InvestorQ : Where do you see the case of Anil Ambani versus SBI going from here? Who has a stronger hand?
vidhya Laxmi made post

Where do you see the case of Anil Ambani versus SBI going from here? Who has a stronger hand?

Answer
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sarah Leo answered.
1 month ago


It could turn both ways. The judges will be extremely careful since this is the first such case and could set the precedent for such cases in the future. Also, most banks are awaiting the outcome of the SBI-RCOM case to understand how to deal with personal guarantees.

Under the NCLT, liquidation of business assets was allowed but not individual assets. That changes with the Dec-19 amendment. As of now it does look like the case is going to continue for much longer in the high courts.

The case will be judged in the light of the intent of the amendment; to curb promoters shielding their personal assets. Unfortunately, the final decision will be subjective and it may be hard for the courts to create a template or precedent for the future.

Anil’s counsellor, Harish Salve, pointed to the risks of personal bankruptcy. Hence, courts have to be extremely careful in extending a corporate bankruptcy to personal assets and properties of the promoters and their families. That is surely a tightrope walk.

It is a sticky situation for Indian government too. It needs to encourage businesses to take on risk and punitive personal bankruptcy laws will curb risk taking. At the same time, bank assets are public assets and need to be protected. The solution is surely a tough one!