While the Insolvency and Bankruptcy Code, 2016 (“IBC”) provides for insolvency resolution and liquidation of ‘corporate persons’, it excludes ‘financial service provider’ (“FSP(s)”) from the said provision. The Central Government, pursuant to its powers under Section 227 of IBC, had notified Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019 (“FSP Rules”) for resolving specified non-banking financial companies (“Specified NBFCs”) registered with the Reserve Bank of India.Continue Reading Stock Broker is a Financial Service Provider – The NCLAT ruling may offer respite
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?
In a corporate democracy, the rule of majority prevails, period! Hence, in most jurisdictions, shareholders’ resolutions may be passed by a simple majority, or, where the decision may be critical to the operations or the future of a company, by a super/ special majority of at least, three-fourths. In this way, the decision of the majority binds all members/ shareholders.Continue Reading Protection and Redressal of Minority Shareholder Rights
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?
Key Managerial Personnel (“KMP”) play an integral role in the management and functioning of a company. Earlier, the Companies Act, 1956 under Section 269, provided for the appointment of managing or whole-time director or manager in certain cases. However, the Dr. J.J. Irani Report, recognized that the board of directors (“Board”) typically look towards KMP for formulation and execution of policies and recognized their role in conducting the affairs of the company. The Committee highlighted the need to recognise the concept of KMP, govern such appointments and identify them as officers responsible for certain functions of the company, along with making them liable for any related non-compliances. Further, the Parliamentary Standing Committees on the Companies Bill in 2009 and 2011 also discussed the necessity for the concept of KMP to be included in the Companies Act, 2013 (“Companies Act”). Accordingly, the Companies Act, re-envisioned the importance of KMP and for the first time provided for a detailed definition of KMP along with the provisions governing their appointment.Continue Reading Key Managerial Personnel Appointments: Applicability of Section 203 of the Companies Act, 2013 to private companies: does the NCLAT order cast the net too wide?
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
In a recent judgment pronounced in Invesco Developing Markets Fund v. Zee Entertainment Enterprises Limited (“Judgment”), on March 22, 2022, a Division Bench of the Bombay High Court (“BHC”) allowed Invesco’s appeal against a judgment dated October 26, 2021. The October 26 judgment was passed by a Single Judge of the BHC (referred to hereinafter as the “Impugned Order”), which had granted an injunction restraining Invesco from calling for and holding an extraordinary general meeting (“EGM”) of Zee.Continue Reading Bombay High Court’s Judgment in Invesco v Zee– A major boost for shareholders’ rights in India
Since the enactment of the Insolvency and Bankruptcy Code, 2016, (“IBC”), the Indian judiciary has been facing numerous interpretational challenges on various provisions of the IBC. While certain challenges have been put to rest by introducing amendments to the legislation, a larger bunch of the issues have been settled by interpretations adopted by the judiciary. The Courts and Tribunals, in interpreting the provisions of the IBC, have aspired to achieve the objective of the IBC, i.e. maximising the value of assets of the corporate debtor.Continue Reading Is Claim for Refund of Advance an ‘Operational Debt’? SC Comes to Rescue
The recent judgment of the Supreme Court (“SC”) in Devas Multimedia Private Limited v. Antrix Corporation Limited (“the Antrix case”) has many interesting facets. It brings to light some interesting questions of law on the enforcement of foreign arbitral awards and the Bilateral Investment Treaties when the claimant company (Decree holder) is ordered to be wound up (for the first time in India) on the grounds of fraud, which is against the public policy of India and most jurisdictions that are signatories to the New York Convention.Continue Reading SC’s decision in the Devas Antrix Case: Does it dilute evidentiary value of the Auditor’s Report under the Companies Act?
The Insolvency and Bankruptcy Code, 2016 (‘Code’) recognises two types of debts — financial and operational– to enable the creditors to make an application for initiating insolvency proceedings against a corporate debtor. A financial creditor and an operational creditor can initiate a Corporate Insolvency Resolution Process (‘CIRP’) under Section 7 and Section 9 of the Code, respectively. If there is a debt, other than a financial debt or an operational debt, the creditor will not qualify to apply under Sections 7 or 9 of the Code, as the case may be. Therefore, it becomes important to determine the nature of debt/claim while considering the application of an admission under the Code.
Continue Reading Lease and Rentals: Are these Operational Debt under the IBC?