The IBBI on June 1, 2021 has issued Insolvency Professionals to act as Interim Resolution Professionals, Liquidators, Resolution Professionals and Bankruptcy Trustees (Recommendation) Guidelines, 2021. These Guidelines have been issued in supersession of the earlier Guidelines issued on November 23, 2020. The IBBI is required to recommend the names of Insolvency professionals (IP) to an Adjudicating Authority for the appointment as an Interim Resolution Professional or Liquidator in accordance with the provisions of IBC. The IBBI, in order to save time and have an efficient process in place as references/ directions from the Adjudicating Authority to it is a time-consuming process and involves complexities, IBBI created Insolvency Professionals to act as Interim Resolution Professionals, Liquidators, Resolution Professionals and Bankruptcy Trustees (Recommendation) Guidelines, 2021. These guidelines provide for the following:
The Guidelines shall come into effect for appointments as IRP, Liquidator, RP and BT with effect from July 1, 2021.
The Hon’ble Supreme Court upheld the provisions of the IBC relating to insolvency of personal guarantors, that were brought into force in 2019. The Bench also held that approval of a resolution plan relating to a corporate debtor does not operate so as to discharge the liabilities of personal guarantors (to corporate debtors).
The Hon’ble High Court of Karnataka held that the provisions of the Code shall override the provisions of the Karnataka Protection of Interest of Depositors in Financial Establishments Act, 2004.
The Hon’ble NCLAT held that the Resolution Plan approved shall not construe any waiver to any statutory obligations/liabilities arising out of the approved Resolution Plan and same shall be dealt in accordance with the appropriate authorities as per relevant laws. It further stated that if any waiver is sought in the Resolution Plan the same shall be subject to approval by the concerned authorities. The Adjudicating Authority is to record analytical subjective satisfaction which is a precondition before according an approval to the Resolution Plan.
The Hon’ble NCLAT held that during CIRP once the Resolution Plan is approved by the Adjudicating Authority. The Appeal can only be filed on the grounds of material irregularity in exercise of powers by the Resolution Plan.
The Hon’ble NCLAT held that merely because the Corporate Debtor had enough liquidity to run the Company as a going concern, the act of the Appellant Banks to adjust the credit balance in the Cash Credit Account towards the debit balance after commencement of CIRP cannot be justified as it is against the provisions of Section 14 of IBC.
The Hon’ble NCLAT held that Notification dated 01.06.2020 changes in criteria for classification of MSME issued under MSMED Act, 2006 and the said notification is applicable to the Corporate Debtor which is still under liquidation and promoters are eligible to file a scheme u/s 230 of the Companies Act, 2013.
The Hon’ble NCLAT held that all statutory provisions for the conduct of CIRP are interlinked, it does not leave any scope to the IRP/RP to skip any of the provisions & when the constitution of the CoC itself is found to be tainted, then the decision of that CoC cannot be validated on the pretext of exercising commercial wisdom.
The Hon’ble NCLT Principal Bench held that if the borrowing given is contrary to the limit prescribed under Companies Act 2013 (Section 186), it is not a legally enforceable debt
The Hon’ble NCLT held that no notice is required to be issued to the Personal Guarantor at the initial stage when the Resolution Professional is appointed. The non-issuance of notice at the time of appointment of RP cannot be held to be a violation of the Principles of Natural Justice.
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