Insolvency Brief Case – September 2024

Hello! Welcome back to our updates on the insolvency law landscape in India.    In the News IBBI vide notification no. IBBI/2024-25/GN/REG116 dated 24.09.2024 amended the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. The amended regulations provide for the appointment of an interim representative who will act as a representative for a class of creditors during the period when the application for appointment of the authorised representative is under consideration of the NCLT for approval.

As per CareEdge Ratings report, haircut taken by creditors under the insolvency proceedings has increased to 68 per cent of the admitted claims in Q1 of FY 2023-24, against 57 per cent logged in Q1 of FY 2019-20.

On 26.09.2024, the Supreme Court reserved its verdict in appeal filed by Glas Trust Company LLC against the order of NCLAT which had allowed withdrawal of insolvency proceedings against Byju’s and approved settlement with BCCI. The Supreme Court has also directed resolution professional to maintain status quo and not to hold any meeting of the committee of creditors.

From the Docket

The Supreme Court in V.S. Palanivel v. P. Sriram CS Liquidator etc, has held that advice offered by the stakeholders’ consultation committee is not binding on the liquidator, however, regulation 31A required liquidator to record in writing reasons for taking a decision which is at variance with the advice given by the stakeholders’ consultation committee.

The NCLAT in Asha Chopra and ors vs. Hind Motors India Limited and Ors. has held that application of withdrawal under section 12A of IBC is specifically for corporate insolvency resolution process and the same cannot be filed during liquidation proceedings.

In Rajat Metaal Polychem Pvt. Ltd. Vs. Mr. Neeraj Bhatia RP Vinayak Rathi Steels Rolling Mills Pvt. Ltd. and Anr. NCLAT has observed that operational creditors as the law stands today are denied any payment when the amount payable to them in the event of liquidation is nil, however, the hands of the courts are tied till the legislature comes to the aid of the claim of operational creditor by amending the law.

The NCLAT in Noida Power Company Limited vs Mr. Gaurav Katiyar has held that the protection provided to the corporate debtor under section 2A of the IBC regarding non termination of the supply of essential goods and services is subject to payment of the dues to the supplier by corporate debtor.

In Times Innovative Media Limited vs Pawan Aggarwal (Liquidator) & Anr., NCLAT has held that the operational creditors cannot claim any priority in the distribution of assets of the corporate debtor as compared to unsecured financial creditor.

Thank you for reading! We will be back again next month with more updates on insolvency law.