Evolving Private Equity Trends in India – Buyout Transactions

INTRODUCTION

Private equity (PE) transactions in India conventionally comprised minority investments in Indian companies. However, maturing market conditions and an increasingly favourable regulatory landscape have been providing tailwinds to PE firms to undertake buyout transactions. Many PE firms investing in India have gained significant experience to deal with the governance and regulatory risks that Indian markets pose. This enables them to leverage their expertise from running businesses globally to managing businesses in India.
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THE ROAD TO RESOLUTION OF FINANCIAL SERVICE PROVIDERS - IBC

 

The Imperative for a distinct framework for the resolution of financial firms

The financial sector is facing a combination of liquidity, governance and business issues, on account of which certain Non Banking Financial Companies (“NBFCs”) are facing solvency concerns.

The severe liquidity crunch for NBFCs was caused  as banks and other financial institutions have curtailed refinancing the loans of NBFCs on account of which several NBFCs and other financial institutions faced debt servicing and solvency issues. These have sought to be resolved through the Stressed Asset Directions issued by the Reserve Bank of India (“RBI”) on June 7, 2019. This was fraught with complexities given the diverse sets creditor, including market borrowings  each of whom were governed by different financial regulators.
Continue Reading The Road to Resolution of Financial Service Providers: A Firm First Step

 Recent Maha RERA Directions on Change in Promoter

The real estate sector post enactment of the Real Estate (Regulation and Development) Act, 2016 (Act) is witnessing major consolidation primarily on account of financial constraints faced by small and mid-sized developers. Such consolidation has resulted in developers looking to either exit from their existing projects or enter into collaboration with large established developers for completing such projects.

Hence, in the present scenario, it is of the utmost importance for the industry to know the present legal regime under RERA dealing with new developers / promoters taking over an ongoing projects from existing promoters or from lenders during the process of enforcement of their security over the project.
Continue Reading Analysis of Recent Maha RERA Directions on Change in Promoter

Is Liquidation Irreversible - Schemes of Compromise in Liquidation

The 2005 Report of the Expert Committee on Company Law (JJ Irani Committee Report) had noted that an effective insolvency law:

should strike a balance between rehabilitation and liquidation. It should provide an opportunity for genuine effort to explore restructuring/ rehabilitation of potentially viable businesses with consensus of stakeholders reasonably arrived at. Where revival / rehabilitation is demonstrated as not being feasible, winding up should be resorted to.

Where circumstances justify, the process should allow for easy conversion of proceedings from one procedure to another. This will provide opportunity to businesses in liquidation to turnaround wherever possible. Similarly, conversion to liquidation might be appropriate even after a rehabilitation plan has been approved if such a plan was procured by fraud or the plan can no longer be implemented”.
Continue Reading Is Liquidation Irreversible? Schemes of Compromise or Arrangement for Companies in Liquidation

RBI Circular - Insolvency and Bankruptcy Blog

The Supreme Court’s judgment in Dharani Sugars and Chemicals Limited vs. Union of India is examined herein.

The Supreme Court in Dharani Sugars and Chemicals Limited vs. Union of India & Others (Dharani Sugars) has struck down the circular dated February 12, 2018, containing the revised framework for resolution of stressed assets (RBI Circular) issued by the Reserve Bank of India (RBI) on the ground of it being ultra vires Section 35AA of the Banking Regulation Act, 1949 (Banking Regulation Act).

Section 35AA was introduced by Parliament in 2017 to confer power on Central Government to authorise the RBI to give directions to any bank or banks to initiate an insolvency resolution process under the provisions of the Insolvency and Bankruptcy Code, 2016 (IBC) in respect of ‘a default’. The RBI Circular was challenged, inter alia, on the basis that Section 35AA does not empower the RBI to issue directions for reference to the IBC of all cases without considering specific defaults.Continue Reading Dharani Sugars v. Union of India: RBI’s Regulatory Powers Re-affirmed by the Supreme Court

Sashidhar v. Indian Overseas Bank and Ors. – Commercial Wisdom Reigns Supreme

The Supreme Court’s decision in K. Sashidhar v. Indian Overseas Bank and Ors.[1]addressed a critical issue in the corporate insolvency resolution process (CIRP) – i.e. the scope of judicial scrutiny over a commercial decision taken by the committee of creditors (“CoC”) to approve or reject a resolution plan.
Continue Reading Sashidhar v. Indian Overseas Bank and Ors. – Commercial Wisdom Reigns Supreme

Rights of Suspended Board - Vijay Kumar Jain v. Standard Chartered Bank

Upon commencement of the resolution process under the Insolvency and Bankruptcy Code, 2016 (Code), powers of the Board of Directors of the company stand suspended and are vested in and exercised by the resolution professional. While the directors are entitled to attend the meetings of the committee of creditors (COC) formed for the company, such directors have no voting rights.

A question arose over whether the directors should be given copies of the resolution plans and other confidential documents that the COC considers during the meetings. Sharing of such documents could be seen as in direct conflict with the obligations of the resolution professional to maintain confidentiality under the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (CIRP Regulations) and other related regulations. More importantly, it could create positions of conflict between the suspended Board, who often submit resolution plans or are applicants under Section 12A, and the other participants. The Hon’ble Supreme Court in its recent judgment in Vijay Kumar Jain v. Standard Chartered Bank and Others[1] has, with great respect, left some questions unanswered.
Continue Reading Supreme Court on the Rights of Suspended Board in Vijay Kumar Jain v. Standard Chartered Bank: Some Implications

Swiss Ribbons vs. Union of India – The Foundation for Modern Bankruptcy Law

The authors instructed Mr. Tushar Mehta, Solicitor General of India, on behalf of the respondent Banks and Financial Institutions in the proceeding before the Supreme Court.

The Supreme Court’s decision in Swiss Ribbons v. Union of India upholding the constitutionality of the provisions of the Insolvency and Bankruptcy Code, 2016 (IBC or the Code) is a landmark in the development of the Code.
Continue Reading Swiss Ribbons v. Union of India – The Foundation for Modern Bankruptcy Law

DECOMMISSIONING OF OIL AND GAS PRODUCTION FIELDS ON HIGH SEAS

The Exploration and Production (E&P) basins usually mature in about 20-30 years. What is left after the prolonged E&P phase are the abandoned installations and wells (onland), sub-sea infrastructure, platforms, and wells (offshore). Once the hydrocarbon resources are exhausted or it becomes unviable to extract them further, the E&P project moves to an abandonment phase, and the project is decommissioned. Decommissioning ensures that the E&P installations and infrastructure are removed subsequent to their abandonment and the site is restored in an environmentally sustainable way.Continue Reading Decommissioning Of Oil and Gas Production Fields on High Seas

Fugitive Economic Offenders Ordinance, 2018 Impact on Creditor Rights

On April 21, 2018 the Fugitive Economic Offenders Ordinance, 2018 (FEO Ordinance) was promulgated to immediately bring into effect the provisions contained in the Fugitive Economic Offenders Bill, 2018 (FEO Bill)[1]. The Union Finance Minister Mr. Arun Jaitley, in his Budget speech, had announced that Central Government was considering the introduction of legislative changes to confiscate the assets of ‘big time offenders’, including economic offenders, who flee the country to escape the Indian legal system.

As the process of extradition has often been challenging and ineffective, the Ordinance seeks to compel the fugitive offender to face trial in India through severe deterrents. Care will need to be taken, however, to ensure that the Ordinance does not adversely impact creditor rights. The deterrents and their impact on insolvency resolution are discussed below.Continue Reading Fugitive Economic Offenders Ordinance, 2018: Impact on Creditor Rights