IBC News
IBC Moratorium Vs Cheque Dishonour Proceedings
The Hon'ble Supreme Court of India has, in the matter of P. Mohanraj & Ors. Vs M/s. Shah Brothers Ispat Pvt. Ltd. has clarified the difference between section 14 of the IBC Code, 2016 and section 138/141 of the Negotiable Instrument Act. Besides determining the difference between the two, Hon'ble Court has also emphasised whether Moratorium under Section 14 of IBC Covers Section 138 of NI Act Proceedings against Corporate Debtor for Cheque Dishonour. First, Hon'ble Court has made...
IBC - The Journey So Far – Part III
EMERGING LEGAL ISSUES CLOGGING RESOLUTION: There are few major emerging issues which could impact resolutions under IBC (especially in large cases), one of which is shrinking market for resolution. A Corporate Debtor attracts proposals if it has inherent value and technology used by it is not changed (which is very unlikely) and it is viable in its market space. Since, there are few takers, the value offered hovers around liquidation value and in many cases substantially below...
Process Analysis Of Pre-Packs : The Next Step In The Evolution Of Insolvency Regime In India
The enactment of the Insolvency and Bankruptcy Code, 2016 ('the Code') provided a new insolvency regime to the country in order to resolve the corporates and individuals, undergoing financial distress, in a time bound manner. Given the fact that the market for the new professions created by the Code have sufficiently matured and the processes introduced by it have adequately evolved, the Government found it feasible to explore new initiatives in order to further improve the effectiveness of the...
IBC - The Journey So Far – Part II
JOURNEY ON THE LEGAL FRONT The factors which could be said to be key for rapid and successful stabilization of the legal positions, have been timely initiatives by the Government by introducing timely amendment in the Code wherever needed and some landmark judgments by the Supreme Court which helped in accelerating the process and cutting short the time. In a short span of four years there were as many as four major amendments in the Code. The first major amendment was introduced...
Application For Initiating CIRP Has To Be Rejected If A Dispute Truly Exists In Fact And Is Not Spurious, Hypothetical Or Illusory: Supreme Court
The Supreme Court observed that adjudicating authority has to reject an application seeking initiation of Corporate Insolvency Resolution Process under Section 9 of Insolvency and Bankruptcy Code, if a dispute truly exists in fact and is not spurious, hypothetical or illusory.The bench of Justices RF Nariman and BR Gavai observed that, at this stage, the authority is not required to be...
NCLT/NCLAT Has No Residual Equity Jurisdiction While Dealing With Resolution Plan Approved By CoC: Supreme Court
The Supreme Court observed that there is no residual equity based jurisdiction in the Adjudicating Authority or the Appellate Authority while dealing with the resolution plan approved by the Committee of Creditors.The bench of Justices DY Chandrachud and MR Shah reiterated that these authorities can not enter into the commercial wisdom underlying the approval granted by the CoC to the...
No Bar In Permitting Amendment Of Pleadings Or Filing Of Additional Documents In CIRP Application U/s 7 IBC: Supreme Court
The Supreme Court observed that there is no bar in permitting amendment of pleadings or to the filing of additional document in an application under Section 7 of the Insolvency and Bankruptcy Code.Depending on the facts and circumstances of the case, when there is inordinate delay, the Adjudicating Authority may, at its discretion, decline the request, the bench comprising Justices...
Money Decree/Certificate Of Recovery In Favour Of Financial Creditor Gives Fresh Cause Of Action To Initiate CIRP U/s 7 IBC: Supreme Court
The Supreme Court observed that a judgment and/or decree for money in favour of the Financial Creditor, or the issuance of a Certificate of Recovery in its favour, would give rise to a fresh cause of action for the Financial Creditor, to initiate proceedings under Section 7 of the IBC for initiation of the Corporate Insolvency Resolution Process. Such judgment/decree may be passed by the...
IBC - The Journey So Far – Part I
This write up trace evolution of jurisprudence and short legal history under Insolvency and Bankruptcy Code, 2016. Since, it captures the developments on various fronts, the write up is divided into three Parts. Part-I traces the background and principles of the new law and impact it has so far created on the system. Part-II deals with the various amendments carried out in the Code as the landmark judgements which shaped the law in the present form. Part-III deals with the issue clogging...
"Scattering Litigation Causes Multiplicity Of Litigation": Gujarat HC Recommends Transfer Of Winding Up Proceedings To NCLT
Stressing that scattering the litigation in various Forums is the root cause of a multiplicity of litigation and amounts to misuse and abuse of process of law, the Gujarat High Court recently recommended transferring of the entire litigation (Winding up and insolvency proceedings) of two corporate bodies viz. GPPML (Ganpati Pulp and Paper Mills Limited) and SIL to NCLT. The Bench of...
IBC Amendment Bill Passed In Lok Sabha To Allow Pre-Packaged Insolvency Process For MSMEs
The Lok Sabha on Wednesday passed the Insolvency and Bankruptcy Code (Amendment) Bill, 2021. It was introduced in the house on Monday, July 26 and passed without any discussion due to disruptions caused by opposition protests.As per the Government, the Covid-19 pandemic has taken a hit on the businesses, especially micro, small or medium enterprises (MSME sector) which is critical to the...