By Swaroop George.The Central Government has vide notification dated November 15, 2019, appointed December 1, 2019 as the date from which the provisions of the Insolvency and Bankruptcy Code, 2016 concerning personal guarantors to Corporate Debtors will come into effect. Subsequently several regulations have been notified in this regard. Bringing personal guarantors of Corporate Debtors into the Insolvency framework will have enormous repercussions on fiscal discipline and the recovery of dues by creditors. Till date, the banks have found it difficult to go after the assets of directors of a defaulting company even if they are guarantors because of the long delay associated with legal proceedings. The proposed framework gains significant importance in light of the fact that if the proposed framework for personal guarantors operates with the same efficiency, seen qua the corporate insolvency resolution process, the banks should be able to recover a windfall from defaulting guarantors in a time-bound manner. .The present article is Part I of a two-part series with Part I attempting to present a bird’s eye view of the insolvency process for personal guarantors under the framework of the Insolvency and Bankruptcy Code, 2016, Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Process for Personal Guarantors to Corporate Debtors) Rules, 2019 and the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Regulations, 2019 with Part II examining the bankruptcy process ..I. DEFINITION OF GUARANTOR.Guarantor has been defined under Section 3(f) of Insolvency and Bankruptcy (Application to Adjudicating Authority for Bankruptcy Process for Personal Guarantors to Corporate Debtors) Rules, 2019, notified by the Central Government, as “a debtor who is a personal guarantor to a corporate debtor and in respect of whom guarantee has been invoked by the creditor and remains unpaid in full or part.” Thereby, action under the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the ‘Code’) against a personal guarantor can only be taken if the guarantee has been invoked by the creditor and remains unpaid in full or in part..II. APPLICATION FOR INITIATION OF INSOLVENCY PROCESS.An application for initiation of the insolvency process can be filed by the guarantor itself or through a resolution professional (hereinafter referred to as the ‘RP’) as per the notified form along with payment of application fees of Rs. 2000. The guarantor also has to serve a copy of the application to every financial creditor as well as the corporate debtor for whom the guarantor is a personal guarantor..The creditors have also been given the right to file for initiation of insolvency process themselves or through a RP as per the notified form against the personal guarantor of the corporate debtor. Prior to filing of such application, the creditor has to serve a demand notice in the format prescribed to the guarantor demanding payment of the amount in default within fourteen days from the receipt of the notice and if payment is not made, the creditor may file an application for initiation of the insolvency process in the format prescribed along with fees of Rs. 2000. Notice of the application filed has to be served on the guarantor as well the corporate debtor for whom the guarantor is a personal guarantor..The regulations specify that an applicant may withdraw its application before the same is admitted but after admission, the application can be withdrawn only if a request is made by the applicant and ninety (90) percent of the creditors agree to such withdrawal..III. ADJUDICATION OF APPLICATION.a. INTERIM MORATORIUM.When an application is filed for initiation of insolvency process as stated aforesaid by a creditor or a guarantor; an interim-moratorium shall commence from the date of the application in relation to all the debts and shall cease to have effect on the date of admission of such application and during such period all pending legal actions shall be stayed and creditors shall be forbidden from initiating any legal action or proceedings in respect of any debt with regard to the guarantor..b. APPOINTMENT OF RP.If the application is filed through a resolution professional, the Adjudicating Authority shall, within 7 days of the application, direct the Insolvency and Bankruptcy Board of India (hereinafter referred to as the ‘IBBI’) to confirm that there are no disciplinary proceedings pending against the RP and if so, confirm the appointment of the RP. Where the application has not been filed through the RP, the Adjudicating Authority shall, within 7 days of the application, direct the IBBI to appoint an RP. In this regard, the regulations provide that the IBBI may share with Adjudicating Authority, a panel from which RPs may be appointed as well as a database of the RPs which would inter-alia display information regarding any disciplinary proceedings against the RPs. The Applicant shall have to share a copy of the application to the RP as well as the board within three days of the appointment of the RP..c. REPORT OF RP.The RP as appointed aforesaid will examine the application filed and submit a report to the Adjudicating Authority recommending approval or rejection of the plan within ten days of their appointment. In the examination, the RP shall inter-alia ask the guarantor to prove if the debt has been paid by adducing proof. It is also provided that where the debt for which an application has been filed by a creditor is registered with the information utility, the debtor shall not be entitled to dispute the validity of such debt. The RP may also seek such further information or explanation from the debtor or creditor or any other person in pursuance of his examination of the application. Information sought by the RP has to be provided within 7 days of the request for the information. The RP will also check inter-alia whether the applicant suffers from any disqualification from making such application, if application is in the correct form and with the prescribed accompanying documents, whether the applicant has provided the information and/or explanation, if any sought by the RP and whether the fees for the application have been paid. Thereafter, the RP shall submit a report recording with reasons the recommendation for approval or rejection of the application. A copy of the report shall also be provided to the debtor or creditor..d. ADMISSION/REJECTION OF APPLICATION.The Adjudicating Authority will within 14 days of the submission of the report by the RP, admit or reject the application. Furthermore, in case of admission, the Adjudicating Authority may on the request of the RP issue instructions for the purpose of conducting negotiations between the debtor and creditors and for arriving at a repayment plan. The Adjudicating Authority will provide a copy of the order of admission or rejection to the creditors within 7 days of the order along with a copy of the application as well as the report of the RP. If the application is rejected by the Adjudicating Authority on the basis of the report submitted by the RP or on the ground that the application was made with the intention to defraud the guarantor’s creditors or the resolution professional, the order of the Adjudicating Authority shall record that the creditor is entitled to file for a bankruptcy order under Chapter IV of the Code..IV. POST ADMISSION OF APPLICATION.a. MORATORIUM.The moment an application is admitted, a moratorium will commence with regard to all debts of the guarantor and shall remain in place till 180 days from the date of admission or till the date the Adjudicating Authority passes an order on the repayment plan, whichever is earlier. The guarantor will not be able to alienate its assets during such period nor will any legal actions, by the creditors of the guarantor, be continued i.e. they will be stayed during the moratorium period..b. INVITATION OF CLAIMS.The Adjudicating Authority shall issue a public notice within seven days of the order admitting the application, inviting claims from all creditors which are to be submitted within twenty- one days of such notice. The creditors shall register their claim with the RP along with proof. The creditors may prove their claim on the basis of records available in an information utility or any other documentary evidence which substantiates the existence of claim. If the amount claimed by a creditor is not precise, the RP will make the best estimate of the amount of the claim based on the information available with them. The RP is also entitled to modify the amounts of the claims on the basis of additional information received till the date of approval of repayment plan. Where the debt has been transferred, both the assignee and the transferee shall provide the details of such transfer to the RP. The RP shall, within 30 days of the issuance of notice prepare a list of creditors including their names, amounts claimed, amounts admitted as well as security interest, if any, on the basis of the claims received as well as the application on the basis of which insolvency proceedings were initiated. The aforesaid list shall be made available to the creditors, guarantor, etc.. The RP shall also prepare a statement of affairs of the guarantor which shall include its assets, liabilities etc..c. PREPARATION OF REPAYMENT PLAN.The guarantor shall in consultation with the RP prepare a repayment plan containing a proposal for their creditors to restructure the guarantor’s debts. The repayment plan must include inter-alia justification for preparation of such repayment plan and reasons on the basis of which the creditors may agree upon the plan; and provision for payment of fee to the resolution professional and such other matters as may be specified. The repayment plan may also provide for inter-alia administration or disposal of any funds of the guarantor, satisfaction or modification of any security interest etc..Thereafter, the RP must submit the repayment plan to the Adjudicating Authority within 21 days of the last receipt of claim from the creditors. The RP must also examine the repayment plan and submit a report certifying that the repayment plan is in compliance with the law, has a reasonable chance of being approved and the necessity of summoning a meeting of creditors, if required, and the date, time and venue of such meeting which shall be not less than fourteen days and not more than twenty-eight days from the date of submission of report. If the RP states that such a meeting is not required, then it must provide reasons for the same. Where a meeting of creditors has been dispensed with, the Adjudicating Authority shall pass an order with regard to the repayment plan on the basis of the report prepared by the RP..d. MEETING OF CREDITORS.The RP shall, thereafter, issue a notice, along with necessary documents such as the repayment plan etc., to the entire list of creditors prepared by the RP, calling for the meeting of the creditors at least fourteen days before the date fixed for such meeting. The RP shall also be bound to convene a meeting of creditors whenever a request is made by creditors having thirty- three percent of voting share among the creditors. Unless otherwise provided in the Code, any decision of the creditors shall require approval of more than fifty percent of voting share of the creditors who voted..The RP shall preside over the meeting of the creditors. The quorum required for a meeting of the creditors shall consist of creditors representing at least thirty-three percent of voting share present in person, by proxy or through video conferencing..All the creditors included in the list of creditors shall be entitled to attend the meeting. The creditors on the meeting may approve, reject or modify the repayment plan and their voting share shall be in proportion to the debt owed to the creditor. In case of modification, the RP has to take the consent of the Guarantor. The Code provides that the repayment plan or any modification to the repayment plan has to be approved by a majority of more than three- fourth in value of the creditors present, in person or by proxy, and voting on the resolution in a meeting of the creditors. The RP may adjourn the meeting for sufficient cause for a period not more than 7 days. All creditors may vote as per the voting share assigned to them but a creditor will not be entitled to vote for a debt for an unliquidated amount or if the creditor is not in the list of creditors prepared by the RP or if the creditor is an associate of the guarantor..A secured creditor participating in the meetings of the creditors and voting in relation to the repayment plan shall forfeit his right to enforce the security during the period of the repayment plan in accordance with the terms of the repayment plan. Where a secured creditor does not forfeit his right to enforce security, the creditor will have to submit an affidavit to the RP at the meeting of the creditors stating that the right to vote exercised by the secured creditor is only in respect of the unsecured part of the debt; and the estimated value of the unsecured part of the debt. In case, a secured creditor participates in the voting on the repayment plan by submitting such an affidavit, the secured and unsecured parts of the creditor’s debt shall be treated as separate debts. The permission of the secured creditor has to be obtained if the secured creditor does not participate in the voting on repayment plan but the repayment plan affects the secured creditor’s right to enforce security..e. APPROVAL OF REPAYMENT PLAN BY THE ADJUDICATING AUTHORITY.Subsequent to the voting, the RP will submit a report on the meeting of creditors approving or rejecting the resolution plan to the Adjudicating Authority with a copy to guarantor and the creditors. The Adjudicating Authority will accept or reject the repayment plan on the basis of the reports submitted or it may even send the same back to the creditors if the Adjudicating Authority feels that modifications are necessary..An order approving the repayment plan will make the repayment plan binding on the creditors as well as the debtors. An order rejecting the plan would make the debtor and the creditors entitled to file an application for bankruptcy of the guarantor under Chapter IV..f. IMPLEMENTATION OF REPAYMENT PLAN.The RP shall be responsible for supervising the execution of the repayment plan. Within 14 days of the completion of the repayment plan, the RP has to send a notice to all the parties bound by the repayment plan as well as the Adjudicating Authority intimating the completion of the same as well a report on the execution of the resolution plan..If the guarantor has failed in implementing the repayment plan, the RP shall, within three days of knowledge of such failure, issue a notice to the guarantor asking the guarantor to, within fifteen days of receipt of the notice, address such failure if it can be addressed, or provide a satisfactory explanation for the failure. If the same is done, the RP shall within 7 days report the failure to the creditors. If the Guarantor fails to address the failure or provide a satisfactory explanation, the RP shall approach the Adjudicating Authority for directions if the RP is of the opinion that the failure will affect the implementation of the repayment plan. Furthermore, in the event of non- cooperation of the guarantor at any time, the RP is empowered to file a statement regarding the act of non-cooperation before the Adjudicating Authority for appropriate directions..If the repayment plan is not fully implemented in respect of all persons bound by it within the period as mentioned in the repayment plan, then the RP will submit a report to the Adjudicating Authority detailing inter-alia the reasons for failure of the plan, remaining debts due to creditors etc. On the basis of the report submitted, the Adjudicating Authority may declare that the repayment plan has not been completely implemented and, in such event, the debtor or the creditor, whose claims under repayment plan have not been fully satisfied, shall be entitled to apply for a bankruptcy order under Chapter IV. The RP on the basis of the repayment plan can apply to the Adjudicating Authority for the discharge of the debt of the Guarantor; and accordingly, an order can be passed..Thereby, on the failure of the insolvency process, the creditors have the right to initiate bankruptcy proceedings against the Guarantor just as liquidation is ordered in the case of corporate debtors where the resolution process fails..Swaroop George is an independent advocate practicing at New Delhi.Read Notification:
By Swaroop George.The Central Government has vide notification dated November 15, 2019, appointed December 1, 2019 as the date from which the provisions of the Insolvency and Bankruptcy Code, 2016 concerning personal guarantors to Corporate Debtors will come into effect. Subsequently several regulations have been notified in this regard. Bringing personal guarantors of Corporate Debtors into the Insolvency framework will have enormous repercussions on fiscal discipline and the recovery of dues by creditors. Till date, the banks have found it difficult to go after the assets of directors of a defaulting company even if they are guarantors because of the long delay associated with legal proceedings. The proposed framework gains significant importance in light of the fact that if the proposed framework for personal guarantors operates with the same efficiency, seen qua the corporate insolvency resolution process, the banks should be able to recover a windfall from defaulting guarantors in a time-bound manner. .The present article is Part I of a two-part series with Part I attempting to present a bird’s eye view of the insolvency process for personal guarantors under the framework of the Insolvency and Bankruptcy Code, 2016, Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Process for Personal Guarantors to Corporate Debtors) Rules, 2019 and the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Regulations, 2019 with Part II examining the bankruptcy process ..I. DEFINITION OF GUARANTOR.Guarantor has been defined under Section 3(f) of Insolvency and Bankruptcy (Application to Adjudicating Authority for Bankruptcy Process for Personal Guarantors to Corporate Debtors) Rules, 2019, notified by the Central Government, as “a debtor who is a personal guarantor to a corporate debtor and in respect of whom guarantee has been invoked by the creditor and remains unpaid in full or part.” Thereby, action under the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the ‘Code’) against a personal guarantor can only be taken if the guarantee has been invoked by the creditor and remains unpaid in full or in part..II. APPLICATION FOR INITIATION OF INSOLVENCY PROCESS.An application for initiation of the insolvency process can be filed by the guarantor itself or through a resolution professional (hereinafter referred to as the ‘RP’) as per the notified form along with payment of application fees of Rs. 2000. The guarantor also has to serve a copy of the application to every financial creditor as well as the corporate debtor for whom the guarantor is a personal guarantor..The creditors have also been given the right to file for initiation of insolvency process themselves or through a RP as per the notified form against the personal guarantor of the corporate debtor. Prior to filing of such application, the creditor has to serve a demand notice in the format prescribed to the guarantor demanding payment of the amount in default within fourteen days from the receipt of the notice and if payment is not made, the creditor may file an application for initiation of the insolvency process in the format prescribed along with fees of Rs. 2000. Notice of the application filed has to be served on the guarantor as well the corporate debtor for whom the guarantor is a personal guarantor..The regulations specify that an applicant may withdraw its application before the same is admitted but after admission, the application can be withdrawn only if a request is made by the applicant and ninety (90) percent of the creditors agree to such withdrawal..III. ADJUDICATION OF APPLICATION.a. INTERIM MORATORIUM.When an application is filed for initiation of insolvency process as stated aforesaid by a creditor or a guarantor; an interim-moratorium shall commence from the date of the application in relation to all the debts and shall cease to have effect on the date of admission of such application and during such period all pending legal actions shall be stayed and creditors shall be forbidden from initiating any legal action or proceedings in respect of any debt with regard to the guarantor..b. APPOINTMENT OF RP.If the application is filed through a resolution professional, the Adjudicating Authority shall, within 7 days of the application, direct the Insolvency and Bankruptcy Board of India (hereinafter referred to as the ‘IBBI’) to confirm that there are no disciplinary proceedings pending against the RP and if so, confirm the appointment of the RP. Where the application has not been filed through the RP, the Adjudicating Authority shall, within 7 days of the application, direct the IBBI to appoint an RP. In this regard, the regulations provide that the IBBI may share with Adjudicating Authority, a panel from which RPs may be appointed as well as a database of the RPs which would inter-alia display information regarding any disciplinary proceedings against the RPs. The Applicant shall have to share a copy of the application to the RP as well as the board within three days of the appointment of the RP..c. REPORT OF RP.The RP as appointed aforesaid will examine the application filed and submit a report to the Adjudicating Authority recommending approval or rejection of the plan within ten days of their appointment. In the examination, the RP shall inter-alia ask the guarantor to prove if the debt has been paid by adducing proof. It is also provided that where the debt for which an application has been filed by a creditor is registered with the information utility, the debtor shall not be entitled to dispute the validity of such debt. The RP may also seek such further information or explanation from the debtor or creditor or any other person in pursuance of his examination of the application. Information sought by the RP has to be provided within 7 days of the request for the information. The RP will also check inter-alia whether the applicant suffers from any disqualification from making such application, if application is in the correct form and with the prescribed accompanying documents, whether the applicant has provided the information and/or explanation, if any sought by the RP and whether the fees for the application have been paid. Thereafter, the RP shall submit a report recording with reasons the recommendation for approval or rejection of the application. A copy of the report shall also be provided to the debtor or creditor..d. ADMISSION/REJECTION OF APPLICATION.The Adjudicating Authority will within 14 days of the submission of the report by the RP, admit or reject the application. Furthermore, in case of admission, the Adjudicating Authority may on the request of the RP issue instructions for the purpose of conducting negotiations between the debtor and creditors and for arriving at a repayment plan. The Adjudicating Authority will provide a copy of the order of admission or rejection to the creditors within 7 days of the order along with a copy of the application as well as the report of the RP. If the application is rejected by the Adjudicating Authority on the basis of the report submitted by the RP or on the ground that the application was made with the intention to defraud the guarantor’s creditors or the resolution professional, the order of the Adjudicating Authority shall record that the creditor is entitled to file for a bankruptcy order under Chapter IV of the Code..IV. POST ADMISSION OF APPLICATION.a. MORATORIUM.The moment an application is admitted, a moratorium will commence with regard to all debts of the guarantor and shall remain in place till 180 days from the date of admission or till the date the Adjudicating Authority passes an order on the repayment plan, whichever is earlier. The guarantor will not be able to alienate its assets during such period nor will any legal actions, by the creditors of the guarantor, be continued i.e. they will be stayed during the moratorium period..b. INVITATION OF CLAIMS.The Adjudicating Authority shall issue a public notice within seven days of the order admitting the application, inviting claims from all creditors which are to be submitted within twenty- one days of such notice. The creditors shall register their claim with the RP along with proof. The creditors may prove their claim on the basis of records available in an information utility or any other documentary evidence which substantiates the existence of claim. If the amount claimed by a creditor is not precise, the RP will make the best estimate of the amount of the claim based on the information available with them. The RP is also entitled to modify the amounts of the claims on the basis of additional information received till the date of approval of repayment plan. Where the debt has been transferred, both the assignee and the transferee shall provide the details of such transfer to the RP. The RP shall, within 30 days of the issuance of notice prepare a list of creditors including their names, amounts claimed, amounts admitted as well as security interest, if any, on the basis of the claims received as well as the application on the basis of which insolvency proceedings were initiated. The aforesaid list shall be made available to the creditors, guarantor, etc.. The RP shall also prepare a statement of affairs of the guarantor which shall include its assets, liabilities etc..c. PREPARATION OF REPAYMENT PLAN.The guarantor shall in consultation with the RP prepare a repayment plan containing a proposal for their creditors to restructure the guarantor’s debts. The repayment plan must include inter-alia justification for preparation of such repayment plan and reasons on the basis of which the creditors may agree upon the plan; and provision for payment of fee to the resolution professional and such other matters as may be specified. The repayment plan may also provide for inter-alia administration or disposal of any funds of the guarantor, satisfaction or modification of any security interest etc..Thereafter, the RP must submit the repayment plan to the Adjudicating Authority within 21 days of the last receipt of claim from the creditors. The RP must also examine the repayment plan and submit a report certifying that the repayment plan is in compliance with the law, has a reasonable chance of being approved and the necessity of summoning a meeting of creditors, if required, and the date, time and venue of such meeting which shall be not less than fourteen days and not more than twenty-eight days from the date of submission of report. If the RP states that such a meeting is not required, then it must provide reasons for the same. Where a meeting of creditors has been dispensed with, the Adjudicating Authority shall pass an order with regard to the repayment plan on the basis of the report prepared by the RP..d. MEETING OF CREDITORS.The RP shall, thereafter, issue a notice, along with necessary documents such as the repayment plan etc., to the entire list of creditors prepared by the RP, calling for the meeting of the creditors at least fourteen days before the date fixed for such meeting. The RP shall also be bound to convene a meeting of creditors whenever a request is made by creditors having thirty- three percent of voting share among the creditors. Unless otherwise provided in the Code, any decision of the creditors shall require approval of more than fifty percent of voting share of the creditors who voted..The RP shall preside over the meeting of the creditors. The quorum required for a meeting of the creditors shall consist of creditors representing at least thirty-three percent of voting share present in person, by proxy or through video conferencing..All the creditors included in the list of creditors shall be entitled to attend the meeting. The creditors on the meeting may approve, reject or modify the repayment plan and their voting share shall be in proportion to the debt owed to the creditor. In case of modification, the RP has to take the consent of the Guarantor. The Code provides that the repayment plan or any modification to the repayment plan has to be approved by a majority of more than three- fourth in value of the creditors present, in person or by proxy, and voting on the resolution in a meeting of the creditors. The RP may adjourn the meeting for sufficient cause for a period not more than 7 days. All creditors may vote as per the voting share assigned to them but a creditor will not be entitled to vote for a debt for an unliquidated amount or if the creditor is not in the list of creditors prepared by the RP or if the creditor is an associate of the guarantor..A secured creditor participating in the meetings of the creditors and voting in relation to the repayment plan shall forfeit his right to enforce the security during the period of the repayment plan in accordance with the terms of the repayment plan. Where a secured creditor does not forfeit his right to enforce security, the creditor will have to submit an affidavit to the RP at the meeting of the creditors stating that the right to vote exercised by the secured creditor is only in respect of the unsecured part of the debt; and the estimated value of the unsecured part of the debt. In case, a secured creditor participates in the voting on the repayment plan by submitting such an affidavit, the secured and unsecured parts of the creditor’s debt shall be treated as separate debts. The permission of the secured creditor has to be obtained if the secured creditor does not participate in the voting on repayment plan but the repayment plan affects the secured creditor’s right to enforce security..e. APPROVAL OF REPAYMENT PLAN BY THE ADJUDICATING AUTHORITY.Subsequent to the voting, the RP will submit a report on the meeting of creditors approving or rejecting the resolution plan to the Adjudicating Authority with a copy to guarantor and the creditors. The Adjudicating Authority will accept or reject the repayment plan on the basis of the reports submitted or it may even send the same back to the creditors if the Adjudicating Authority feels that modifications are necessary..An order approving the repayment plan will make the repayment plan binding on the creditors as well as the debtors. An order rejecting the plan would make the debtor and the creditors entitled to file an application for bankruptcy of the guarantor under Chapter IV..f. IMPLEMENTATION OF REPAYMENT PLAN.The RP shall be responsible for supervising the execution of the repayment plan. Within 14 days of the completion of the repayment plan, the RP has to send a notice to all the parties bound by the repayment plan as well as the Adjudicating Authority intimating the completion of the same as well a report on the execution of the resolution plan..If the guarantor has failed in implementing the repayment plan, the RP shall, within three days of knowledge of such failure, issue a notice to the guarantor asking the guarantor to, within fifteen days of receipt of the notice, address such failure if it can be addressed, or provide a satisfactory explanation for the failure. If the same is done, the RP shall within 7 days report the failure to the creditors. If the Guarantor fails to address the failure or provide a satisfactory explanation, the RP shall approach the Adjudicating Authority for directions if the RP is of the opinion that the failure will affect the implementation of the repayment plan. Furthermore, in the event of non- cooperation of the guarantor at any time, the RP is empowered to file a statement regarding the act of non-cooperation before the Adjudicating Authority for appropriate directions..If the repayment plan is not fully implemented in respect of all persons bound by it within the period as mentioned in the repayment plan, then the RP will submit a report to the Adjudicating Authority detailing inter-alia the reasons for failure of the plan, remaining debts due to creditors etc. On the basis of the report submitted, the Adjudicating Authority may declare that the repayment plan has not been completely implemented and, in such event, the debtor or the creditor, whose claims under repayment plan have not been fully satisfied, shall be entitled to apply for a bankruptcy order under Chapter IV. The RP on the basis of the repayment plan can apply to the Adjudicating Authority for the discharge of the debt of the Guarantor; and accordingly, an order can be passed..Thereby, on the failure of the insolvency process, the creditors have the right to initiate bankruptcy proceedings against the Guarantor just as liquidation is ordered in the case of corporate debtors where the resolution process fails..Swaroop George is an independent advocate practicing at New Delhi.Read Notification: