Small Operational Creditors Are 'Significantly Disenfranchised': Supreme Court Urges Review Of IBC Framework

The Supreme Court on Friday observed that small operational creditors, including MSMEs and statutory local bodies, remain "significantly disenfranchised" under the Insolvency and Bankruptcy Code (IBC) by being placed at the bottom of the repayment waterfall. Observing that the issue falls within the legislative domain, the court urged the Law Commission of India and the legislature to examine whether a fairer repayment mechanism could be devised without compromising the efficiency and commercial...

Dismissal Of DRT Recovery Case For Default Does Not Bar Insolvency Proceedings Against Personal Guarantor: NCLAT

The National Company Law Appellate Tribunal (NCLAT) in Delhi has held that the dismissal of a debt recovery case for default does not wipe out the underlying debt or prevent insolvency proceedings against a personal guarantor. It dismissed an appeal filed by a personal guarantor challenging the National Company Law Tribunal's (NCLT) order admitting the Bank of Maharashtra's application. A bench of Judicial Member Justice N. Seshasayee and Technical Member Indevar Pandey observed: “Dismissal...

NCLT Kochi Recalls Oral Order Minutes After Pronouncement Over Undisclosed Facts

The National Company Law Tribunal (NCLT) at Kochi recently recalled its oral order allowing withdrawal of the corporate insolvency resolution process (CIRP) against Air Travel Enterprises India Limited. The tribunal did so within five minutes of pronouncing the order, after the Resolution Professional (RP) brought to its notice material facts regarding the Committee of Creditors (CoC) that had not been disclosed earlier.A bench of Judicial Member Vinay Goel and Technical Member Ravichandran...

Gratuity Payable To Retiring Employee Cannot Be Equated With Salary, Not Part Of CIRP Costs: NCLAT

The National Company Law Appellate Tribunal (NCLAT) in Delhi has held that gratuity payable to an employee who retires during the corporate insolvency resolution process cannot be treated as part of the insolvency resolution process costs. It held that gratuity is a terminal benefit and not an expense incurred by the Resolution Professional (RP) in running the insolvency process.A bench of Judicial Member Justice N. Seshasayee and Technical Members Arun Baroka and Indevar Pandey upheld an order...

Pending Compromise Scheme No Bar To Insolvency Proceedings: NCLAT

The National Company Law Appellate Tribunal (NCLAT) in Delhi has held that a proposed scheme of compromise under the Companies Act and ongoing one-time settlement (OTS) negotiations cannot prevent the admission of insolvency proceedings once financial debt and default are established.A bench of Judicial Member Justice N. Seshasayee and Technical Members Arun Baroka and Indevar Pandey held that the National Company Law Tribunal (NCLT) was justified in admitting insolvency proceedings against...

NCLT Amaravati Admits Insolvency Plea Against KGOC Terminals, Says Pre-COVID Loan Default Not Protected

The National Company Law Tribunal (NCLT), Amaravati Bench, has admitted Canara Bank's insolvency plea against KGOC Terminals Private Limited. It held that the company could not rely on the COVID-19 suspension on insolvency filings because it had already defaulted on its loan repayments before that period began. The later classification of the loan account as a non-performing asset (NPA) did not change that position. The bench of Judicial Member Kishore Vemulapalli and Technical Member Umesh...

CoC-Approved Valuation Cannot Be Reopened At Instance Of Suspended Director: NCLAT New Delhi

The New Delhi Bench of the National Company Law Appellate Tribunal (NCLAT) on 14 July held that a suspended director cannot seek fresh valuation of a corporate debtor's assets after the Committee of Creditors (CoC) has approved the valuation reports and the resolution plan. Valuation decisions fall within the CoC's commercial wisdom. Judicial Member Justice Mohd Faiz Alam Khan and Technical Member Naresh Salecha dismissed appeals filed by Santosh R. Shetty, suspended director and promoter of...

NCLT Delhi Rejects Kalka Home Developers Resolution Plan Paying Government Dues Below Liquidation Value

The New Delhi Bench of the National Company Law Tribunal (NCLT) on 3 July held that a resolution plan cannot provide an operational creditor, including the government, an amount lower than the liquidation value payable to it under the Insolvency and Bankruptcy Code, 2016 (IBC). Judicial Member Ashok Kumar Bhardwaj and Technical Member Atul Chaturvedi rejected the plan submitted for Kalka Home Developers Pvt. Ltd., observing that the plan failed to comply with Section 30(2)(b) of the IBC, which...

NCLAT Dismisses Jaypee Greens Homeowners' Appeals Seeking Social Club Condition In JAL Resolution Plan

The National Company Law Appellate Tribunal (NCLAT) in Delhi has dismissed appeals filed by the Association of Independent House Owners of Jaypee Greens, refusing to interfere with an order declining to direct the inclusion of a mandatory condition in Jaiprakash Associates Ltd's resolution plan for the construction of a social club. The appellate tribunal noted that the resolution plan had already been approved. It also took note of the Successful Resolution Applicant's (SRA) undertaking to...

NCLAT Sets Aside NCLT Order Applying Corporate Insolvency Threshold To Personal Insolvency Plea

The National Company Law Appellate Tribunal (NCLAT) in Delhi has set aside an order of the National Company Law Tribunal (NCLT) that dismissed a personal insolvency application after applying the minimum default threshold applicable to corporate insolvency proceedings. The appellate tribunal has remanded the matter to the NCLT Chandigarh for fresh consideration. A bench of Judicial Member Justice N. Seshasayee and Technical Member Barun Mitra held that the application must be reconsidered in...

NCLT Mumbai Dismisses Insolvency Plea Against Ganesh Benzoplast Over Disputed Corporate Guarantee

The National Company Law Tribunal (NCLT) in Mumbai has dismissed an insolvency plea filed by UC Inclusive Credit Pvt. Ltd. against Ganesh Benzoplast Ltd. It held that the application could not be admitted because the corporate guarantee relied upon by the lender is under challenge in multiple civil and criminal proceedings involving allegations of fraud and forgery. A coram comprising Judicial Member Sushil Mahadeorao Kochey and Technical Member Sameer Kakar dismissed the plea seeking...

NCLT Mumbai Dissolves BSE Institute of Research Development & Innovation After Voluntary Liquidation

The National Company Law Tribunal (NCLT) in Mumbai on Thursday ordered the dissolution of BSE Institute of Research Development & Innovation Private Limited after finding that its voluntary liquidation had been completed in accordance with law and that the company's affairs had been completely wound up. A bench of Judicial Member K.R. Saji Kumar and Technical Member Anil Raj Chellan observed that the liquidator had completed the required formalities and that the company's assets had been...