TagDebt Finance

SEBI’s Proposed Framework for Corporate Bonds and Debenture Trustees

[Rashmi Birmole is a III year B.A., LL.B. student at ILS Law College, Pune] Infrastructure Leasing & Financial Services (“IL&FS”), a non-banking finance company (“NBFC”) belonging to a sub-category of systemically important non-deposit accepting core investment companies was, at the time, engaged in  financing and developing infrastructure projects. In June 2018, the collapse of IL&FS...

Liability of Issuers for Misleading Advertisement in a Public Issue of Securities

[Neha Sinha is a 3rd Year B.A. LL.B. student at National University of Study and Research in Law (NUSRL), Ranchi] In an order dated February 26, 2020, the Securities and Exchange Board of India (SEBI) imposed penalty on Muthootu Mini Financiers Ltd. (MMFL) in a matter relating to misleading advertisement made to the public at large regarding the issue of debt securities. The matter was decided by...

Position of Third Party Security after Jaypee Infratech

[Ankesh Kumar is a IV Year student at NLIU Bhopal] Anuj Jain v Axis Bank Limited witnessed the Supreme Court ruling on two important matter in Indian insolvency law. As summarized in this post, while the Court set aside the transactions in question as being preferential within the meaning of section 43 of Insolvency and Bankruptcy Code, 2016 (IBC), it went on to decide that creditors taking third...

Enforcing a Pledge over an Insurance Company’s Shares

A transfer of shares of an insurance company requires the prior approval of the Insurance Development and Regulatory Authority of India (IRDAI) in certain circumstances. Section 6A(4)(b)(iii) of the Insurance Act, 1938 provides: “(4) A public company as aforesaid which carries on life insurance business- … (b) shall not register any transfer of shares … (ii) where, after the transfer, the total...

Disclosure of Loan Defaults by Listed Entities

Readers may recall the controversy surrounding a circular that the Securities and Exchange Board of India (SEBI) issued in August 2017 to all listed companies requiring them to make a public disclosure to the stock exchanges within one working day of defaulting on loans and other financial facilities. In a blog post then, I had discussed the rationale for SEBI’s move. However, the circular came...

RBI’s Circular Invalidated: A Potential Watershed Moment in the Indian Insolvency Regime

[Saurav Roy is a final-year law student [V B.A.LL.B] at ILS Law College, Pune] On 2 April 2019, a Supreme Court bench of Justice Rohinton Nariman and Justice Vineet Saran delivered a landmark judgement in the case of Dharani Sugars and Chemicals Ltd. v. Union of India which deals with the pertinent issue of a controversial circular issued on 12 February 2018 titled “Resolution of Stressed Assets...

Expansion of the Rights of Secured Creditors to Recover Debts

[Isha Gupta is a III Year B.A.LLB. (Hons.) student at National Law University, Delhi] The legislature and the judiciary have both adopted a rather pro-creditor approach towards insolvency in the recent past, which is apparent from the enactment of Insolvency and Bankruptcy Code 2016 (“IBC”) and the decision of the Supreme Court in Swiss Ribbons Pvt Ltd v Union of India, wherein the Court upheld...

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...

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