Insolvency and Bankruptcy Code 2016 to apply to personal guarantors to corporate debtors. Wilful defaulter, NPA Account holders, disqualified directors not eligible to be resolution applicant.
The Government has notified the Insolvency and Bankruptcy Code (Amendment) Act, 2017 retrospectively and it shall be deemed to have come into force on the 23rd day of November, 2017.
Persons not eligible to be resolution applicant
A new section 29A has been inserted specifying persons not eligible to be resolution applicant. As per the newly added section, the following persons shall not be eligible to submit a resolution plan:
(a) An undischarged insolvent;
(b) A wilful defaulter
(c) Holder of a loan account classified as non-performing asset (NPA)
(d) Those convicted for any offence punishable with imprisonment for two years or more
(e) Disqualified to act as a director under the Companies Act, 2013
(f) Prohibited by the Securities and Exchange Board of India (SEBI) from trading in securities or accessing the securities markets;
(g) Promoter/connected corporate debtor in which a preferential transaction, undervalued transaction, extortionate credit transaction or fraudulent transaction has taken place and in respect of which an order has been made by the Adjudicating Authority under the Code.
(h) One who has executed an enforceable guarantee in favour of a creditor in respect of a corporate debtor against which an application for insolvency resolution made by such creditor has been admitted under the Code.
(i) The one who has been subject to any disability, corresponding to clauses (a) to (h) above, under any law in a jurisdiction outside India; or
(j) Connected person not eligible under clauses (a) to (i).
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