22.10.2020

BJP promises free Covid-19 vaccine in Bihar investigation manifesto On Thursday, the BJP released its manifesto for the Assembly elections…
Read More
Daily NEWS Summary: 21.10.2020

Daily NEWS Summary: 21.10.2020

Rajasthan could become second state to reject agricultural laws Rajasthan is likely to become the second state ruled by Congress…
Read More
Daily NEWS Summary: 20.10.2020

Daily NEWS Summary: 20.10.2020

Punjab adopts its own three agricultural laws The Punjab Legislature today unanimously adopted three bills to repeal the three new…
Read More
Daily NEWS Summary: 19.10.2020

Daily NEWS Summary: 19.10.2020

Visitors will not be allowed inside the Durga Puja pandals in West Bengal – Calcutta High Court: Visitors will not…
Read More
Daily NEWS Summary: 18.10.2020

Daily NEWS Summary: 18.10.2020

India passed peak of COVID-19, Ministry of Science panel said India passed peak of COVID-19 in September and if current…
Read More
Daily NEWS Summary: 17.10.2020

Daily NEWS Summary: 17.10.2020

Take advantage of the experience of holding mass elections to plan the rapid delivery of the vaccine, said the Prime…
Read More
Cinemas reopened

Cinemas reopened

After being closed for nearly seven months, cinemas outside containment zones in various Indian states reopened on October 15. But…
Read More
Amy Coney Barrett used the term “sexual preference”

Amy Coney Barrett used the term “sexual preference”

During her confirmation hearings on Capitol Hill earlier this week, US Supreme Court nominee Amy Coney Barrett sparked considerable outrage…
Read More
Daily NEWS Summary: 16.10.2020

Daily NEWS Summary: 16.10.2020

Supreme Court Appoints Former Judge Madan Lokur As One-Man Group To Prevent Stubble-Burning Smog Former Supreme Court Justice Madan B….
Read More
error

Enjoy this? Please spread the word :)