Interim Moratorium


The Insolvency Process for Guarantors, in terms of Section 96(a) provides for an "interim moratorium" in relation to any debts of the Guarantor as soon as the application for insolvency under Section 94 or Section 95 is filed before the Adjudicating Authority ("AA"), in addition to a moratorium under Section 101 which comes into effect only upon admission. This is a distinction from the CIRP regulations which imposes a single moratorium period in relation to the assets of a Corporate Debtor only once the National Company Law Tribunal ("NCLT") passes an order imposing such moratorium on the admission of an application filed before it. In cases of personal guarantors however, regardless of whether the application against a Guarantor is admitted by the AA or not, an interim moratorium shall immediately apply preventing the enforcement of any debts of the Guarantor and staying any ongoing legal proceedings in relation thereto.

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