Initiation Of CIRP Not A Pre-Requisite To Initiate IRP Against The Personal Guarantor: NCLAT

[27 January 2022] The NCLAT in a Bench comprising of Justice Ashok Bhushan (Judicial Member) and Dr. Alok Srivastava (Technical Member) in State Bank of India v. Mahendra Kumar Jajodia held that initiation of Corporate Insolvency Resolution Process is not a pre-requisite to initiate Insolvency Resolution Process (IRP) against the Personal Guarantor of the Corporate Debtor. The Appellant, State Bank of India, who is the Financial Creditor of the Corporate Debtor filed an appeal against the order of the Adjudicating Authority- NCLT Kolkata Bench, which refused to entertain an application under Section 95(1) of the Insolvency and Bankruptcy Code, 2016 for initiation of IRP against the Respondent/Personal Guarantor, on the ground that the same is pre-mature as CIRP against the Corporate Debtor had not yet been initiated.