In the regime of insolvency and bankruptcy law in India, the question of when and how the liabilities of Personal Guarantors crystallize has become increasingly significant. Recent judgments by the National Company Law Appellate Tribunal (“NCLAT”) in Shantanu Jagdish Prakash v. State Bank of India & Ors. (Company Appeal (AT)(Ins.) 1609 of 2024), Mavjibhai Nagarbhai Patel v. State Bank of India & Anr. (Company Appeal (AT) (Ins.) Nos. 1702, 1711 & 1712 of 2024), Asha Basantilal Surana v. State Bank of India & Ors. (Company Appeal (AT) (Ins.) No.

In a significant decision with far-reaching consequences for the financial and insolvency ecosystem, the Kerala High Court (“High Court”) in J.C. Flowers Asset Reconstruction Pvt. Ltd. v. State of Kerala adjudicated upon the levy of stamp duty on assignment agreements executed under Section 5 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI Act”).

The Insolvency and Bankruptcy Code, 2016 (IBC) governs insolvency proceedings for individuals and partnership firms in India. This comprehensive legislation consolidates and amends laws pertaining to the reorganization and insolvency resolution of corporate persons, partnership firms, and individuals.

In the case of BRS Ventures Investments Ltd. vs. SREI Infrastructure Finance Ltd. & Anr. the Hon’ble Supreme Court of India (“Supreme Court”) held that simultaneous insolvency proceedings against a borrower and a corporate guarantor can be initiated for the same debt and default; and that assets of a subsidiary do not form part of the corporate insolvency resolution process (“CIRP”) of its holding company.

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