Personal guarantors face bankruptcy action over ₹11,990 crore in June quarter

livemint.com:

₹10,563 crore, while 31 personal guarantors accounting for ₹1,433 crore in defaults by companies approached bankruptcy tribunals on their own for debt resolution, according to data available with Insolvency and Bankruptcy Board of India (IBBI). Lenders in all seek to recover more than ₹2 trillion from personal guarantors since December 2019, when they were brought under the Insolvency and Bankruptcy Code (IBC). Of these, 3,134 cases are in bankruptcy tribunals (National Company Law Tribunal) while 50 are pending in Debt Recovery Tribunals (DRT), showed data from the IBBI.

Often, high-value assets like real estate are held by major shareholders, rather than being in the books of the business. That prompts lenders to move against them to recover dues when assets of the defaulting company are found insufficient for debt resolution. In FY24, 696 persons ended up in bankruptcy tribunals and 27 in debt recovery tribunals as the companies they stood guarantors for defaulted on repayment of ₹28,222 crore of debt.

Recovery, however, is a sluggish. Only 468 cases were admitted in tribunals and several have been withdrawn, either before or after admission. In 26, repayment plans were cleared by tribunals, with creditors realizing nearly ₹103 crore or a little over 2% of their admitted claims.