IBC
Advances Made By Shareholder After Lapse Of Shareholders Agreement Amount To 'Financial Debt': NCLT Mumbai
The National Company Law Tribunal (NCLT), Mumbai Bench, has admitted a Section 7 application filed by Euro Corporate Services Pvt. Ltd. against Royal Fantasy Constructions Pvt. Ltd. The bench comprising Judicial Member Sushil Mahadeorao Kochey and Member Technical Prabhat Singh has ruled that the advances made by the shareholder after the expiration of the shareholder agreement amount to a financial debt under Section 5(8) of the IBC, 2016. The section 7 application was filed by...
Timeline For Filing Bankruptcy Application Under IBC Is Directory, Not Mandatory: NCLT Kochi
The NCLT, Kochi Bench, comprising Vinay Goel (Member-Judicial) and Madhu Sinha (Member-Technical), has held that the three-month period for filing bankruptcy applications against personal guarantors under Section 121(2) IBC, 2016, is directory and not mandatory. Kerala Financial Corporation filed the application under section 123 of the IBC, 2016, seeking bankruptcy proceedings against personal guarantors. The application was filed with a delay of over 266 days past the statutory window...
NCLT Mumbai Rejects Financial Creditor's Plea To Revise Vote On Reliance Broadcast Resolution Plan
The National Company Law Tribunal (NCLT) at Mumbai on Thursday rejected an application by Authum Investment and Infrastructure Limited (which acquired the claim from Reliance Commercial Finance Limited) to revise its vote from No to Yes on the approved resolution plan for Reliance Broadcast Network Limited.A coram of Judicial Member Mohan Prasad Tiwari and Technical Member Charanjeet Singh Gulati refused RCFL's plea on the ground that the voting cannot be altered once the process is...
Interim Finance Is Financial Debt Requiring 66% CoC Approval; NCLT Cannot Direct Contribution Without Such Approval: NCLT Mumbai
The National Company Law Tribunal (NCLT), Mumbai Bench, has recently held that the interim finance constitutes financial debt under the provisions of the IBC, 2016, and can only be raised with the approval of at least 66% of the Committee of Creditors (CoC). The tribunal held that “the term contribution is not defined in the code; hence, the contribution is nothing else but interim finance, which can be raised only with 66% voting by the CoC in compliance with the provisions of Section...
Debtors Not Exempt From Insolvency For Defaults Occurring Before Covid-19 Suspension Period: NCLAT New Delhi
The National Company Law Appellate Tribunal (NCLAT) New Delhi bench upheld the initiation of Corporate Insolvency Resolution Process (CIRP) against Majestic Hotels Limited holding that defaults occurred before COVID-19 suspension period are not protected by section 10A of the Insolvency and Bankruptcy Code, 2016 (IBC) even if payments were to be made during the suspension period. A bench comprising Justice Ashok Bhushan and Mr. Indevar Pandey (Technical Member) dismissed an appeal filed...
Fraud Not Barred By Time: NCLAT Upholds Director's Liability To Contribute ₹8.71 Crore To Corporate Debtor's Assets Obtained Through Fraud
The National Company Law Appellate Tribunal (NCLAT) New Delhi bench upheld the suspended director's liability to restore the amount of Rs. 8.71 crore obtained through fraudulent transactions to the corporate debtor's assets holding that the manner in which the director engineered the transaction clearly amounted to conducting the business with intent to defraud the creditors under section 66 of the IBC. A bench of Justice Ashok Bhushan and Mr. Arun Baroka (Technical Member) held that...
Justice Ashok Bhushan Appointed As NCLAT Chairperson For Second Term
The Central Government has approved the re-appointment of Justice Ashok Bhushan, former Judge of the Supreme Court of India, as Chairperson of the National Company Law Appellate Tribunal (NCLAT). The re-appointment will be effective from the date he assumes charge and will continue until he attains the age of 70 years, i.e., till July 4, 2026.Justice Bhushan was earlier appointed as the NCLAT Chairperson on October 29, 2021, shortly after his retirement from the Supreme Court, and took charge on...
No Fresh Cause Of Action Comes Into Existence If Correct Date Of Default Is Allowed To Be Stated In Application: NCLT Mumbai
The National Company Law Tribunal (NCLT), Mumbai Bench, comprising Prabhat Kumar (Member-Technical) and Sushil Mahadeorao Kochey (Member-Judicial), has ruled that no fresh cause of action comes into existence if the correct date of default is allowed to be stated in the application. The application was filed by the Indian Bank, erstwhile Allahabad Bank, Applicant, under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 r/w Rule 11 of the NCLT Rules, 2016, seeking the leave to...
NCLAT Sets Aside Order Initiating Insolvency Against Realty Firm Mahagun, Orders Fresh Adjudication
In a relief to nearly 8,000 homebuyers, the National Company Law Appellate Tribunal (NCLAT) on Thursday set aside an order initiating insolvency against the Noida-based realty firm Mahagun (India) Pvt. Ltd., directing the adjudicating authority to reconsider the matter afresh. A bench of Chairperson Justice Ashok Bhushan and Technical Member Barun Mitra noted that the National Company Law Tribunal (NCLT), New Delhi, had failed to consider that the default was limited to a single project while...
NCLT Mumbai Refuses To Initiate Investigation Into Former Management of 'Smaaash Entertainment'
The National Company Law Tribunal (NCLT) at Mumbai has recently refused to order an investigation into the erstwhile management of Smaaash Entertainment Private Limited, a gaming company known for its virtual reality-based entertainment centres. However, it has directed that a copy of its order be sent to government authorities to examine possible irregularities and non-compliances by the company's former management. Smaaash, which had undergone insolvency proceedings, was revived after a...
Admission Of Claim By RP Is No Defence To Preferential Transaction U/S 43 of IBC: NCLT Mumbai
The National Company Law Tribunal (NCLT) Mumbai bench of Shri K. R. Saji Kumar (Judicial Member) & Shri Anil Raj Chellan (Technical Member) held that just because the claim had been submitted and accepted by the Resolution Professional, it does not negate preferential transaction under section 43 of the IBC. It held that “submission of a claim by a person with the resolution professional or admission of its claim as unsecured financial creditor by the resolution professional is no...
NCLT Kochi Orders Liquidation Of Malayalam Vehicles India Pvt Ltd After CoC Fails To Receive Any Resolution Plan
The National Company Law Tribunal (NCLT), Kochi Bench, has ordered the liquidation of Malayalam Vehicles India Private Limited (a former Tata Motors passenger vehicle dealer) in furtherance to the resolution passed by the Committee of Creditors (CoC) to liquidate the corporate debtor. The bench comprising Judicial Member Vinay Goel and Technical Member Madhu Sinha observed that considering the decision taken by the COC of the Corporate Debtor, this Adjudicating Authority deems it fit...