InvestorQ : Why did Supreme Court reject SBI’s petition against personal bankruptcy of Anil Ambani? What does that mean for SBI?
Arti Chavan made post

Why did Supreme Court reject SBI’s petition against personal bankruptcy of Anil Ambani? What does that mean for SBI?

Answer
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Rutuja Nigam answered.
1 month ago


In what could be a major relief for Anil Ambani at a personal level, the Supreme Court of India rejected a petition by SBI, to allow personal bankruptcy proceedings against Anil Ambani. While the debts are intact, the risk of personal bankruptcy is off.

The three judge panel ruled that the personal bankruptcy case would remain suspended till the bank hears from the Supreme Court about the future course of action. This pertains to loans taken by RCOM from SBI and guaranteed by Anil Ambani in his personal capacity.

The ruling by the Supreme Court was important because it was supposed to set a precedent for banks. A positive order from the Supreme Court would put the banks in a position to enforce personal guarantees by the promoters by attaching their personal assets.

Harish Salve was the counsel arguing the case on behalf of Anil Ambani and the companies on behalf of which he had guaranteed the loans. Anil Ambani had guaranteed loans to the tune of $160 million on behalf of RCOM.

There is also another twist to this story. Anil Ambani has consistently maintained in the past that these were not guarantees but mere letters of comfort given to the bank. As a result such letters are not legally enforceable in terms of personal bankruptcy.