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Informative
Only 2% personal guarantee claims recovered under IBC so far: IBBI
Update / Judgement Date
20 May 2024
Source
Author
Team — WCP Legal Desk
Reading Time
1 min read
Insolvency & Bankruptcy Code
According to the latest data from the Insolvency and Bankruptcy Board of India (IBBI), creditors have managed to recover only 2.16 per cent, amounting to Rs 102.78 crore, of their admitted claims from personal guarantors under the Insolvency and Bankruptcy Code (IBC). Experts view the resolution of personal guarantors' insolvency as an opportunity to balance debtor relief with creditor recovery, but express concerns over the low recovery rate, indicating a systemic flaw. \r
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Out of 383 admitted personal guarantors' insolvency processes, 124 have been closed, with only 26 repayment plans approved. While the provision for personal guarantors' insolvency resolution was enabled by the IBBI in November 2019, challenges such as interlinked agreements between bankers, companies, and personal guarantors initially arose. \r
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Amendments to the IBBI provisions regarding mandatory committee of creditors meetings in personal guarantors' insolvency cases have been made, following a Supreme Court ruling last year upholding the constitutionality of key IBC provisions, including initiating insolvency against personal guarantors.
