Weekly Digest Of IBC Cases: April 10th To April 17th, 2022

1. NCLT KOLKATA INSOLVENCY RESOLUTION PROCESS AGAINST LEGAL HEIRS OF PERSONAL GUARANTOR BY FINANCIAL CREDITOR NOT PERMISSIBLE Case title: Bank of Baroda v Ms. Divya Jalan Case No: C.P. (IB) - 363/2021 The National Company Law Tribunal ("NCLT"), Kolkata Bench Consisting of Shri Rajasekhar V.K. (Judicial Member) and Shri Balraj Joshi (Technical Member) while dismissing an application filed by the Bank of Baroda (Financial Creditor), held that the application is not maintainable against legal heirs of the Personal Guarantor under the IBC. As per regulation 3(1)(a)(e) of 'Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019', a personal guarantor to a Corporate Debtor is a person against whom guarantee has been invoked and there is outstanding dues left, partly or fully. The definition does not include the 'legal heirs'. It was further observed that when an application under Section 95 of IBC is filed, the assets of the Personal Guarantor are hit by moratorium. If the legal heirs of the deceased Personal Guarantor are put into the shoes of the Personal Guarantor, then their personal assets would also get automatically hit by moratorium, which would cause grave prejudice to the rights of the third party. It further held that there is no provision in the IBC which envisages that the concept of legal heirs stepping into the shoes of the deceased Personal Guarantor. 2. INSOLVENCY AND BANKRUPTCY BOARD OF INDIA IBBI NOTIFIED THE AMENDED INSOLVENCY AND BANKRUPTCY BOARD OF INDIA (VOLUNTARY LIQUIDATION PROCESS) REGULATIONS, 2017 The Insolvency and Bankruptcy Board of India ("IBBI") had issued a Press Release on 08.04.2022 notifying the public that amendments have been made to Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017 ("Voluntary Liquidation Regulations"). The amendments are as follows: a. The Liquidator shall prepare the list of stakeholders within 15 days from the last date for receipt of claims, where no claim from creditors has been received till the last date for receipt of claims. b. The Liquidator shall distribute the proceeds from realization within 30 days the receipt of the amount to the stakeholders. c. The Liquidator shall endeavour to complete the liquidation process of the corporate person within 270 days from the liquidation commencement date, where the creditors have approved the resolution under Section 59(3)(c) of IBC or Regulation 3(1)(c), and 90 days from the liquidation commencement date in all other cases. 3. NCLT DELHI NCLT, DELHI ISSUED CIRCULAR REGARDING DEFECTIVE APPLICATIONS AND PETITIONS BASED ON RULE 28 (2) OF NCLT RULES, 2016 A circular has been issued by the National Company Law Tribunal ("NCLT"), Delhi, on 07.04.2022, in view of Rule 28 (2) of NCLT Rules, 2016. The circular states on scrutiny, if an Application is found to be defective, after notice to the party, the same shall be returned for compliance. If the defects are not complied within 7 days, the Registrar may pass appropriate orders. This notice was issued since there was a failure to remove the defects raised by the registry and to comply with the direction regarding the list of 'Common Objections' published in the website of NCLT dated 17.3.2022, 25.3.2022 and 4.4.2022 4. INSOLVENCY AND BANKRUPTCY BOARD OF INDIA (IBBI) IBBI DISCIPLINARY COMMITTEE RESTRAINS INSOLVENCY PROFESSIONAL FROM RENDERING SERVICES FOR TWO YEARS Case No: IBBI/DC/91/2021 In a matter before the Disciplinary Committee of the IBBI, an Insolvency Professional, namely Mr. Manoj Kumar Singh, has been found to be dispensing his duties as an Interim Resolution Professional in contravention of the Insolvency and Bankruptcy Code, 2016 ("IBC") and its regulations. The Disciplinary Committee, vide an order dated 08.04.2022, has directed Mr. Singh to not seek or accept any process or assignment; or render any services under the IBC for a period of two years from the date when the said order comes into force. The Committee had observed that Insolvency Professional ("IP") had failed to conduct the Corporate Insolvency Resolution Process ("CIRP") as per the provisions of the IBC and its Regulations, as no proper actions were taken by him to constitute the Committee of Creditors. The Committee held that the IP has acted in contravention to the provisions of Sections 17, 18, 20, 25, 208(2)(a) and (e) of the IBC, regulations 16B, 27, 35A, 36, 36A and 40A of CIRP Regulations, Regulation 7(2)(a) and (h) of the IP Regulations and clauses 1, 2, 10, 13 and 14 of the Code of Conduct specified in First Schedule of the IP Regulations. 5. NATIONAL COMPANY LAW APPELLATE TRIBUNAL (NCLAT) NCLAT STAYS THE CONSTITUTION OF COMMITTEE OF CREDITORS OF ...

Weekly Digest Of IBC Cases: April 10th To April 17th, 2022

Pallavi Mishra

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