How does one file for bankruptcy under the law?
A person or organization is deemed bankrupt if they are unable to pay back the debt they obtained from the bank. Legal action is required for this process, despite the fact that it is not as simple as it sounds. That organization or individual must first submit an application to the court in order to do this. Following this, the court hears the person's arguments, and if it decides that they are sound, the process of declaring him bankrupt is initiated. The total time for this process is about 180 days. Upon being declared bankrupt, the individual's assets are seized, and legal action is also initiated against the person who obtained his guarantee. The 2016 Insolvency and Bankruptcy Code Act (IBC) in india has once again come up for debate because of a recent petition.
Why is the supreme court debating the petition?
Significant sections of the Insolvency and Bankruptcy Code were recently contested before the supreme Court. wherein the petitioner, who served as the declared bankrupt person's guarantee, was denied the opportunity to state his case.
A personal guarantor is someone who provides assurance for a loan obtained by another individual. In such a case, the guarantor is also subject to legal action when bankruptcy is filed against the loan recipient. The petitioner contended in court that the invalidated sections of the Insolvency and Bankruptcy Code do not adhere to just norms, such as the legal system. and impact fundamental rights guaranteed by Articles 21, 19(1)(g), and 14 of the Constitution, such as the right to commerce, equality, and a means of subsistence.