[Rohit Sharma is a Partner at Mamta Binani & Associates] The promulgation of the Insolvency and Bankruptcy Code, 2016 (‘Code’) has led to an enormous number of applications being filed before the adjudicating authority for initiation of the corporate insolvency resolution process (‘CIRP’) against a company. The purpose of the Code, according to the Report of the Insolvency Law Committee, was...
Binani Judgment: A Ray of Hope for Operational Creditors
[Ashish Rana is an Advocate on Record in the Supreme Court of India] The Insolvency and Bankruptcy Code, 2016 (‘I&B Code’) provides for resolution of insolvency of persons in a time bound manner along with the maximisation of value of such person’s assets, to promote entrepreneurship, availability of credit and to balance the interests of all stakeholders. Under the I&B Code, upon...
Rights of Preference Shareholders under the Insolvency Code
[Shubham Jain and Kannan Jhunjhunwala are BA.LLB (Hons.) students at National Law University, Delhi] The National Company Law Appellate Tribunal (NCLAT) in Brij Bhushan Singhal v Bhushan Steel Ltd. (10 August 2018) allowed for preference shares to be redeemed outside the purview of section 55 of the Companies Act, 2013 when required by the resolution plan. In this case, with Tata Steel Ltd. as...
The Fate of an Operational Creditor: A Brief Update
[Shayonee Dasgupta is an independent legal practitoner, and also works a consultant with IDIA] Ever since the Insolvency and Bankruptcy Code (IBC) was enacted in 2016, it has been the focal point of several cases before the Supreme Court and various High Courts across the country. One of the key provisions of the IBC that has been the subject matter of a majority of such petitions is the...
Value Destruction and Wealth Transfer under IBC, 2016
[Pratik Datta is a researcher at the National Institute of Public Finance and Policy (NIPFP)] India experienced a major structural change with the enactment of the Insolvency and Bankruptcy Code, 2016 (“IBC”). Since then, India’s ranking under the Insolvency head in the World Bank Group’s Doing Business report has sharply risen from 136 to 103. India was also awarded the Global...
Invocation of Unmatured Corporate Guarantee during Moratorium under Bankruptcy Law
[Himanshu Handa is an Associate with UKCA and Partners, a Law Firm in New Delhi] Introduction In Axis Bank Limited v Edu Smart Services Private Limited, the National Company Law Tribunal (“NCLT”), Delhi had rejected a plea from the financial creditor i.e. “Axis Bank” against the corporate guarantor i.e. Edu Smart in respect of its claim pertaining to a corporate guarantee in the insolvency...
Corporate Insolvency and the Admission of a Debt under the Negotiable Instruments Act
[Siddharth Kumar is a III year BBA LLB (Hons.) student at Vivekananda School of Law and Legal Studies, New Delhi and can be reached at [email protected]] The National Company Law Appellate Tribunal (“NCLAT”) in Sudhi Sachdev v. M/s APPL Industries Ltd. held that the pendency of a case under sections 138 and141 of the Negotiable Instruments Act, 1881 (“NI Act”) amounts to an admission of...
Role of the Adjudicating Authority in Considering a Resolution Plan
[Richa Saraf and Ananya Raghavendra are with Vinod Kothari Consultants Pvt Ltd] The insolvency resolution process of Binani Cements has been through various twists and turns. On 19 November 2018, the Supreme Court in Rajputana Properties Pvt. Ltd. v. UltraTech Cement Ltd. & Ors. dismissed Dalmia Bharat’s plea to seek a stay on Ultratech’s bid for Binani Cement, thereby upholding the UltraTech...
Whether a Refund of Advance is an Operational Debt
[Richa Saraf and Shreya Jain are with Vinod Kothari Consultants Pvt. Ltd.] It is not an unusual business practice to collect advance monies from consumers before providing goods or services to them. In such a scenario, consumers constantly bear the risk of not being able to recover the advance amount in the event the provider of goods or services abruptly ceases operations and, as such, also...
Corporate Insolvency and the “Fitter Bidder”
[Jaskiran Kaur is an associate at IndusLaw] The National Company Law Appellate Tribunal (“NCLAT”) on 14 November, 2018 gave a go – ahead to the revised bid of Ultratech Cement Limited (“Ultratech”) for the acquisition of debt-ridden Binani Cement Limited (“Binani Cement”), while ruling that the resolution plan submitted by the competitor Dalmia Bharat through its group firm Rajputana Properties...
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