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Supreme Court upholds validity of key provisions of Insolvency and Bankruptcy Code

Meanwhile, the Central government defended the IBC provisions, contending that proceedings under Sections 95-99 cause no real prejudice to personal guarantors.

Further, the role of the resolution professional is a limited one under Section 99, only being required to place evidence before the Adjudicating Authority. Nothing gives the former any authority to control or own the assets of the debtor during the interim moratorium, the Central government had stressed.

The professional, thus, does not have unfettered powers, as the personal guarantor can always seek a copy of the report submitted by them to the adjudicating authority (National Company Law Tribunals), it was pointed out.

A resolution professional’s recommendation was also not binding on the adjudicating authority, it was submitted.

The Central government further contended that the intent of Section 96 was to protect the interests of the personal guarantor by preserving their assets, to alleviate them from short-term financial hardship.

In its counter-affidavit, the Central government had also submitted that there was no duplication of recovery proceedings against the personal guarantor under the provisions of the Recovery Of Debts And Bankruptcy Act, 1993 and the SARFAESI Act.

Source: Barandbench

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