Section 19(2) Application Can Be Preferred For Effective Conduct Of CIRP Despite Challenge To Admission Of CIRP: NCLAT

The NCLAT, Chennai bench comprising Justice Sharad Kumar Sharma (Judicial Member) and Jatindranath Swain (Technical Member) has held that an application under section 19(2) of the Insolvency & Bankruptcy Code is maintainable when the Corporate Insolvency Resolution Process (CIRP) is admitted. The Tribunal observed that section 60(5) will not have a superseding effect to the provisions contained under section 19(2) read with section 14 for the purpose of effective conduct of CIRP...

CoC Can Direct Liquidation Of Corporate Debtor Any Time Before Confirmation Of Resolution Plan U/S 33(2) Of IBC: NCLAT

The NLCAT New Delhi bench of Justice Ashok Bhushan (Chairperson), Barun Mitra (Technical Member) and Arun Baroka (Technical Member) has held that the CoC in its commercial wisdom can decide to liquidate the corporate debtor anytime after its constitution but before the confirmation of the Resolution Plan under section 33(2) of IBC. It is not mandatory that all steps related to revival of the corporate debtor through resolution plan must be exhausted before the liquidation can be directed....

NCLAT Orders Refund Of Pre-CIRP Electricity Dues Paid By SRA Under Protest For Restoration Of Electricity Connection

The NCLAT bench comprising Justice Yogesh Khanna (Judicial Member) and Mr. Ajai Das Mehrotra (Technical Member) has allowed the refund of pre-Corporate Insolvency Resolution Process (CIRP) electricity dues paid by the Successful Resolution Applicant (SRA). Maharashtra State Electricity Distribution Co. (Respondent) had imposed the clearance of past dues as a precondition for restoring electricity connection. The Tribunal held that even if the payment was not made by the SRA/Appellant under ...

Sale Of Corporate Debtor As Going Concern Under Liquidation Regulations Takes Precedence Over Scheme Of Compromise U/S 230: NCLAT

The NCLAT Chennai bench of Justice Sharad Kumar Sharma (Judicial Member) and Jatindranath Swain (Technical Member) affirmed that the sale of the Corporate Debtor as a going concern under Regulations 32(e) & 32A of the Liquidation Regulations is more transparent and effective; therefore, the sale of the Corporate Debtor as a going concern will have precedence, rather than resorting to the Scheme of Compromise under Section 230 (1) of the Companies Act, 2013. Brief Facts `M/s....

In Absence Of Pre-Existing Dispute, Petition U/S 9 Of IBC Must Be Admitted If Debt And Default Are Proved: NCLAT

The NLCAT New Delhi bench of Justice Ashok Bhushan (Chairperson) and Barun Mitra (Technical Member) affirmed that once it is established that the corporate debtor has defaulted in the payment of operational debt which amount had clearly become due and payable above the threshold limit, and further if there is no credible or plausible evidence to show the existence of pre-existing dispute, application under section 9 must be admitted by the Adjudicating Authority.Brief FactsThe present appeal...

Corporate Debtor's Property Cannot Be Recovered By Owner/Lessor During Moratorium Period U/S 14 Of IBC: NCLAT

The NCLAT New Delhi bench of Justice Rakesh Kumar Jain (Judicial Member), Mr. Naresh Salecha (Technical Member) and Mr. Indevar Pandey (Technical Member) affirmed that properties occupied by the corporate debtor cannot be recovered by owner/lessor during the moratorium period under section 14 of the IBC. In this case, the NCLT had handed over the possession of the property of the CD to the respondents on the submission of RP that the property was no longer required. This submission of the...

Any Amount Proposed In Settlement Plan U/S 12A Of IBC Cannot Be Refunded If Plan Is Approved: NCLAT

The NLCAT New Delhi bench of Justice Ashok Bhushan (Chairperson), Barun Mitra (Technical Member) and Arun Baroka (Technical Member) held that any amount proposed in the settlement plan under section 12A of the IBC cannot be refunded if the plan is later approved and the CIRP is closed. In this case, a settlement plan was proposed by the appellant in which 3 crores rupees was proposed to be given to the financial creditors. This plan was later approved. Brief Facts This Appeal...

Directors Of Financial Creditors Not Disqualified From Filing Plea U/S 7 Of IBC Due To Sister Company's Default U/S 248 Of Companies Act: NCLAT

The NLCAT New Delhi bench of Justice Ashok Bhushan (Chairperson) and Barun Mitra (Technical Member) held that directors of the financial creditors are not disqualified from filing a petition under section 7 of the IBC merely on the ground that sister company of the financial creditors in which they were holding the same position, defaulted under section 248 of the Companies Act in failing to continue its business for continuous period of 2 years. The default under section 164(2) of ...

Adjudicating Authority Cannot Enter Into Merits At S. 95 Application Stage Before Report Of RP Is Submitted U/S 99 Of IBC: NCLAT

The NLCAT New Delhi bench of Justice Ashok Bhushan (Chairperson), Barun Mitra (Technical Member) and Arun Baroka (Technical Member) affirmed that Adjudicating Authority cannot exercise its adjudicatory power at the stage of consideration of application under section 95 of the IBC by entering into the merits of the case. The power which is conferred on the adjudicating authority at this stage is to appoint a resolution professional. The Adjudicatory role comes into play when a report...

Banking Companies Not Required To Exhaust MSME Revival Option Before Filing Petition U/S 7 Of IBC: NCLT, Mumbai

The NCLT, Mumbai Bench comprising Shri Prabhat Kumar (Technical Member) and Justice Shri V.G. Bisht (Judicial Member) has observed that restructuring process contemplated in the notification dated 29.05.2015 issued by the Ministry of Micro, Small and Medium Enterprises is another mode for revival and rehabilitation of the MSME Corporate Persons in addition to Insolvency and Bankruptcy Code, 2016 (IBC). The Tribunal held that it cannot be said that MSMED Act overrides the provisions of...

IBC Weekly Digest: 4th November To 10th November 2024

NOMINAL INDEX Noida Special Economic Zone Authority Vs. Manish Agarwal & Ors., CIVIL APPEAL NOS. 5918-5919 OF 2022, 2024 LiveLaw (SC) 858STATE BANK OF INDIA AND ORS. Versus THE CONSORTIUM OF MR. MURARI LAL JALAN AND MR. FLORIAN FRITSCH AND ANR.| C.A. No. 5023-5024/2024 and Connected, 2024 LiveLaw (SC) 866Pratham Expofab Private Limited v. Mr. Anil Matta, Resolution Professional and Ors., Company Appeal (AT) (Insolvency) No. 1803 of 2024 Sandip Narendrakumar Patel...

Extinguishment Of Promoters' Personal Guarantees In Resolution Plan Is Valid If Plan Complies With IBC Provisions: NCLT Mumbai

The NCLT Mumbai Bench of Justices Anil Raj Chellan (Technical Member) and Kuldip Kumar Kareer (Judicial Member) affirmed that the clause in the resolution plan for extinguishing the personal guarantees of promoters furnished in favour of all financial creditors or the commercial decision of the CoC to approve such release of personal guarantees, including guarantees executed in favour of dissenting financial creditors, will not contravene any provisions of the Code. Further, the...