[Siddharth Kumar is a 3rdyear B.B.A. LL.B.(Hons.) student at Vivekananda Law School, Delhi] The Supreme Court of India, by its order dated 10 August 2018 in Pr. Commissioner of Income Tax v. Monnet Ispat and Energy Ltd. has held that the provisions of the moratorium stipulated under section 14 of the Insolvency and Bankruptcy Code, 2016 (“ Code”) would override anything inconsistent contained in...
Circumstances where Resolution Process can be Declared Void after Initiation
[Shreya Routh is an Executive at Vinod Kothari & Company] Gains through unjust fraud are never secured. The same goes for a company against which a process of corporate insolvency has been initiated. If the sole intent for initiation of a case is to defraud the creditors, there can be no possibility of revival of the company. The Insolvency and Bankruptcy Code, 2016 (the “Code”) comes with...
IBBI Expects to Usher in Effective Decision-Making at Creditors’ Committee Meetings
[Vinod Kothari is an insolvency practitioner at Vinod Kothari & Co and can be reached at [email protected]] The circular dated 10 August 2018 issued by the Insolvency and Bankruptcy Board of India (IBBI) makes for interesting reading. While it is lamenting the fact that the hard timeline-bound regime of the insolvency process will lead to unintended corporate mortality if the bank...
Fraudulent Initiation of Insolvency Proceedings
[Richa Saraf is a Legal Advisor at Vinod Kothari & Co.] Section 65 was incorporated in the Insolvency and Bankruptcy Code, 2016 (the “Code”) so that the provisions thereof cannot be misused by any person who has initiated the insolvency resolution process or liquidation proceedings with a fraudulent or malicious intent, and for any purpose other than for the resolution of insolvency or...
Concept of Related Party: Interpretation by Letter or Spirit of the IBC?
[Richa Saraf is a Legal Advisor at Vinod Kothari & Co.] In J.R. Agro Industries P. Limited v. Swadisht Oils P. Ltd. (decided on 24 July 2018), the National Company Law Tribunal (NCLT) Allahabad observed that“if claim of related party is given priority over operational creditors, it would not be just to operational creditor”. In the instant matter, the related party and the corporate debtor...
NCLAT Settles the Fate of Proceedings under Section 138 of the NI Act during Bankruptcy
[Aayush Mitruka is a lawyer based in Delhi] The National Company Law Appellate Tribunal (the NCLAT) settled a very important question of law under the Insolvency and Bankruptcy Code, 2016 (the Code) which has been troubling practitioners. The question whether proceedings filed under section 138 of the Negotiable Instruments Act, 1881 (the NI Act) against the corporate debtor will be stalled...
Protecting the Interests of First Charge Holders under the Insolvency and Bankruptcy Code
[Shivam Ahuja is a Final year B.A.,LL.B. at Jindal Global Law School, Sonepat] Introduction A charge as defined in section 2(16) of the Companies Act, 2013 is created over an asset to secure the repayment of a debt. The terms and conditions of the charge are governed by the contract between the parties. Some contracts allow for creation of a subsequent charge while some do not, while some warrant...
Corporate Insolvency: Fraudulent Transactions and Look-Back Period
[Richa Saraf is a Legal Advisor at Vinod Kothari Consultants Pvt Ltd] A combination of sections 45, 49, 66 and 69 of the Insolvency and Bankruptcy Code, 2016 (the Code) requires and empowers the liquidator to apply to the National Company Law Tribunal (NCLT) for appropriate orders in case the Liquidator comes across any vulnerable transactions during the process of liquidation. Such transactions...
Section 29A of the Insolvency and Bankruptcy Code, 2016: The Ambit Narrows
[Rudresh Mandal is a 4thyear student at NALSAR University of Law and Mallika Sen is a 3rdyear student at National Law School] Section 29A of the Insolvency and Bankruptcy Code, 2016, (‘IBC’) has been heavily criticised for casting a net exceedingly wide for preventing maximisation of pay-outs to creditors merely because the bidder is the promoter of the corporate debtor, or for ignoring the...
Subordination of Operational Creditors under IBC: Whether Equitable?
[Vinod Kothari and Sikha Bansal are at Vinod Kothari & Company and can be reached at [email protected]] Introduction Section 53 of the Insolvency and Bankruptcy Code, 2016 (IBC) puts unsecured financial creditors above the claims of the governments. These unsecured financial creditors may actually be even related parties and, therefore, the underlying financial transaction may be...
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