Now Reading: Banks recover just 1% in personal guarantor cases, Mint explains
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Banks recover just 1% in personal guarantor cases, Mint explains
Banks have recovered only about 1% of their admitted claims from personal guarantors since fiscal year 2020, data from the Insolvency and Bankruptcy Board of India shows. Of 2,137 proceedings where resolution…
Banks have recovered only about 1% of their admitted claims from personal guarantors since fiscal year 2020, data from the Insolvency and Bankruptcy Board of India shows. Of 2,137 proceedings where resolution professionals were appointed, just 64 led to an approved repayment plan. For every Rs 100 of bad loans backed by personal guarantees, lenders got back only Re 1.
The issue is highlighted by the National Company Law Tribunal's approval of Zee Group founder Subhash Chandra's Rs 6.5 crore repayment plan. Chandra was admitted into insolvency in April 2024 over a Rs 170 crore loan guarantee to Vivek Infracon. His plan received 80.81% support from creditors by value, though several lenders opposed it.
Lawyers note that personal guarantor insolvency establishes liability but does not guarantee recovery. The NCLT's role is limited to checking statutory compliance once creditors approve a plan. Sharma's opinion is not the final order, the matter has been sent back to the regular bench for further directions.
Indian Opinion Analysis
The 1% recovery rate underlines a structural weakness in the IBC's personal guarantor framework: liability is easy to establish, but assets are often held in trusts, family settlements or opaque structures. The 2026 amendments requiring disclosure of beneficial and digital assets aim to close this gap, but enforcement depends on how thoroughly resolution professionals and courts verify those declarations. Subhash Chandra's case is not a precedent, each plan is judged on its own creditor vote, but the low recovery accepted here may signal to other promoters that a modest settlement is viable. The key next step is the regular bench's final order on Chandra's plan, which will determine whether the Rs 6.5 crore payout is formally implemented or challenged further.
Source: livemint.com
This brief was synthesised by AI from the source linked above.
