Image Source : PIXABAY The promoters are likely to soon start paying the huge dues of the banks.
The Supreme Court’s recent order is likely to have a strong impact on the promoters of companies who have not yet paid huge bank dues. After the top court’s direction, the risk of loss of personal property of these promoters has increased. It is believed that such promoters will soon start paying the huge dues of banks.
As per a report by the Financial Express, banks were earlier asked by the promoters to recover their dues by selling the company’s assets, which is a time-consuming process. But now the top court’s order allows banks to immediately recover their dues by selling the personal properties of the promoters.
What can banks do after SC’s order
According to reports, promoters of companies, under insolvency proceedings, are expected to settle their pending dues with banks, fearing loss of their personal assets. The apex court’s decision said that banks can now sell residential properties, personal assets like shares and bonds, gold and jewellery of these promoters. Experts believe that this decision will force such promoters and directors to voluntarily come forward to repay the dues, which will promote recovery from bad loans.
The Supreme Court last week upheld the constitutionality of Insolvency and Bankruptcy Code (IBC) provisions on personal guarantors in the insolvency resolution process, bringing relief to banks, Financial Express reported citing a senior lawyer of the Supreme Court. This decision is expected to have a far-reaching impact on many high-profile cases. The banks are engaged in a legal battle with several high-profile names like Anil Ambani, Venugopal Dhoot, Kishore Biyani, Kapil and Dheeraj Wadhawan to recover their dues.
Cases related to personal guarantees linked to corporate loans
According to the Insolvency and Bankruptcy Board of India, as many as 2,289 cases related to personal guarantees linked to corporate loans, worth Rs 1.64 trillion, have been filed in the National Company Law Tribunal. Personal guarantors are now forced to get involved in negotiations and settlements with creditors. Experts say that promoters are not left with many options as the court’s decision has removed ambiguity from this issue. The top court’s directives can lead to a quick settlement between the individual guarantors and the banks, as it clarifies the legal position and can prevent the guarantors from starting a protracted legal battle, thereby expediting the resolution of the outstanding loan.
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