[Kavya Lalchandani is a Master of Corporate Law student at University of Cambridge] In a judgement dated 12 July 2022, in Vidarbha Industries Power Limited v. Axis Bank Limited, the Supreme Court (SC) ruled that admission of the application under section 7(5) of the Insolvency and Bankruptcy Code (IBC or the Code) which is made by a financial creditor is discretionary while admission of an...
The Conundrum of Inter-se Priorities between Secured Creditors in Liquidation
[Arvind Tiwari is a IV year student at the National Law University, Delhi] The recent ruling of the National Company Law Appellate Tribunal (“NCLAT”) in Oriental Bank of Commerce v. Anil Anchalia has rekindled the debate concerning the significance of inter-se priorities among secured creditors in the process of liquidation. In this matter, it was held that once a secured financial...
Debunking Special Situation Funds: Is India Ready for the Vultures?
[Aditya Shekhar and Abhishek Choudhary are Vth year B.A., LL.B. (Business Law Hons.) students at National Law University, Jodhpur] The need for inclusion of special situation fund [“SSF”] in the Indian financial market was felt due to India’s bad debt problem. It is evident from the recent trend and eagerness of financial institutions to sell off their non-performing assets [“NPA”], which...
The Supreme Court Reiterates the Status of Recovery Certificates under the IBC
[Abhyudaya Yadav and Adhiraj Lath are 4th year B.A., LL.B. (Hons.) students at Dharmashastra National Law University, Jabalpur] Recently, the Supreme Court of India (“Court”) in Kotak Mahindra Bank Ltd. v. A. Balakrishnan dealt with the issue of whether the issuance of a recovery certificate by a Debt Recovery Tribunal (“DRT”) can be treated as a “financial debt” within the meaning of section...
Scrutinizing the Status of Settlement Agreements Under the IBC
[Neelabh Niket is a 4th Year B.A., LL.B. (Hons.) student at Hidayatullah National Law University in Raipur] On 3 June 2022, the New Delhi Bench of the National Company Law Tribunal (NCLT) in Ahluwalia Contracts (India) Limited v. Logix Infratech Private Limited (Ahluwalia) rekindled the debate on the commencement of the Corporate Insolvency Resolution Process (CIRP) by creditors on the premise of...
Supreme Court on Commercial Wisdom of the Committee of Creditors
[Rohit Sharma is a Partner at Mamta Binani & Associates, Mumbai] In a judgment dated 3 June 2022 in Vallal RCK v. Siva Industries and Holdings Limited, the Supreme Court sought to hold, once again, that the commercial wisdom of the Committee of Creditors (‘CoC’) is supreme. Apart from the paramountcy of the commercial wisdom of the CoC, the Court also noted the tremendous importance of...
Can Government Companies be Brought under the Aegis of the IBC?
[Shradha Sharma is a banking and finance lawyer at a law firm in India] Government companies are defined under section 2(45) of the Companies Act, 2013 (“Act”) to mean any company in which not less than 51 percent of the paid-up share capital is held by the central government or state government(s), or partly by the central government and partly by one or more state governments, and includes the...
Supreme Court Explains Scope of Section 60(6) of IBC
[Raghav Bhatia is an Advocate, currently practising at the Supreme Court of India. The author would like to acknowledge Diali Sahana, 3rd Year Law Student of NUJS Kolkata, for her assistance] Recently, the Supreme Court of India in New Delhi Municipal Council v. Minosha India Limited explained the scope of section 60(6) of the Insolvency and Bankruptcy Code, 2016 (“IBC”). Under section 60(6) of...
Lost in a Labyrinth: NCLT’s Journey from Admission to Withdrawal under the IBC
[Siddharth Jasrotia is a IV year student at the Maharashtra National Law University, Mumbai] The National Company Law Tribunal’s (“NCLT”) power to allow the withdrawal of insolvency petition has been subject to immense judicial scrutiny over the past few years, often resulting in conflicting outcomes. The inception of section 12-A in the Insolvency and Bankruptcy Code, 2016 (“IBC”) further...
Rising Haircuts: A Death Knell for the IBC?
[Simran Lunagariya and Priyanshi Jain are fourth-year B.Com LL.B. (Hons.) students at Nirma University, Ahmedabad (Gujarat)] A competent insolvency procedure assists creditors and corporate debtors (“CDs”) in recognizing whether the stressed company is approaching financial collapse and in finding an amicable solution for the same. To this end, it is important that the insolvency procedure is...
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