Welcome to NUALS Restructuring & Insolvency BLOG
RESOLUTION OR RECOVERY: COLOURABLE APPLICATION OF IBC, 2016
Introduction The Insolvency and Bankruptcy Code, 2016 (IBC, 2016) is a comprehensive legislation dealing with matters related to the functioning of an insolvent company and the disposal of its assets if required. However, before proceeding under the provisions of IBC, it is pertinent that the adjudicating authority takes a decision on whether the company can…
SEBI’S NEW TRANSPARENCY REGIME FOR AIFS: ACCOUNTABLE TO THE INVESTORS
Introduction As the Securities and Exchange Board of India (SEBI) seeks to implement its new Transparency Program for Alternative Investment Funds (AIFs), venture firms and PE Funds must rethink their entire structure and plan as set out in its recent consultation papers (Papers)[i] – the five papers institute methods to bring more fairness to investors.…
REDUCING TIME FOR ADMITTING CIRP APPLICATIONS UNDER THE IBC: WILL IT UNDERMINE JUDICIAL INTERVENTION IN THE INSOLVENCY PROCESS?
The Ministry of Corporate Affairs in January 2023 posted a long list of changes recommended for the Insolvency and Bankruptcy Code (IBC) to revamp the existing structure of the corporate insolvency resolution process (CIRP), aiming to enhance and strengthen the current provisions and mechanisms pertaining to admitting CIRP applications, streamlining their resolution, and re-moulding the…
PRE-PACKAGED INSOLVENCY IN INDIA – A BIRD WITHOUT WINGS
Background The corporate world comprises multitudinous business associations with varying organizational structures, often subjected to numerous processes of restructuring and reorganization. Since no two organizations are identical, the method of corporate rescue opted for by different organizations naturally varies. It is only reasonable for a company to opt for a restructuring mechanism that is most…
Liability of directors under the Negotiable Instruments Act during the moratorium period under IBC
[A comment on the current judicial stance] Introduction In order to buttress smooth conduct of business in the economy, it is pertinent to have non-cash instruments for the business transactions. Negotiable Instruments are important to provide for the alternative of cash so that the business of the economy does not hamper. To give effect to…
RESOLUTION PLANS UNDER INSOLVENCY AND BANKRUPTCY CODE 2016: A ONE-WAY TRIP
The courts perform the herculean task of interpreting and ascertaining the true meaning of the statutes and other legal texts. Intentionalism is one of the most accepted theories of statutory interpretation where primacy is accorded to the legislative intent of the lawmakers, even when it runs contrary to the text of the statute. It must…
The shift in the duties of directors in the ‘Twilight Zone’- where does the demarcation lie?
The Insolvency and Bankruptcy Code, 2016 (IBC Code) subsumed all previous legislation pertaining to insolvency and restructuring. The Code adopted the creditor-in-control model wherein the creditors will manage the affairs of the company under insolvency. One significant feature of creditor-in-possession of the corporate debtor (an entity under resolution) is the ousting of equity-led control of…
HAS INDIAN CAPITALISM GOT BANKRUPTCY WRONG?
[An analysis of E. S. Krishnamurthy & Ors. v. M/s Bharath Hi Tech Builders Pvt. Ltd(2021)] The insolvency and bankruptcy process in India has a tumultuous history, as has Indian capitalism. From the forced liberalisation of the Indian economy as a result of the IMF conditions imposed on India during the 1991 economic crisis, according…
The Future of Basel Norms: Basel IV
Abstract: Globalization is at its peak form, with the rapid advancement of the internet and trade developments, due to which the regulation of the banking regime globally has gained greater importance. International organizations have taken proactive steps to ensure that there is a free flow of capital and other required financial assistance for those requiring…
Challenges of Pre-Packaged Insolvency in Indian Scenario
Introduction The introduction of the Insolvency and Bankruptcy Code, 2016 (“IBC”)[1] has resulted in a significant change in India’s corporate distress resolution structure. It has provided a fresh lease of life to a company whose fate had previously been determined by plenty of debt restructuring schemes, the failures of which often resulted in the company…
Lalit Kumar Jain v. Union of India & Ors – Relief for Banks; Pandora’s box of litigation for Personal Guarantors
In the wake of enactment of Notification No. S.O. 4126(E) in November 2019, which brought into effect the Part III of Insolvency and Bankruptcy Code, 2016 (IBC) only against personal guarantors, multiple petitions were filed before various high courts of the country challenging the constitutional validity of this selective application. These petitions were later transferred…
PRE-PACKAGED DEALS – INSOLVENCY ORDINANCE, 2021 AND INTERPLAY WITH SDG-8
INTRODUCTION The importance of the Sustainable Development Goals as enumerated by the United Nations General Assembly plays a crucial role in many policy decisions made by countries. The Sustainable Development Goals, in a nutshell provide the methods and necessities which are to be considered by each nation for development, keeping in mind balanced utilisation of…
ENTRIES IN BALANCE SHEET ARE PROOF OF ADMISSION OF DEBT: AN END OF A LONG-RUNNING CONFLICT
Introduction The Limitation Act, 1963 and the Insolvency and Bankruptcy Code, 2016 (IBC) have been at odds ever since the inception of the latter. One such instance of conflict has been brought about by Section 18 of the Limitation Act. This section lays down that an admission of liability in writing shall create a fresh…
Supreme Court classifies ‘Related parties’ on the ‘Collusive Transaction’
In order to classify transactions between the related parties, it is important to determine whether the parties involved are “related parties”. The Supreme Court three-judges bench in a recent case of Phoenix Arc Private Limited v. Spade Financial Services Limited & Ors deduced important and interesting aspects of IBC, 2016. The Court infers a ‘relationship’…
ISSUES WITH THE IBC
The Code aims to consolidate and amend the laws governing the reorganisation and insolvency resolution of these entities in India, as well as all insolvency and bankruptcy-related laws in India that have resulted in insufficient and ineffective results. ISSUES WITH THE IBC 1. SLOW ADJUDICATION PROCESS – The slow judicial process is one of the…
Secured Creditor opting out of Liquidation Proceedings under IBC: Legal Implications
A secured creditor, as defined u/S. 3(30) of the Insolvency and Bankruptcy Code, 2016is a creditor in favour of whom security interest is created. Once the Corporate Insolvency Resolution Process (CIRP) is initiated against a corporate debtor, a moratorium is imposed u/S. 14 of the Code and the secured creditor is prohibited from enforcing its…
Invocation of Personal Guarantees under Part III: A shot in the dark
The Government of India vide the November 2019 Notification, brought into effect Part III of the Insolvency and Bankruptcy Code, 2016 (hereafter referred to as “IBC”) which pertains to the insolvency of individuals in so far as it is applicable to the Corporate Debtors’ Personal Guarantors. In light of recent events concerning the invocation of…
“Anubhav Anilkumar Agarwal v. BOI & RNA Corp Pvt. Ltd.”- Scope of Inherent Power of NCLAT demystified
INTRODUCTION The National Company Law Appellate Tribunal (“NCLAT”) has recently, in the case of Anubhav Anilkumar Agarwal v. Bank of India & RNA Corp Private Limited, emphasized on the limited scope of powers vested in the NCLAT under Rule 11 of the National Company Law Appellate Tribunal Rules, 2016 (“NCLAT Rules”). The NCLAT has deliberated…
Interdisciplinary aspects of aviation industry vis a vis insolvency and bankruptcy code, 2016
Running an airline company requires compliance with various provisions of the law. Four years since the enactment of Insolvency and Bankruptcy Code, 2016 (IBC), we have already seen an airline suffering major insolvency proceedings. This can be attributed to the fact that the IBC contains a non-obstante clause according to which, in case of conflict…
Preferential Transactions: Applicability of the Doctrine of Alter Ego in the Judicial Approach
1. Introduction The incorporation and implementation of Insolvency & Bankruptcy Code, 2016 in India was an important step in order to set up a legal framework governing corporate insolvency as well as financial failures. IBC, has brought all the different legislations governing different fraudulent acts and transactions under one branch. The act of fraudulent transaction…
Do ‘Invoice Factoring Transactions’ fall within the ambit of Financial Debt?
‘Factoring Business’ is defined under The Factoring Act, 2011 as “the business of acquisition of receivables of assignor by accepting assignment of such receivables of financing, whether by way of making loans or advances or in any other manner against the security interest over any receivables.”[1]Invoice factoring is a financial transaction, wherein a company sells…
Kotak Investment Advisors Ltd. v. Krishna Chamadia & Ors.: NCLAT REINFORCES PRINCIPLES OF NATURAL JUSTICE
Introduction The Insolvency Law Committee of 2018 restated in its report that one of the primary objectives of the Insolvency and Bankruptcy Code of India (IBC/Code) is to respect the ‘commercial wisdom’ of the Committee of Creditors (CoC). The IBC limits the jurisdiction of the National Company Law Tribunal (NCLT/Adjudicating Authority) and the National Company Law Appellate Tribunal…
COVID-19 AND RESPONSE TO INSOLVENCY: THE DAMOCLES’ SWORD ON REVIVAL
Introduction The Covid-19 pandemic has crippled commercial activities and has aggravated the financial woes of business entities. Liquidity crunch coupled with supply chain disruptions and halted business activities is likely to induce increased insolvency on the horizon. This article analyses the ensuing implications of increasing the minimum threshold to initiate insolvency resolution under Insolvency and…
UNCERTAINTIES SURROUNDING THE SUSPENSION OF IBC
Introduction The Managing Director of Siemens Gamesa Renewable Power Ltd., Ramesh Kymal, had quit his position in the company on 30thApril this year. He filed a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016, claiming INR 104.11 crore against the company (corporate debtor), alleging the date of default to be 30th April2020[1]. …
TOWARDS ENTERPRISE RE-ORGANISATION: ACHIEVING FINALITY IN CROSS-BORDER INSOLVENCY IN INDIA?
Introduction While India’s attempt towards realigning the domestic bankruptcy regime through the formation of the Insolvency & Bankruptcy Code (IBC), 2016, was hailed as a much-needed reform, provisioning the reciprocity requirement u/s. 234 as a stop-gap measure for cross-border insolvency was frowned upon. Despite the hurdles identified in Jet Airways and Videocon cases, the legislative…
MODIFICATION OF RESOLUTION PLANS: AN ONGOING QUANDARY
Introduction Insolvency and Bankruptcy Code, 2016 (Code) endeavours to save the life of the distressed company. It is not a mere recovery forum for creditors but also beneficial legislation that helps the distressed companies to get back on their feet. The Union Cabinet through IBC Ordinance, 2020, has announced several measures to protect the corporate…
Follow My Blog
Get new content delivered directly to your inbox.
NUALS Restructuring and Insolvency Law Journal 