[Ridhi Arora is a III Year B.A., LL.B (Hons.) student at Gujarat National Law University and Varun Singh a III Year B.A., LL.B (Hons.) student at Rajiv Gandhi National University of Law] On March 8, 2021, the Supreme Court of India in Gujarat Urja Vikas Nigam Limited v. Amit Gupta ruled that the provisions of the Insolvency and Bankruptcy Code, 2016 (‘IBC’) prevail over power purchase agreements...
Fragmented Framework for Perfection of Security Interest: A Secured Creditor’s Nightmare?
[Sikha Bansal is a Partner and Siddharth Goel a Legal Advisor at Vinod Kothari & Company] An interesting question of law came up for consideration by way of appeal before National Company Law Appellate Tribunal (NCLAT) in Volkswagen Finance Private Limited v. Shree Balaji Printopack Pvt. Ltd . The brief facts of the case involved a car financing company, which extended a car loan to the...
Classification of Advance Payment Claims as Operational Debt: Intention Test
[Kartik Adlakha is a final year B.B.A., LL.B. (Hons.) student at Jindal Global Law School] Insolvency and Bankruptcy Code (‘the Code’) defines ‘operational debt’ as claims arising in respect of provision of goods or services. The term ‘claim’ under the Code refers to right to payment or right to remedy for breach of contract if such breach gives rise to a right to payment. Due to the scheme of...
Third Party Pledgees Not “Financial Creditors”: Supreme Court
An arrangement involving a third party security is not uncommon in commercial financing transactions. Here, a person (“A”) creates a security in favour a creditor (“B”) who provides financing to a third party (“C”). While a number of contract law and commercial law issues likely arise in such third party security, of immediate relevance is a scenario where A were to become insolvent in terms of...
SC uses ‘Smoke-Test’ to Classify ‘Related Parties’ under the IBC
[Sikha Bansal is a Partner and Megha Mittal an Associate at Vinod Kothari & Company. Another set of posts on the topic is available here] Generally, in order to classify a transaction as a related party transaction, one needs to first determine whether the parties involved are ‘related parties’. However, in a recent case Phoenix Arc Private Limited v. Spade Financial Services Limited &...
The Ineligibility of Collusive Transactions as “Financial Debt”: Part II
[Continued from here] Analysis and Observations Through its decision in Phoenix Arc, the Supreme Court has added to the wealth of jurisprudence under the IBC. At the same time, several questions remain. Collusive Transactions Perhaps the broadest and most impactful interpretation of the Court lies in the question of whether collusive transactions give rise at all to “financial debt” within the...
The Ineligibility of Collusive Transactions as “Financial Debt”: Part I
[Another post on this topic is available here]A three-judge bench of the Supreme Court of India on 1 February 2021 rendered important and interesting pronouncements on some aspects of the Insolvency and Bankruptcy Code, 2016 (IBC) in Phoenix Arc Private Limited v Spade Financial Services Limited. Speaking through Dr. Dhananjaya Y Chandrachud, J, the Court ruled that a collusive transaction cannot...
NCLAT on Whether Entries in Balance Sheet are an Acknowledgment of Debt
[Mohak Thukral is a IV year B.A., LL.B. (Hons.) student at the Jindal Global Law School] According to an order in Bishal Jaiswal v Asset Reconstruction Company (India) Ltd (dated December 22, 2020), a five-member bench of the National Company Law Appellate Tribunal (“NCLAT”) rejected a reference order made by a three-member bench for the reconsideration of the decision in V. Padmakumar v...
Straining Conceptual Consistency: Home Buyers as Financial Creditors
[M P Ram Mohan is Associate Professor, Indian Institute of Management Ahmedabad and Vishakha Raj a Research Associate, Strategy Area, Indian Institute of Management Ahmedabad. This post is based on the authors’ article Apartment Buyers as Financial Creditors: Pushing the Conceptual Limits of the Indian Insolvency Regime published in the Columbia Journal of Asian Law] A unique feature of the...
Online Certificate Course on the Insolvency and Bankruptcy Code, 2016
[Announcement on behalf of BR Foundation] BR Foundation is conducting an online certificate course on the Insolvency and Bankruptcy Code, 2016 from February 26, 2021 to March 1, 2021. The Media Partner for the course is IBC Law Reporter. This is an annual 4-day course on Corporate Restructuring and Insolvency, especially focusing on the developments in the insolvency regime in India and the major...
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