[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...
Stay on NCLAT Order Rejecting Withdrawal of Resolution Plan – Unsettling the Dust Once Again
[Richa Pathak is an alumna of the London School of Economics and Indian Institute of Management, Ahmedabad and Mansi Mishra is a fourth-year student at National Law Institute University, Bhopal] The Supreme Court vide its order dated November 16, 2020, stayed the operation and effect of the judgment of the National Company Law Appellate Tribunal (“NCLAT”) in the case of Kundan Care Products...
Moratorium on Termination of Contracts during CIRP: Need for a Clarification
[Ragini Agarwal and Mayank Udhwani are graduate students at the National Law University, Jodhpur] As per any standard commercial contract, initiation of insolvency against a party is considered as a material breach of the contract. Such a material breach often gives the non-defaulting party a right to terminate the contract. However, owing to section 14(1)(b) of the Insolvency and Bankruptcy...
Extinguishment of a Personal Guarantor’s Right of Subrogation: A Critique
[Vijay Rohan Krishna is pursuing his LLM (Corporate and Commercial Laws) at NUJS, Kolkata, and Sambhawi Sanghamitra is a 3rd year B.A. LL.B. (Hons.) student at CNLU, Patna] Ever since personal guarantors were made liable under the Insolvency and Bankruptcy Code, 2016 (IBC) by way of the notification dated 15 November 2019, their rights and liabilities under the IBC have been extensively debated...
Supreme Court Rules on ‘Transfer of Winding Up Proceedings’
[Aditya Rajagopal is a graduate of NUJS, Kolkata (Batch of 2020) and is currently an associate at Shardul Amarchand Mangaldas & Co] One of the contentious issues after the enactment of the Insolvency and Bankruptcy Code, 2016 (‘IBC’) has been regarding the transfer of pending ‘winding up’ proceedings to the National Company Law Tribunal (‘NCLT’). Section 434 of the Companies Act, 2013 (‘Act’)...
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