Print Friendly, PDF & Email

Insolvency process will be initiated against Anil Ambani

Topics Covered: Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

Insolvency process will be initiated against Anil Ambani:


The National Company Law Tribunal (NCLT) has allowed the initiation of insolvency proceedings against Anil Ambani after two companies promoted by him failed to pay dues on Rs 1,200 crore that they had borrowed from State Bank of India (SBI).

  • The insolvency process will be initiated against Ambani as he had given personal guarantee against the loans provided to his firms.

Personal insolvency:

The case is significant as it is one of the first cases of insolvency against a major business group head.

The rules for initiation of personal insolvency were notified last year in December.

What is the process for personal insolvency?

As the NCLT has allowed the appointment of an interim resolution professional (IRP) in the matter, SBI will now approach the IRP with a list of the assets provided by Ambani as a personal guarantee when his companies had sought the loan.

In the case of banks providing loans against personal guarantee, the guarantor has to furnish a list of assets whose value is equivalent to the total amount of loan being given.

  • In case of failure to pay these assets, these guarantees can be invoked.

What happens to Anil Ambani after the insolvency process is over?

Like corporate insolvency processes, a businessperson is free to start with a clean slate after a personal insolvency case against them is over.

The lenders will be eligible to recover their dues only from the collateral deposited or personal assets belonging to that person.

However, any or all assets mentioned in the list provided at the time of sanctioning of the loan, even if transferred to someone else, can also be attached and sold.

  • Ambani will be free to run other businesses which are not under insolvency, or which are able to service their debts and obligations on time.

For details on the Insolvency and Bankruptcy Code (IBC), refer:


Prelims Link:

  1. What is insolvency and bankruptcy?
  2. Various institutions established under the IBC code.
  3. NCLT- composition and functions.
  4. What are debt recovery tribunals?
  5. Sections 7, 9 and 10 of IBC.

Mains Link:

Discuss how suspension of initiation of fresh insolvency proceedings will help shield companies impacted by the outbreak of Covid-19.

Sources: Indian Express.