[Megha Mittal and Shreya Jain are Associates at Vinod Kothari & Co.] The seemingly low threshold of Rs. 1,00,000 for the initiation of insolvency proceedings has been a persistent concern given the possibility of its exploitation by frivolous actions. While rumours about raising the threshold limit for initiating insolvency process have long been swirling, the recent outbreak of Covid-19 came...
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...
IBC Ordinance, 2019: Impleadment of Allottees in a Pending Application
[Pareekshit Bishnoi is an advocate based in Delhi] The President of India on 28 December 2019 promulgated the Insolvency and Bankruptcy Amendment (Ordinance) Act, 2019 (the “Ordinance”) to amend several provisions of the Insolvency and Bankruptcy Code, 2016 (the “Code”). Pertinently, section 3 of the Ordinance amended section 7 of the Code by adding three provisos to it. The provisos have limited...
Reverse CIRP: Reflections on NCLAT’s Legal Experimentation
[Ankit Tripathi is a practicing advocate before the Supreme Court and Delhi High Court and Ravleen Chhabra is a final year student at Institute of Law, Nirma University] A recent ruling of the National Company Law Appellate Tribunal (“NCLAT”) in Flat Buyers Association v. Umang Realtech Pvt. Ltd. comes as a game-changer. It not only affects the existing corporate insolvency resolution process...
Supreme Court Rules on Preferential Transactions in Insolvency
In Anuj Jain v. Axis Bank Limited (26 February 2020), the Supreme Court was concerned with the validity of certain transactions that the corporate debtor carried out in the run up to its insolvency. Briefly, the corporate debtor, Jaypee Infratech Limited (JIL), mortgaged some of its assets in favour of certain and banks and financial institutions for loans they advanced to JIL’s parent company...
Section 29A of the IBC: Stretched Too Far?
[Shruti Kunisetty is a III Year B.A. LL.B. (Hons.) student at the National Law School of India University, Bangalore] Section 29A of the Insolvency and Bankruptcy Code, 2016 (the “IBC”) bars certain entities from submitting a resolution application in insolvency proceedings. Broadly, there are four categories of entities that are barred under this provision: (i) ineligible persons, (ii) persons...
CIRP against Government Companies: Has Supreme Court Settled the Debate?
[Soumyajit Saha is a 3rd year B.A. LL.B student at National University of Study and Research in Law, Ranchi] Last year, in Harsh Pinge v. Hindustan Antibiotics Limited, the judicial member of the National Company Law Tribunal (NCLT), Mumbai Bench dismissed the petition filed under section 9 of Insolvency and Bankruptcy Code, 2016 (IBC). This was on the ground that corporate debtor, being a...
Reciprocity Requirements in India’s Adoption of the UNCITRAL Model Law on Cross Border Insolvency
[Soham Chakraborty is a II year, BA LLB (Hons.) student at NALSAR University of Law, Hyderabad] The corporate insolvency resolution process (CIRP) of Jet Airways was one of the first instances of cross border insolvency in India. In the case, the National Company Law Tribunal (NCLAT) enabled a Dutch Court Administrator appointed by the Noord District Court in Holland to participate in the...
Can a Sole Proprietorship Initiate Insolvency Proceedings under the IBC?
[Sahithi Uppalapati is a III Year, B.A.LLB (Hons.) student at NALSAR University of Law, Hyderabad] The recent decisions of various benches of the National Company Law Tribunal conflict on the issue of whether a sole proprietorship concern is covered under the term ‘person’ under section 3(23) of the Insolvency and Bankruptcy Code, 2016, which is determinative of who is entitled to initiate a...
Insolvency of Financial Service Providers and Third Party Rights Under Securitisation Contracts
[Richa Saraf is an Advocate] The Insolvency and Bankruptcy Code, 2016 (“Code”) does not, in general, deal with insolvency of financial service providers (“FSPs”), as FSPs are seen to be systemic and complex structures engaging in unique transactions. However, the collapse of Dewan Housing Finance Corporation Limited (“DHFL”) led to the notification of the Insolvency and Bankruptcy (Insolvency and...
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