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

During CIRP of Ganga Steel Ltd, the RP, Mr. Bose, applies under section 235 for foreign evidence. The application relates to assets of the corporate debtor's personal guarantor located in a reciprocating country. Which view is correct?

The application is valid. Section 235 expressly extends to assets of a personal guarantor of a corporate debtor, provided the assets are in a country with reciprocal arrangements under section 234 and evidence or action is needed. It does not require a CoC vote or a prior bankruptcy declaration.

  1. AThe application is invalid because section 235 covers only assets of the corporate debtor
  2. BThe application is valid, since section 235 includes assets of a personal guarantor of a corporate debtor, if the other conditions are metCorrect
  3. CIt is valid only if the committee of creditors approves it by 66 per cent
  4. DIt is valid only after the personal guarantor is declared bankrupt

Explanation

Section 235(1) refers to assets of the corporate debtor or debtor, including a personal guarantor of a corporate debtor. If the assets lie in a country with reciprocal arrangements under section 234 and evidence or action is required in the process, the RP may apply. The section does not require CoC approval or a bankruptcy declaration; the 66 per cent vote in section 28 relates to different listed actions.

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