The Ministry of Corporate Affairs (“MCA”) issued a notification on October 03, 2023 under Section 14(3)(a) of the Insolvency and Bankruptcy Code, 2016 (“IBC”), exempting the applicability of moratorium under Section 14(1) of the IBC to transactions, arrangements or agreements under the Cape Town Convention on International Interests in Mobile Equipment (“Convention”) and the Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment (“Protocol”) (the “Notification”).Continue Reading Sky is the Actual Limit for IBC? – Exemption from Moratorium over Aircraft Objects during Insolvency
In its recent judgment in State Bank of India vs Moser Baer Karamchari Union, the Apex court has reiterated the settled legal position of law pertaining to treatment of Employees’ provident fund, pension fund and gratuity Fund (“EPF Dues”) under the Insolvency and Bankruptcy Code, 2016 (“Code”). The primary reason for various interpretations of how PF dues are treated under the Code ensues from the overlapping nature of certain provisions within the Code itself, the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (“EPF Act”) and the Companies Act, 2013. The article traces the judicial trend in treatment of EPF dues under the code and analyses the reasoning put forth by various adjudicating authorities in deciding on the rights of the employees of the corporate debtor.Continue Reading Treatment of Employees Provident Fund Dues under the IBC
Recently, the Supreme Court, in the case of Gaurav Agarwal vs CA Devang P. Sampat, has issued notice to the parties for adjudicating the crucial question of law pertaining to the ‘Period of Limitation’ for preferring an appeal under Section 61 of Insolvency and Bankruptcy Code, 2016 (“the Code”).Continue Reading Limitation under Section 61 of Insolvency and Bankruptcy Code: Too Strict Interpretation of the Law?
Ease of doing business also includes the ease with which companies can shut operations and exit the marketplace in a country. Under Indian law, companies (or limited liability partnerships (“LLP”) have various options to wind down operations voluntarily, either under the Companies Act, 2013 (“Companies Act”), (or the Limited Liability Act, 2008, for an LLP) or the Insolvency and Bankruptcy Code, 2016 (“IBC”).Continue Reading Ease of closing a Business in India
On July 12, 2022, the Supreme Court of India (“Supreme Court”) passed a judgment in Vidarbha Industries Power Limited v. Axis Bank Limited (“Vidarbha”), which considered the question whether Section 7(5)(a) of the Insolvency and Bankruptcy Code, 2016 (“Code”), is mandatory or discretionary in nature. Section 7(5)(a) of the Code states that the National Company Law Tribunal (“NCLT”) “may” admit an Application filed under Section 7 of the Code (“Application”), if (a) a default has occurred; (b) the Application is complete; and (c) there is no disciplinary proceeding pending against the proposed resolution professional. The Supreme Court held that Section 7(5)(a) of the Code allows the NCLT to reject an Application even if the financial creditor establishes ‘debt’ and ‘default’ on the part of the corporate debtor.Continue Reading The Vidarbha Aftermath
Over the last few years, several cases of defaulting real estate companies, including major players like, Amrapali, Jaypee Infratech and Supertech, have been stuck at various stages of insolvency proceedings under the provisions of the Insolvency and Bankruptcy Code, 2016, as amended (“Code”). As per the data provided by Insolvency and Bankruptcy Board of India (“IBBI”), a total of 344 corporate debtors engaged in construction and real estate activities have been admitted into corporate insolvency resolution process (“CIRP”) as of September 2022.[i]Continue Reading Proposed Amendments to the Insolvency and Bankruptcy Code- A Real Solution For Real Estate Insolvencies?
The Supreme Court, in a recent judgment passed in Vidarbha Industries Power Limited v. Axis Bank Limited1, adjudicated upon whether Section 7(5)(a) of the Insolvency and Bankruptcy Code, 2016 (“IBC“) is a mandatory or discretionary provision i.e. on an application for initiating Corporate Insolvency Resolution Process (“CIRP“) by a financial creditor.Continue Reading Admission of application Section 7(5)(a) not mandatory even when default established: Supreme Court clarifies
The Supreme Court of India, in a recent judgment, reiterated that the limitation period for filing of an appeal against the order of the National Company Law Tribunal (“NCLT”) as laid down under Section 61 of the Insolvency and Bankruptcy Code, 2016 (“IBC”) has to be interpreted strictly.Continue Reading Interpreting Limitation Provisions – Supreme Court Rejects the ‘Date of Knowledge’ Argument
The provisions of the Insolvency and Bankruptcy Code, 2016 (the “Code”) in relation to personal guarantors (“PG”) to corporate debtor (“Corporate Debtor”) have been effective since December 1, 2019. However, whether a corporate insolvency resolution process (“CIRP”) (or even a pending application to initiate such a process) against the Corporate Debtor is a pre-requisite for initiation of insolvency resolution process or bankruptcy process against the PG under the Code (“PG Proceedings”) before the National Company Law Tribunal (“NCLT”) has been a question that continued to vex the judicial for some time, until recently the Honourable Supreme Court, in Mahendra Kumar Jajodia v. SBI Stressed Assets Management Branch (“Mahendra Kumar Case”), upheld the National Company Law Appellate Tribunal (“NCLAT”) order holding that the NCLT has jurisdiction over PG Proceedings, regardless of any CIRP or liquidation proceedings pending against the Corporate Debtor before it.
This blog analyses the background, the developments so far and the position after the Apex Court’s order.Continue Reading Appropriate forum for Insolvency of Personal Guarantors – Is the last word out?
International Monetary Fund (“IMF”) was founded in the aftermath of World War-II at the Bretton Woods Conference in 1944 to establish a post-war financial order that would facilitate economic cooperation. The IMF has the mandate of providing financial support mechanisms such as bailouts to member countries that are experiencing actual or potential macroeconomic problems. A balance of payments crisis is a huge macroeconomic imbalance. It is also called currency crisis. It occurs when a nation is unable to pay for essential imports or service its external debt payments. Since 2010, world financial markets have expressed recurrent concerns about risks to debt sustainability. This was fuelled by the COVID-19 pandemic wherein most stressed economies got pushed into a pandemic induced financial crisis, making IMF bailouts the go to short-term ‘solution’ for failing balance of payments.Continue Reading International Monetary Fund Bailouts: The Sri Lankan Bankruptcy Battle