[Mathanki Narayanan is a 4th year B.A. L.L.B. (Hons.) student at Jindal Global Law School] The conceptualization of the Insolvency and Bankruptcy Code, 2016 (IBC) was underpinned by the need to preserve economic value through expediency. However, its implementation has revealed asymmetries of power amongst the creditors. The Committee of Creditors (CoC) spearheads the Corporate Insolvency...
Balancing Review and Recall: NCLAT on Correction of Procedural Errors
[Basil Gupta is a 4th year B.A., LL.B. (Hons.) student at National Law University, Jodhpur] The National Company Law Appellate Tribunal (NCLAT) has clarified that it possesses the power to recall its judgments, asserting its inherent authority under Rule 11 of the NCLAT Rules, 2016. In a significant decision, a five-member bench of the NCLAT in Union Bank of India (Erstwhile Corporation Bank) v...
Reimagining the Insolvency Process: A Case of Multiple Resolution Plans
[Piyush Kr. Choubey and Kaustubh Kumar are 4th year students at the National University of Study and Research in Law, Ranchi] The Ministry of Corporate Affairs (“MCA”) in January 2023 floated a discussion paper on possible changes to the Insolvency and Bankruptcy Code, 2016 (the “Code”). One of the topics in the discussion paper was “Reimagining the consideration of the resolution plan and the...
Supreme Court Ruling: Admission of Corporate Insolvency a Norm, Rejection an Exception
[Megha Maiti and Subhasmita Routray are legal counsels at Mercedes-Benz Financial Services India Private Limited] Section 7(5) of the Insolvency and Bankruptcy Code, 2016 (IBC) lays down the power of the National Company Law Tribunal (NCLT) to either accept or reject an insolvency application filed by a financial creditor. The issue of whether the said power is mandatory or discretionary in...
Position of a Seller of an Immovable Property under the Insolvency and Bankruptcy Code, 2016
[Lavanya Pathak and Pallavi Mishra are advocates practicing in the Delhi High Court] Under the Insolvency and Bankruptcy Code, 2016 (“IBC”), there is a clear scheme of categorization of creditors for the purpose of initiation of the corporate insolvency resolution process (“CIRP”). This categorization lies at the core of the waterfall mechanism for distribution of assets prescribed under section...
Shareholder Protection under IBC: A Myth or a Possibility
[Dhruv Kohli is a 4th year B.A.LLB student and Sanya Singh a 4th year B.S.W LLB student, both at Gujarat National Law University] Ever since the enactment of the Insolvency and the Bankruptcy Code, 2016 (IBC), there has been a shift in the debt resolution mechanism in India. Unlike its predecessors, the IBC is a creditor-centric legislation, which can be ascertained from the fact that once there...
Constitutionality of Section 327(7) of the Companies Act 2013: Sanctity of the Waterfall Mechanism
[Simran Malhotra is an Associate at Shardul Amarchand Mangaldas, New Delhi] In Moser Baer Karamchari Union v. Union of India (2 May 2023), workmen unions challenged the constitutionality of section 327(7) of the Companies Act (“Act”) for excluding preferential payment for workmen’s dues over other dues as provided under sections 326 and 327 of the Act in the event of liquidation of a company...
Preserving the IBC’s rationale: The Tussle with the Benami Act
[Rohan Srivastava and Rupam Dubey are currently B.A., LL.B. (Hons.) students at the National Law School of India University, Bengaluru] Presently, the Supreme Court is considering an appeal in the C Ramasubramaniam Liquidator v. Deputy Commssioner of Income Tax (Benami Prohibition) , which will potentially establish the extent to which the Insolvency and Bankruptcy Code (‘IBC’), [year] is given...
Dilemma Surrounding Assignment of Not Readily Realisable Assets (‘NRRA’) under the IBC
[Rohit Sharma is a Partner at Mamta Binani & Associates, Mumbai] By way of a notification dated 13 November 2020, the Insolvency and Bankruptcy Board of India (‘IBBI’) inserted regulation 37A to the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 (‘Liquidation Process Regulations’), which states as follows: “37A. Assignment of not readily realisable assets. A...
Imposition of an Interim Moratorium Prior to Corporate Insolvency Resolution Process
[Sumer Karekar is a lawyer and is presently undergoing the Graduate Insolvency Programme at the Indian Institute of Corporate Affairs, Gurgaon] The Insolvency and Bankruptcy Code, 2016 (“IBC”) has sought to implement a time-bound framework for resolution of stressed companies. For this purpose, it prescribes a timeline for the adjudicating authority (“AA”) to admit or reject an application for...
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