Personal insolvency beginning of a 'new learning', says Sahoo
New Delhi: Personal insolvency framework will be the "beginning of a new learning" and the next big thing in insolvency reforms, IBBI chief M S Sahoo has said.
Starting with a small set of individuals, the framework under the Insolvency and Bankruptcy Code (IBC) for personal guarantors to corporate debtors has come into force from December 1.
Sahoo, Chairperson of the Insolvency and Bankruptcy Board of India (IBBI), emphasised that insolvency resolution of personal guarantors complements insolvency resolution of corporate debtors.
"It (personal insolvency) is the next big thing in insolvency reforms. It will be beginning of a new learning," he told PTI in a recent interview.
In the last three years, Sahoo said it was learning about corporate insolvency and in the next three years, "we will invest in learning personal insolvency".
The IBC came into effect from December 2016.
"We intend to move in a phased manner to cover insolvency of partnership and proprietorship firms and other individuals," he said.
Under the IBC, individuals are classified into three classes -- personal guarantors to corporate debtors, partnership firms and proprietorship firms, and other individuals.
"There are occasions when a corporate debtor takes a loan guaranteed by another corporate person (corporate guarantor to the corporate debtor) or an individual (personal guarantor to the corporate debtor).