The New Indian Express ·
Subhash Chandra effect: IBBI proposes tighter safeguards for personal guarantor insolvency
The Insolvency and Bankruptcy Board of India (IBBI) has proposed tighter safeguards for insolvency proceedings involving personal guarantors, including independent valuation of their assets, scrutiny of transactions that could erode creditors’ recovery and mandatory recording of reasons for approving repayment plans.
The proposals come amid controversy over Essel Group chairman Subhash Chandra’s repayment plan, under which creditors with admitted claims of Rs 22,006.57 crore would receive just Rs 6.25 crore — a 99.97% haircut.
A key proposal is to bar related parties of a personal guarantor from voting on the repayment plan. The IBBI has proposed assigning such creditors a nil voting share and requiring the resolution professional to separately identify them in the list of creditors.