[Karnika Singh Pasayat and Vignaraj Pasayat are advocates practising in the Supreme Court of India and the High Court of Delhi] The National Company Law Appellate Tribunal (NCLAT), New Delhi Bench, recently rendered a ruling in Puro Naturals JV v. Warana Sahakari Bank (Company Appeal (AT) (Insolvency) Nos.661-663 of 2023 dated November 24, 2023)on whether to approve a resolution plan that Puro...
Distribution of Profits Accrued During CIRP: An Equitable Approach Towards Settlement of Claims
[Karthika S. Babu is a third-year B.A. LL.B. Student at Gujarat National Law University] The Insolvency and Bankruptcy Code, 2016 (“Code”) provides for a specialized mechanism, i.e., the corporate insolvency resolution process (“CIRP”) for the resolution of insolvency of financially distressed entities. The CIRP aims to mitigate the claims of the affected creditors against the distressed...
Navigating the Twilight Zone Conundrum: A Cautionary Tale for Restructured Preference Shareholders
[Snigdha and Subhasish Pamegam are 3rd year B.A., LL.B. students at Gujarat National Law University, Gandhinagar] The practice of companies issuing restructured preference shares (RPS) in exchange for operational debt during the ‘twilight zone’, a period wherein a company is susceptible to becoming insolvent, is now seen as a controversial strategy. The order of the National Company Law Tribunal...
Recall of Approved Plan: Reconsideration of Judgment?
[Aditya Vaid is a third-year law student at Jindal Global Law School, Sonipat and Hrishikesh Goswami is a third-year law student at the Gujarat National Law University, Gandhinagar] The corporate insolvency resolution process (‘CIRP’) is a recovery mechanism through which the creditors of a corporate debtor may seek to rehabilitate the company with a view to recovering their debt. The CIRP aims...
Inherent Powers of the NCLT to Recall an Insolvency Resolution Plan
The Insolvency and Bankruptcy Code, 2016 (IBC) lays emphasis on an elaborate process by which a corporate insolvency resolution plan (CIRP) can be proposed, considered, decided, and approved. The principal actors involved in the process include the resolution professional, the committee of creditors (CoC) and the adjudicating authority (being the National Company Law Tribunal (NCLT) and, on...
Will Insolvency Drown Under the Crown’s Weight? Addressing Differential Debt Treatment under the IBC
[Deep Dighe is an Advocate practicing in the Bombay High Court] The question of statutory dues or crown debts (as they were previously known under the colonial regime) and their interplay with the corporate insolvency law in India has been an issue that has drawn the attention of all stakeholders to it. Much ink has been spilled about the contrasting Supreme Court judgments on the treatment of...
Interpretation of Section 30(2) of the IBC: Rights over Prudence?
[Saksham Chaturvedi is a 5th year law student at National Law University, Odisha] A division bench of the Supreme Court in DBS Bank v. Ruchi Soya has referred an issue concerning the interpretation of the amended section 30(2)(b) of the Insolvency and Bankruptcy Code, 2016 (IBC) to a larger bench. The question before the bench in DBS Bank was whether, as per the amended section 30(2)(b)(ii) of...
Resolution Professional as the Occupier: A Recipe for Disaster?
[Tanish Arora is a 3rd year B.B.A.LL.B. student at National Law University Odisha] In December 2023, the Madras High Court in Subrata Monindranath Maity v The State, Represented by Deputy Director, Industrial Safety and Health-II stipulated that a person who is the resolution professional (“RP”) in respect of an establishment is also an occupier under the Factories Act, 1948. Hence, the RP would...
Navigating the Doctrine of Election under the IBC
[Akshita Shrivastava is a IV year B.A.LL.B. (Hons.) student at National Law Institute University in Bhopal (M.P.)] The doctrine of election, a fundamental principle in evidentiary law, has been a subject of extensive discussion and legal interpretation in recent times, particularly in its application within the intricate landscape of insolvency and bankruptcy proceedings. This doctrine comes into...
Replacement of a Liquidator under the IBC: The End of Independence?
[Sannah Mudbidri is a 3rd year BA LLB (Hons.) student at National Law School of India University, Bangalore] The landscape of liquidator replacements under the Insolvency and Bankruptcy Code, 2016 (IBC) has witnessed a transformative journey, marked by the historical authority vested in the adjudicating authority and amendments to the Insolvency and Bankruptcy Board of India (IBBI) regulations...
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