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CS Professional · Insolvency and Bankruptcy - Law and Practice · Cross Border Insolvency (Elective 7.5)

A suit-based insolvency proceeding against Mr Iyer, personal guarantor of Orion Pharma Ltd, is pending before another tribunal when the NCLT starts Orion Pharma's CIRP. What is the effect under Section 60 of the Code?

The proceeding against Mr Iyer stands transferred to the Adjudicating Authority handling Orion Pharma's CIRP. The Code provides that pending guarantor proceedings in any court or tribunal move to the NCLT dealing with the principal debtor, so they are not dismissed, continued elsewhere, or sent to the Board.

  1. AThe proceeding against Mr Iyer stands transferred to the Adjudicating Authority dealing with Orion Pharma's CIRPCorrect
  2. BThe proceeding continues in the original tribunal unaffected
  3. CThe proceeding is automatically dismissed
  4. DThe proceeding is transferred to the Insolvency and Bankruptcy Board

Explanation

Section 60(3) provides that an insolvency resolution process or liquidation or bankruptcy proceeding of a corporate or personal guarantor pending in any court or tribunal stands transferred to the Adjudicating Authority dealing with the corporate debtor's process. It is neither dismissed nor left in place, and the Board does not adjudicate.

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