TagDebt Finance

Invocation of Unmatured Corporate Guarantee during Moratorium under Bankruptcy Law

[Himanshu Handa is an Associate with UKCA and Partners, a Law Firm in New Delhi] Introduction In Axis Bank Limited v Edu Smart Services Private Limited, the National Company Law Tribunal (“NCLT”), Delhi had rejected a plea from the financial creditor i.e. “Axis Bank” against the corporate guarantor i.e. Edu Smart in respect of its claim pertaining to a corporate guarantee in the insolvency...

RBI’s Amendment to the Hedging Policy for ECBs: Reasoning and Impact

[Saher Fatima and Siddharth Tandon are III year students at the National Law University, Jodhpur] Introduction Over the years, external commercial borrowings (“ECB”) have become a preferred source of finance for Indian entities. ECBs refer to commercial loans in the form of bank loans, securitized instruments, buyers’ credit or suppliers’ credit availed of from non-resident lenders with a minimum...

Creation and Operation of Tenancy Rights over Secured Assets under SARFAESI

[Samarth Saxena is a final year student at ILS Law College, Pune] The advent of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interests Act, 2002 (“SARFAESI”) ushered in a new era of reforms for the Indian banking regime. These reforms were primarily aimed at facilitating the speedy recovery of defaulting loans and thereby controlling the rising levels of non...

Filing of Return for Delayed Payment to MSMEs

[Simran Jalan is an Executive at Vinod Kothari & Co] The Government of India enacted the Micro, Small and Medium Enterprises Development Act, 2006 (the “Act”) to ensure timely and smooth flow of credit to micro, small, and medium enterprises (“MSMEs”) and minimize sickness among them. The Act strengthens the provisions relating to delayed payments to the MSMEs by specifying the maximum credit...

The “Masala” in Rupee Denominated Bonds

[Anirudh Singh is a 4th year B.A LL.B (Hons.) student at NALSAR University, Hyderabad] Background Rupee Denominated Bonds (RDBs),more commonly known as “Masala Bonds”, are debt securities denominated in Indian rupees issued by Indian entities to overseas investors but settled in foreign currency. In other words, they are rupee denominated bonds issued to overseas buyers. Though these bonds are...

Fast Track Debt Resolution Programme – Achilles Heel Of The Insolvency And Bankruptcy Code

[Tushar Kumar is a 4th Year BA LLB (Hons.) student at Dr. Ram Manohar Lohiya National Law University, Lucknow] The Ministry of Finance, in July 2018, accepted the recommendations of a committee constituted for review on Non-Performing Assets of Public Sector Banks, headed by Sunil Mehta (Non-Executive Chairman of Punjab National Bank) proposing “Project Sashakt”, calling for a five-tier approach...

Corporate Insolvency Proceedings: Can Interest be Claimed as a Part of Debt?

[Lyssa Maria Brito is a 4thyear B.B.A.L.L.B. (Hons.) student at School of Law Christ (Deemed to be University), Bengaluru] Introduction Earlier, in section 433(e) of the Companies Act, 1956, there was no distinction provided between a financial and an operational debt. Section 433(e) only provided that a company may be wound up by the court if it is unable to pay its debts. Therefore, the issue...

Subordination of Operational Creditors under IBC: Whether Equitable?

[Vinod Kothari and Sikha Bansal are at Vinod Kothari & Company and can be reached at [email protected]] Introduction Section 53 of the Insolvency and Bankruptcy Code, 2016 (IBC) puts unsecured financial creditors above the claims of the governments. These unsecured financial creditors may  actually be even related parties and, therefore, the underlying financial transaction may be...

The Battle against Non-Performing Assets

[Pranjal Doshi is an MCL Candidate, University of Cambridge] The foundation of an enduring banking industry lies in robustly crafted recovery mechanisms. It promotes the stable existence of the borrower-lender relationship. Incongruously, non-performing assets (“NPAs”) have grown substantially in India from 9.2% (September 2016) to 10.2% (September 2017)[1], amounting to ₹8,36,782 crores (October...

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