The question of whether the creditors and an insolvent corporate debtor can enter into an out-of-court settlement that results in the withdrawal of the insolvency process has been a vexed one. The issue has received the attention of the Supreme Court on at least three occasions, as previously discussed on this Blog (here, here, here and here). However, as I argue in this column in BloombergQuint...
Insolvency under Section 29A: Pre-Pack Pools & Independent Review of Connected Party Sales
[Rudresh Mandal and Hardik Subedi are 3rd year students of NALSAR University of Law, Hyderabad] While the Insolvency and Bankruptcy Code, 2016 (“IBC”) in section 5(25) initially allowed ‘any person‘ to submit a resolution plan, the moral hazard posed by defaulting promoters buying back the assets of the corporate debtor at steep discounts soon prompted the Government to bar certain...
Supply of Essential Goods or Services under the IBC: Unresolved Issues
[Job Michael Mathew is a IV year student at NALSAR University of Law, Hyderabad] Under section 13(1)(a) of the Insolvency and Bankruptcy Code, 2016 (“Code”), the adjudicating authority is required to impose a moratorium for matters referred to in section 14. Section 14(2) of the Code...
Call for Papers: Insolvency and Bankruptcy Code
[Announcement from Vinod Kothari & Co.] The following are details of a paper writing competition on a topic under the Insolvency and Bankruptcy Code, 2016 (the “Code”), as detailed below: The Code in India makes a distinction between financial creditors (FC) and operational creditors (OC). FCs make a resolution plan; which should bind all- including OCs. FCs sit and decide whether and how...
Transferability of Winding-up Proceedings from High Court to NCLT
[Dheeresh Kumar Dwivedi is a lawyer at APJ SLG Law Offices New Delhi] The Companies Act, 2013 (“Act of 2013”) was passed with the object of consolidating and amending the law of corporations in India. Before the passage of the Act, the winding-up of a corporate debtor on the ground of ‘inability to pay debts’ was governed by the provisions of sections 433(e) and 434 of Companies Act, 1956 (“Act...
The Insolvency and Bankruptcy Code: Moratorium and Personal Guarantors
[Aayush Mitruka is a lawyer based in Delhi] The latest ruling of the National Company Law Appellate Tribunal (Appellate Tribunal) in the case of State Bank of India (SBI) v V Ramakrishnan and another has evoked another controversy touching upon the Insolvency and Bankruptcy Code, 2016 (Code) that serves as a major setback to creditors. The moot question was whether a financial creditor can...
Winding-up and Liquidation: Demarcation by the Bombay High Court
[Shubham Sancheti and Prashamsha Tulachan are 4th Year B.A., LL.B. (Hons.) studentsat NALSAR University of Law, Hyderabad] The Insolvency and Bankruptcy Code, 2016 [“Code”] entailed various interpretation lacunae and, the Central Government is constantly seeking to bridge the emerging gaps. One of such lacuna pertained to the conflict between “Winding-up” under the Companies Act [“1956 Act” or...
The Liquidation Value- ‘Erstwhile’ Benchmark for Prospective Investors
[Rohit Sharma is a Company Secretary in Kolkata, and can be reached at [email protected]] Introduction In accordance with the provisions of the Insolvency and Bankruptcy Code, 2016 (‘Code’), the interim resolution professional was required to appoint two registered valuers for the valuation of the assets of the corporate debtor. The registered valuers were appointed for the valuation of...
Assignment of Debts under the Insolvency and Bankruptcy Code
[Aayush Mitruka is a lawyer based in Delhi] Synergies Dooray Automotive, the first corporate entity to be resolved under the new Insolvency and Bankruptcy Code (Code) posed a few very interesting questions and highlighted some grey areas in Code. In the present post I intend to discuss one important issue that came up in the context of assignment of debts. To put things in perspective, the Code...
Latecomers in Liquidation – Entitlements and Penalties
[Sikha Bansal is an Associate at Vinod Kothari & Company and can be reached at [email protected]] The Insolvency and Bankruptcy Code (the “Code”) provides for corporate insolvency resolution in respect of corporate debtors, and then liquidation where the insolvency proceedings fail. In case of liquidation of insolvent entities, the competing stakeholders stake their claims on...
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