[Kartik Singh is a 4th year B.A., LL.B. (Hons.) student at National Law University, Odisha, Cuttack] The Insolvency and Bankruptcy Code, 2016 (IBC) was enacted with the objective of providing a time-bound insolvency resolution mechanism to a financially stressed company and saving it from liquidation. For the said purpose, the committee of creditors (CoC) comprising financial creditors is at the...
Hanging by a Thread: The Saga of Interest-Free Loans under the IBC
[Ojaswi Shankar is with ICICI Bank in Mumbai] In Orator Marketing Private Limited v. Samtex Desinz Private Limited (26 July 2021), the Supreme Court held that a person who has advanced an interest-free loan to a corporate entity would be a ‘financial creditor’ and, hence, competent to initiate a corporate insolvency resolution process (“CIRP”) under section 7 of the Insolvency and Bankruptcy...
Recourse to Appropriate Proceedings against Personal Guarantor of Corporate Debtor
[Akansha Uboveja is a fifth-year B.A., LL.B. (Hons.), student at Hidayatullah National Law University, in Raipur] Recently, the National Company Law Appellate Tribunal (NCLAT) in Nitin Chandrakant Naik v. Sandhiya Industries LLP clarified the position of personal guarantors in corporate insolvency resolution proceedings (CRIP) initiated against a corporate debtor under the Insolvency and...
‘Ordinary Course of Business’ Defence under the IBC: Origin and Scope
[Saai Sudharsan Sathiyamoorthy is an advocate practising at the Madras High Court and is one of the Chief Specialist Editors of Wadhwa Law Chambers Guide to Insolvency & Bankruptcy Code (2nd edition, 2021). He can be contacted at [email protected].] One way that the Insolvency & Bankruptcy Code, 2016 (“the Code”) seeks to secure pro rata distribution among similarly placed...
Retention of Title Clauses – An Indian Perspective
[Malavika Devaya is an associate at Poovayya & Co., Advocates & Solicitors.] A retention of title (ROT) clause is a provision that may be included in commercial contracts and purports to protect the seller’s interests by maintaining title to the goods with the seller until the occurrence of a future event, usually the receipt of payment. These clauses are, however, not very commonly...
The Dilemma of Interest-Free Loans as Financial Debt under IBC
[Sanskar Modi and Vijpreet Pal are 3rd year BA LLB (Hons.) students at National Law Institute University, Bhopal (NLIU)] Recently, the Supreme Court, in the case of Orator Marketing v. Samtex Desinz decided that a lender who has advanced interest-free loans to a corporate body would fall under the definition of financial creditor and thereby could initiate the Corporate Insolvency Resolution...
Orator Marketing v. Samtex Desinz: Highlighting the Importance of Time Value of Money
[Shivankar Sukul and Vedaant S. Agarwal are IV-year law students at the National Law University, Jodhpur] The Supreme Court of India (“the Court”) in Orator Marketing Pvt Ltd v. Samtex Desinz Pvt Ltd, (“Orator”) held an interest free term loan as a ‘financial debt’ in clear defiance of the statutory scheme under the Insolvency and Bankruptcy Code, 2016 (“the Code”), which necessitates...
Invocation of Pledged Shares: Disqualification from Seat on Committee of Creditors?
[Viti Bansal is a fourth year student of B.A. LL.B. (Hons) at Gujarat National Law University] The Insolvency & Bankruptcy Code, 2016 (“IBC”), under section 21(2), provides that a related party to the corporate debtor who is also a financial creditor of the corporate debtor will have no right of representation, participation or voting in a meeting of the committee of creditors (“CoC”). The...
The NCLAT Decision in Hystone Merchants: Conferring Unruly Discretion
[Shubhansh Thakur is a fourth-year student at the Symbiosis Law School, Noida. The author wants to thank Mr. Deepak Joshi for his comments on the draft version] The National Company Law Tribunal (“NCLAT”) in Hytone Merchants Pvt Ltd v. Satabadi Investments Consultants Pvt. Ltd. has held that the Adjudicating Authority (“AA”) can refuse to admit an application that is...
Impediments to the Enforcement of Arbitral Awards under IBC
[Anuj Dubey and Amay Bahri are 4th year students at National Law University, Delhi] The jurisprudence on the interplay between the Insolvency and Bankruptcy Code 2016 (IBC) and the Arbitration and Conciliation Act 1996 (Arbitration Act) is in nascent stages. While friction arises during multiple stages of the proceedings under both laws, the conflict arising out of enforcement of arbitral awards...
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