A working committee of insolvency professionals had submitted recommendations on such changes to IBBI a month ago.The committee felt that such action will enable quicker aggregation of assets of defaulters and guarantors. The IBBI governing board will discuss the recommendations and is likely to approve them.Insolvency and Bankruptcy Board chairman MS Sahoo declined to comment on the agenda of Friday’s meeting.Once the regulations are finalised by IBBI and the government notifies them, lenders will be able to directly move against personal guarantors of companies facing insolvency proceedings. The lenders can start attaching financial assets and seize properties, and make these a part of the final settlement.Current rules don’t permit such action. “In most of the large default cases filed with NCLT, the promoters are the guarantors,” said Manoj Kumar, partner at Corporate Professionals. “Individual insolvency would be another blow to truant promoters seeking the escape route.”To illustrate this, let’s assume a company is facing NCLT proceedings.

Source: Economic Times November 29, 2017 18:38 UTC