President Promulgates IBC Amendment Ordinance To Allow Pre-Packaged Insolvency Process For MSMEs

The Central Government has promulgated Insolvency and Bankruptcy Code(Amendment) Ordinance 2021 to allow pre-packaged insolvency resolution process for corporate debtors classified as micro, small or medium enterprises under the Micro, Small and Medium Enterprises Development Act, 2006.The Ordinance amends the Insolvency and Bankruptcy Code 2016 to allow the Central Government to notify...

NCLT Bengaluru Bench Permits A Resolution Applicant To Withdraw The Resolution Plan

The NCLT, Bengaluru Bench has allowed a Resolution Applicant, M/s. Kundan Care Products Ltd. to withdraw its Resolution Plan after the same was approved by the Committee of Creditors of the Corporate Debtor, M/s. Sagar Power (Neerukatte) Pvt. Ltd. The Resolution Applicant had moved the NCLT under Section 60(5) of the IBC, after discovering certain 'discrepancies' and 'inaccuracies' in the Information Memorandum and other correspondences issued by the Resolution Professional. It was ...

Person Claiming To Be An Operational Creditor Should Demonstrate Their Claim Can Be Treated As Operational Debt Under The IBC: NCLT

The Kochi Bench of the National Company Law Tribunal has underscored the importance of examining the nature of debt involved in a transaction before a Corporate Insolvency Resolution Proceeding (CIRP) is instituted upon an application to the effect. Judicial Member Ashok Kumar Borah iterated the following prerequisites for the institution of a CIRP under the Insolvency and Bankruptcy...

Arbitration Reference Not Maintainable If Filed After Admission Of Insolvency Resolution Petition U/s 7 IBC: Supreme Court

The Supreme Court observed that in any proceeding which is pending before the Adjudicating Authority under Section 7 of Insolvency and Bankruptcy Code, if such petition is admitted upon the Adjudicating Authority recording the satisfaction with regard to the default and the debt being due from the corporate debtor, any application seeking reference to arbitration...

Insolvency Process Maintainable Against Corporate Guarantor Even If Principal Borrower Is Not A 'Corporate Person' : Supreme Court

'In law, the status of the guarantor, who is a corporate person, metamorphoses into corporate debtor, the moment principal borrower (regardless of not being a corporate person) commits default in payment of debt which had become due and payable"

Adjudicating Authority Cannot Substitute Any Commercial Term Of Resolution Plan Approved By Committee Of Creditors: Supreme Court

The Supreme Court observed that adjudicating authority cannot substitute any commercial term of the resolution plan approved by Committee of Creditors. If, within its limited jurisdiction, the Adjudicating Authority finds any shortcoming in the resolution plan vis-à-vis the specified parameters, it would only send the resolution plan back to the Committee of Creditors, for re-submission,...

Insolvency Law in Review – February 2021

The enactment of the Insolvency and Bankruptcy Code 2016 (Code) has had significant ramifications on the corporate insolvency landscape. Over time, the Code has witnessed a manifold increase in litigation, and consequently in the number of decisions. This has made it difficult for insolvency practitioners to stay updated with developments in the field. The purpose of this column is to fill this gap by providing brief summaries of latest decisions, from the various fora dealing with Insolvency...

Section 14 Limitation Act Applies To Application Under Section 7 IBC : Supreme Court

The Supreme Court has held that in an application under Section 7 of the Insolvency and Bankruptcy Code, the applicant can claim the benefit of Section 14 of the Limitation Act, in respect of proceedings under the SARFAESI Act.Section 14 of the Limitation Act 1963 allows for exclusion from the limitation period the time spent litigating before wrong forum.A bench comprising Justices...

Not All Disputes Are Amenable To The Jurisdiction Of Electricity Commission: PPAs Cannot Be Terminated During Moratorium

The Hon'ble Supreme Court in its order dated 08.03.2021 in the matter titled Gujarat Vikas Nigam Limited Vs. Mr. Amit Gupta & Ors. ("Instant Matter"), while upholding order of the National Company Law Appellate Tribunal ("NCLAT") held that National Company Law Tribunal ("NCLT") has jurisdiction to adjudicate contractual disputes which arise solely from or which relate to corporate debtor's insolvency. In Instant Matter, the Hon'ble Court has dealt with the role/power of NCLT to...

NCLT Allows Waiver Of Improper Share Allotment And Irregular Appointment Of Directors

The Hon'ble NCLT recently in the matter of Harman Singh Arora and Ors. v. Axestrack Software Solutions Pvt. Ltd. & Ors. ("Company Petition No. 11/241-242/JPR/2018") and in Priya Choudhary and Ors. vs. Axestrack Software Solutions Pvt. Ltd. & Ors. ("Company Petition No. 279/241-242/JPR/2019") after taking into record the settlement agreement arrived at between the parties inter se, allowed waiver/ exemption to the Company ("Axestrack Software Solutions Pvt. Ltd") from the penalty(ies) qua...

Person Ineligible U/s 29A IBC To Submit Resolution Plan Cannot Propose Scheme Of Compromise & Arrangement U/s 230 Companies Act 2013: Supreme Court

The Supreme Court held that a person who is ineligible under Section 29A of the Insolvency Bankruptcy Code to submit a resolution plan, cannot propose a scheme of compromise and arrangement under Section 230 of the Companies Act, 2013.The bench comprising Justices DY Chandrachud and MR Shah also upheld the constitutional validity of Insolvency and Bankruptcy Board of India (Liquidation...

NCLT/NCLAT Can't Interfere With Commercial Wisdom Of CoC Except Within Limited Scope Under Sections 30 & 31 IBC : Supreme Court

The Supreme Court has reiterated that the National Company Law Tribunal(NCLT) or the National Company Law Appellate Tribunal(NCLAT) cannot interfere with the 'commercial wisdom' of the Committee of Creditors(CoC), except within the limited scope under Sections 30 and 31 of the Insolvency and Bankruptcy Code(IBC).Based on this well settled principle, a 3-judge bench comprising Justices...