JSA’s Post

On 06 August 2024, the Insolvency and Bankruptcy Board of India released the “Guidelines for the Committee of Creditors” outlining nine considerations for timely resolution of insolvency of the corporate debtor. In the present update, we discuss the guidelines. #India #InsolvencyAndRestructuring #Guidelines #IBBI #CommitteeOfCreditors https://lnkd.in/gC-3xzMk

𝗧𝗵𝘂𝗿𝘀𝗱𝗮𝘆𝘀' 𝘄𝗶𝘁𝗵 𝗚𝗮𝘂𝗿𝗶: 𝟮𝟮𝗻𝗱 𝗪𝗲𝗲𝗸-𝟮𝟮𝗻𝗱 𝗖𝗵𝗮𝗹𝗹𝗲𝗻𝗴𝗲: Today, on my birthday, I'm excited to share insights into a significant development in the realm of corporate law that has far-reaching implications for creditors and debtors alike. 𝗜𝗕𝗖 𝗔𝗺𝗲𝗻𝗱𝗺𝗲𝗻𝘁: 𝗦𝗮𝗹𝗲 𝗼𝗳 𝗔𝘀𝘀𝗲𝘁𝘀 𝗼𝗿 𝗥𝗲𝘀𝗼𝗹𝘂𝘁𝗶𝗼𝗻 𝗣𝗹𝗮𝗻𝘀 𝗼𝗻 𝗮 𝗦𝗲𝗴𝗿𝗲𝗴𝗮𝘁𝗲𝗱 𝗕𝗮𝘀𝗶𝘀 – 𝗔 𝗚𝗮𝗺𝗲 𝗖𝗵𝗮𝗻𝗴𝗲𝗿? The recent amendments to the Insolvency and Bankruptcy Code (IBC) have introduced the concept of the sale of assets or resolution plans on a segregated basis specifically under Regulation 37 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. This significant change aims to enhance the flexibility and efficiency of the insolvency resolution process in India. Let’s delve into what led to this amendment, its impact on the IBC mechanism, and who stands to benefit the most.   Traditionally, the IBC required a single resolution plan for the entire corporate debtor, which often proved cumbersome and time-consuming, especially for large conglomerates with diverse business units. The segregated basis approach was introduced to allow for the sale of different units or assets separately, facilitating a more targeted and efficient resolution.   𝗪𝗵𝘆 𝗜𝘁 𝗛𝗮𝗽𝗽𝗲𝗻𝗲𝗱: - Large companies with multiple business units faced significant hurdles in finding a single resolution applicant willing to take over the entire entity. - Separate sales of assets can often fetch higher value than a bundled sale, thus maximizing returns for creditors. - Allows resolution professionals to devise more flexible and tailored solutions for different parts of the business.   𝗜𝗺𝗽𝗮𝗰𝘁 𝗼𝗻 𝘁𝗵𝗲 𝗜𝗕𝗖 𝗠𝗲𝗰𝗵𝗮𝗻𝗶𝘀𝗺: - Facilitates quicker and more efficient resolutions, particularly for large and complex insolvencies. - Creditors may achieve better recovery rates compared to a single resolution plan. - Attracts a wider pool of bidders interested in specific assets or business units rather than the entire distressed entity.   𝗖𝗮𝘀𝗲 𝗟𝗮𝘄: A notable case that highlights the significance of asset segregation in resolution plans is the case of 𝗘𝘀𝘀𝗮𝗿 𝗦𝘁𝗲𝗲𝗹.Although this case pre-dates the amendment, the complexity and challenges faced during its resolution underscored the need for more flexible approaches, such as the segregated sale of assets, to expedite and optimize the insolvency resolution process.

Amends rules: Clearer authorization for insolvency professional, interim role clarification Streamlining corporate insolvency process, updating key regulations for clarity and efficiency.: This notification amends the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. It substitutes certain words in regulations 12(3) and 16A(2)(i) for clarity. The proviso in 16A(1) is replaced to clarify the choice of insolvency professional as authorized representative by a financial creditor class. A new proviso is inserted in 16A(2) regarding the interim role of the selected insolvency professional until appointment of the authorized representative. Regulation 40A's table is amended to omit the row for 12(2) and modify the row for 13(1) by removing references to claims verification under 12(2) and the associated timeline. These amendments aim to streamline the insolvency resolution process for corporate persons. http://dlvr.it/TDlCyS #IBBI #InsolvencyResolution #CorporateInsolvency #LegalUpdates

IndusLaw, Hyderabad, successfully represented L&T Finance Limited in a pivotal case before the National Company Law Tribunal (NCLT). The matter involved a petition filed against the personal guarantor of ICOMM Tele Limited, seeking to initiate the insolvency resolution process under the Insolvency and Bankruptcy Code, 2016 (“IBC”). The NCLT's order addresses crucial legal issues, including the limitation period, the conversion of financial creditors’ debt into equity, and the ongoing liability of personal guarantors under the IBC. In its detailed judgment, the NCLT clarified that the notional conversion of the financial creditors’ entire debt, amounting to Rs. 1300 crores, into equity shares in the Corporate Debtor under the resolution plan, without actually allotting the shares and filing the PAS-3 forms, did not extinguish the personal guarantor's liability. The Tribunal noted that apart from passing a board resolution, neither the Successful Resolution Applicant (SRA) nor the Corporate Debtor (CD) took any concrete steps to issue equity to the Financial Creditors (FCs), thereby preserving the liability of the personal guarantor. Moreover, the Tribunal emphasized that the guarantee was a continuing obligation and that the rights of financial creditors against personal guarantors were explicitly preserved, even after the approval of the resolution plan. This ruling provides critical clarity that the liability of a personal guarantor remains intact if the debt has not been fully repaid, despite the resolution plan's approval. IndusLaw also effectively countered the argument that the application was time-barred, by thoroughly analyzing the terms of the guarantee agreement and the relevant provisions of the Limitation Act, 1963. This aspect of the ruling reinforces the continued legal obligations of personal guarantors under Indian insolvency law. The Financial Creditor, L&T Finance Limited, was represented by IndusLaw's Shabbeer Ahmed and Aneesh Vempati. This landmark ruling further strengthens the legal framework surrounding insolvency resolution in India and provides much-needed guidance on the complex interplay between resolution plans and personal guarantees. Read here: https://lnkd.in/gph_unSz #IndusLaw #InsolvencyLaw #IBC #LegalUpdate #InsolvencyResolution #PersonalGuarantee

Mahim Raval and I write for the Global Business Law Review, analysing the implications of the M. Suresh Kumar Reddy judgement delivered by the Supreme Court of India last year. We argue that the Court, in clarifying that the position in Vidarbha Industries was an exception premised on peculiar facts, lost out on an opportunity to establish unambiguous standards for the interpretation of Section 7(5) of IBC by harmonizing the position laid out in Vidarbha Industries with the SC’s judgements in Innoventive Industries and ES Krishnamurthy. Further, we argue that considering the current situation, there is a pressing need for a legislative amendment to address the persistent ambiguities and provide for clearly established standards for acceptance/rejection of Insolvency Applications by the Adjudicating Authority under Section 7. We look forward to receiving your feedback on the same! Link:

The May edition of our monthly ‘Restructuring & Insolvency Newsletter’ discusses several topical judgments by NCLT, NCLAT and the courts. The team (Abhirup Dasgupta, Ishaan Duggal, and Ruchi Goyal) has also analyzed some of the Resolution Plans approved by the NCLT recently, and provided details on the companies admitted to insolvency or directed to be liquidated in May 2024.   Statutory Updates 1.     Discussion Paper on ‘Strengthening the process of issuance of record of default by Information Utility’ dated May 10, 2024 Recent judgments 1.     Vistra ITCL (India) Ltd & Ors v. IIFL Home Finance Ltd. & Anr and Vistra ITCL (India) Ltd & Ors v. Asset Reconstruction Company India Ltd. & Anr 2.      Reddy Veerraju Chowdary v. Resolution Professional, C.A. Sai Ramesh Kanuparthi & Anr 3.     Global Credit Capital Ltd & Anr v. Sach Marketing Pvt Ltd & Anr 4.     Sanjay D Kakade v. HDFC Ventures Trustee Company Ltd and Ors    Recent deals 2.     Resolution of Reliance Broadcast Network Ltd 3.      Resolution of Radius Infra Holdings Pvt Ltd Companies admitted to insolvency in April 2024 1.      Companies admitted to insolvency 2.     Companies directed to be liquidated     Click here to read more: https://lnkd.in/gTxtGx5A #restructuring #insolvencyandbankruptcy #statutory #update #judgements #orders #deals #liquidation #insolvency #resolutionprocess #nclat  #india  #Law #lawstudents #lawyers #lawfirmmarketing #lawyerlife #lawyering #legalinsights #generalcounsel #lawsuits  #india #inhousecounsel #legalprofession #legal #law #lawyers #lawfirms #lawdotasia

Can application for initiation of Corporate Insolvency Resolution Process (CIRP) under Sections 7, 9 and 10 be withdrawn after it has already been filed? Yes, the introduction of Section 12-A in the IBC allows for the withdrawal of CIRP. Prior to this, the only provision for withdrawal was Rule 8 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. Consequential amendments on similar lines were made in the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, by inserting Regulation 30A. Let's have a look at the 'ratio-decidendi' set by various courts and tribunals in India.

The March edition of our monthly ‘Restructuring & Insolvency Newsletter’ discusses several topical judgments by NCLT, NCLAT and the courts. The team (Abhirup Dasgupta, Pratik Ghose, Ishaan Duggal, Avishek Roy Chowdhury, and Ruchi Goyal) has also analyzed some of the Resolution Plans approved by the NCLT recently, and provided details on the companies admitted to insolvency or directed to be liquidated in September 2023.   Statutory updates 1.      IBBI (Insolvency Resolution Process for Corporate Persons) (Amendment) Regulations, 2024 2.      IBBI (Voluntary Liquidation Process) (Amendment) Regulations, 2024 3.      IBBI (Insolvency Professionals) (Amendment) Regulations, 2024 4.      IBBI (Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) (Amendment) Regulations, 2024 5.      IBBI (Bankruptcy Process for Personal Guarantors to Corporate Debtors) (Amendment) Regulations, 2024    Recent judgments 1.      Greater Noida Industrial Development Authority v. Prabhjit Singh Soni & Anr 2.      Vijay Saini v. Shri Devender Singh & Ors 3.      Navyuga Engineering Company Ltd v. Mr. Umesh Garg & Ors    Recent deals 1.      Resolution of Sarga Hotel Pvt Ltd 2.      Resolution of Balaji Paper and Newsprint Pvt Ltd 3.      Resolution of Magppie International Ltd   Companies admitted to insolvency in JAN-FEB 2024 1.     Companies admitted to insolvency 2.     Companies directed to be liquidated     Click here to read more: https://lnkd.in/gRq3b4cc #restructuring #insolvencyandbankruptcy #statutory #update #judgements #orders #deals #liquidation #insolvency #resolutionprocess #nclat  #india  #Law #lawstudents #lawyers #lawfirmmarketing #lawyerlife #lawyering #legalinsights #generalcounsel #lawsuits  #india #inhousecounsel #legalprofession #legal #law #lawyers #lawfirms #lawdotasia

INDIA TODAY 8TH APRIL 2024 GO FIRST AIRLINE GIVEN EXTENSION FOR RESOULTION PLAN BY NCLT UPTO 3RD JUNE 2024 WHICH DOWN SHUTTER LAST YEAR ON 2ND MAY 2023 The National Company Law Tribunal (NCLT) on Monday approved another 60-day extension to the bankrupt Go First airline to complete its corporate insolvency resolution process (CIRP). The extension will be effective till 3 June, and has been allowed keeping in mind the interest of stakeholders, as per the NCLT. India's insolvency laws mandate completion of a corporate resolution process in 180 days, extendable by another 90 days. However, it must be completed in no more than 330 days in total. A previous extension, from 4 February to 4 April, exhausted the 330-day deadline to complete the resolution process. However, under exceptional circumstances, the NCLT agreed to give Go First another 60 days, as the resolution plans were nearing completion. https://lnkd.in/grBZFnJ3