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The Supreme Court decision will be a great relief to banks in debt recovery
New Delhi: The Supreme Court has passed a landmark judgment on companies defaulting on bank loans. The court has also cleared the way for the bank to claim the personal assets of such businessmen for debt recovery.
The Supreme Court has rejected all petitions challenging the Centre's 2019 circular. The Supreme Court has given the green light to file a personal bankruptcy case against the promoters of debt-ridden companies. In short, if a company goes into debt, the bank can also claim the personal assets of the debt-ridden industrialist to recover such debts.
The country has a long list of debt-ridden industrialists. The new notification was issued in 2019 by the central government amending the Insolvency and Bankruptcy Code as the recovery was not happening as expected. But about 75 petitions were filed against it in different high courts. The Center had sought a joint hearing in the Supreme Court on all the petitions. Justice accordingly. Nageshwar Rao and Justice. Ravindra Bhatt's bench has given this important verdict.
The result is a big shock for entrepreneurs like Anil Ambani, Bhushan Power and Steel's Sanjay Singhal, Videocon's Venugopal Dhoot, Dewan Housing Finance's Wadhwan. The case of defaulting on loans of various banks is pending against these industrialists. The struggle that banks had to face before this decision to recover their debts will now be lessened, as the fear of a heel on personal assets will be on the borrowers. Therefore, it is expected that the borrowers will be more responsible in respect of bank loans.
Often, big business banks offer such personal guarantees to make it easier to obtain. However, it was not easy for the banks to get the right to personal property for recovery after the debt sank. It is said that this important decision of the Supreme Court will change all the equations about debt in the industry.
New Delhi: The Supreme Court has passed a landmark judgment on companies defaulting on bank loans. The court has also cleared the way for the bank to claim the personal assets of such businessmen for debt recovery.
The Supreme Court has rejected all petitions challenging the Centre's 2019 circular. The Supreme Court has given the green light to file a personal bankruptcy case against the promoters of debt-ridden companies. In short, if a company goes into debt, the bank can also claim the personal assets of the debt-ridden industrialist to recover such debts.
The country has a long list of debt-ridden industrialists. The new notification was issued in 2019 by the central government amending the Insolvency and Bankruptcy Code as the recovery was not happening as expected. But about 75 petitions were filed against it in different high courts. The Center had sought a joint hearing in the Supreme Court on all the petitions. Justice accordingly. Nageshwar Rao and Justice. Ravindra Bhatt's bench has given this important verdict.
The result is a big shock for entrepreneurs like Anil Ambani, Bhushan Power and Steel's Sanjay Singhal, Videocon's Venugopal Dhoot, Dewan Housing Finance's Wadhwan. The case of defaulting on loans of various banks is pending against these industrialists. The struggle that banks had to face before this decision to recover their debts will now be lessened, as the fear of a heel on personal assets will be on the borrowers. Therefore, it is expected that the borrowers will be more responsible in respect of bank loans.
Often, big business banks offer such personal guarantees to make it easier to obtain. However, it was not easy for the banks to get the right to personal property for recovery after the debt sank. It is said that this important decision of the Supreme Court will change all the equations about debt in the industry.
The Supreme Court has rejected all petitions challenging the Centre's 2019 circular. The Supreme Court has given the green light to file a personal bankruptcy case against the promoters of debt-ridden companies. In short, if a company goes into debt, the bank can also claim the personal assets of the debt-ridden industrialist to recover such debts.
The country has a long list of debt-ridden industrialists. The new notification was issued in 2019 by the central government amending the Insolvency and Bankruptcy Code as the recovery was not happening as expected. But about 75 petitions were filed against it in different high courts. The Center had sought a joint hearing in the Supreme Court on all the petitions. Justice accordingly. Nageshwar Rao and Justice. Ravindra Bhatt's bench has given this important verdict.
The result is a big shock for entrepreneurs like Anil Ambani, Bhushan Power and Steel's Sanjay Singhal, Videocon's Venugopal Dhoot, Dewan Housing Finance's Wadhwan. The case of defaulting on loans of various banks is pending against these industrialists. The struggle that banks had to face before this decision to recover their debts will now be lessened, as the fear of a heel on personal assets will be on the borrowers. Therefore, it is expected that the borrowers will be more responsible in respect of bank loans.
Often, big business banks offer such personal guarantees to make it easier to obtain. However, it was not easy for the banks to get the right to personal property for recovery after the debt sank. It is said that this important decision of the Supreme Court will change all the equations about debt in the industry.
