On Thursday, the Supreme Court dismissed the request of the State Bank of India (SBI) to request the stay of a stay granted by the Delhi High Court in bankruptcy proceedings against Reliance Communications (RCom) chairman Anil Ambani.
Ambani had previously objected to SBI invoking personal guarantees under the 2019 Corporate Debtors Regulations.
In late August, the Delhi High Court suspended the insolvency resolution process (IRP) against Anil Ambani in connection with the recovery of Rs 1.2 billion loans granted by the SBI to his two companies. Ambani had provided personal guarantees for the SBI loans of Rs 565 million and Rs 635 million to RCom and Reliance Infratel (RITL), respectively, in August 2016.
The order came after new rules were applied against personal guarantors made on loans of over 1 billion rupees or more by developers. Until November, the IBC only covered Indian companies and not developers. In its petition to the SC, SBI said that several promoters have transferred to the Delhi High Court after their personal guarantees have been invoked.
Ambani, in his statement before the Delhi High Court, challenged the constitutionality of the IBBI Regulation (Insolvency Resolution Process for Personal Guarantors of Corporate Debtors) of 2019.
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While the high court is examining the personal guarantee issue, the NCLT will decide the fate of the Rs 45 billion quotas, including Chinese banks, while the matter is still pending.
The National Court of Company Law (NCLT) on August 20 had ordered the initiation of insolvency proceedings against Ambani under the personal guarantee clause of the bankruptcy law. He had ordered the appointment of a resolution professional and asked SBI to take the necessary action.
The NCLT had also said that both RCom and RITL defaulted on and around January 2017. The accounts were retrospectively reported as delinquent with effect from August 26, 2016, even before the loan agreements were signed.
On September 7, the SBI also invoked the personal guarantees of Sanjay Singal, promoter of Bhushan Power & Steel, as the company defaulted on loans worth 48 billion rupees. Resolution of the company’s debt is nearing completion at the NCLT, with JSW Steel declared the highest bidder with a bid of Rs 19.7 billion. The matter is currently pending in the SC after JSW Steel requested its intervention not to hold the firm responsible for the criminal acts of the previous developer.
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