The Insolvency and Bankruptcy Code, 2016 since its inception, has seen constant amendments, regulatory changes as well as active judicial interpretation to ensure the applicability of the Code in line with its object and purpose. The IBC interacts with and affects various stakeholders on a day-to-day basis operating across sectors. Dhir & Dhir Associates, a firm of high repute in the insolvency domain has encapsulated the critical legislative, regulatory as well as the judicial interpretation of the Code to provide a snapshot at a glance for all.
The press release of the finance minister, on 17.05.2020 as regards IBC created quite a stir wherein the following was announced:
Since the Ordinance is not released yet, from the reading of the Press Release it is not very clear as to whether there shall be a blanket suspension of all proceedings under Section 7, 9 and 10 of the IBC or partial suspension of proceedings having nexus to the default which occurred on account of Covid-19. Taking cue from the RBI notification which suspended the classification of account w.e.f. 01.03.2020, the needs of the current economic situation shall be better facilitated in case suspension of proceedings is as regards default having a cut-off date as regards defaults arising in wake of Covid-19. In absence of such classification blanket ban may jeopardize the interest of stakeholders who shall be deprived of the provisions of the Code and relegated to other mechanisms which have evidently failed to meet the interest of such creditors.
Hon’ble NCLT vide its Order Dated 12.05.2020 directed to file default record from Information Utility along with new petitions under Section 7 of IBC. Such record of default is also required to be filed in pending matters.
Insertion of Regulation 47A: IBBI inserted a new Regulation 47A under the IBBI (Liquidation Process) Regulation, 2016 (‘Liquidation regulation’) w.e.f. 17.04.2020 to exclude the Covid-19 lockdown period from the computation of the time-line for liquidation process.
Hon’ble Jharkhand High Court dismissed the Writ Petition as preferred before the Court, without taking into consideration the approved Resolution Plan approved by the NCLT, on account of the initiation of the insolvency proceedings being brought to the knowledge of the Commercial Tax Authorities of the State of Jharkhand. The Court further held that approved Resolution Plan shall be binding only on those stakeholders who were involved in the Resolution Plan.
Hon’ble NCLT Special Bench at Mumbai approved the resolution plan for the Trimax IT Infrastructure & Services from the Resolution Applicant i.e. Ebix Software India. According to the Resolution Plan, Ebix Software India will acquire 100% of the Corporate Debtor for Rs. 75 Cr. which is to be infused within 30 days from the date of approval of the Resolution plan by the Adjudicating Authority. The Company owed over Rs 1,918 crore to its lenders, including about Rs 1,700 crores to Financial Creditors.
Hon’ble Mumbai NCLT approved the resolution plan for Uttam Galva Metalics and Uttam Value Steels. The Resolution Plans involved settlement to financial creditors of Uttam Value Steels with a total upfront and contingent payment of Rs 1,078 crore and Rs 1,576 crore for Uttam Metallics. Earlier Operational Creditor had objected to the plan by CarVal for accepting 99 per cent haircut, however, the bench held that it cannot be seen whether Operational Creditors are receiving money equivalent to the money Financial Creditors are getting because operational creditors as a class cannot equate themselves with the financial creditors and ask for more than what they are entitled.
Hon’ble Mumbai NCLT held that for initiating CIRP against the Corporate Debtor, specific board resolution is required rather than a general one. Merely, authorized in board resolution to represent the company, concerning the business affairs relating to property of the company, cannot filed application under Section 7 of the IBC.
Hon’ble Chennai NCLT held that on a bare reading of Section 29(2) of the Limitation Act, 1963 would posit the position that the provision of Section 4 to 24 of the Limitation Act, 1963 shall be applicable to the applications filed under IBC.
Hon’ble Chennai NCLT held that the Operational Creditor would have stopped goods in transit, as soon as he did not receive the payment with 90 days. The Operation Creditor is also left with remedy for claiming the damages from the buyer for non-performance, however, such a claim cannot be adjudicated by the Tribunal. Moreover, the Applicant has failed to produce any proof of delivery of the goods to the Respondent. So, the default cannot be ascertained and as such the claim of the Operational Creditor will not qualify as an Operational Debt.
Hon’ble NCLT Chennai, on application filed by the Resolution Professional assailing freeze of bank account of the Corporate Debtor lying with Kotak Mahindra Bank based on the order passed by the Economic Offences wing on 05.07.2018, defreezed the said account with a direction to the Kotak Mahindra Bank to allow the Resolution professional to operate the bank account of the Corporate Debtor.
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