IBC
Related Party Status Must Be Determined On When Insolvency Proceedings Commence, Not By Historical Facts: NCLT Ahmedabad
The National Company Law Tribunal, Ahmedabad bench of Mr. Shammi Khan (Judicial Member) and Mr. Sanjeev Kumar Sharma (Technical Member), held that related party status as per the Insolvency & Bankruptcy Code must be determined on the date of commencement of Insolvency Proceedings and not based on historical roles. Background Facts: The Corporate Debtor, Sebacic India Limited, was incorporated on 10.09.2007. Between 2011 and 2018, venture Capital Funds, Wayzata III India Ocean...
Personal Guarantor's Liability Can't Exceed Contractual Limit: NCLT Kochi Dismisses Petitions U/S 95 IBC For Defective Demand Notices
The National Company Law Tribunal (NCLT), Kochi Bench comprising Smt. Madhu Sinha (Technical Member) and Shri. Vinay Goel (Judicial Member) has held that where a guarantee agreement expressly limits the liability of the personal guarantor, any demand notice or invocation of guarantee which seeks to recover an amount exceeding such capped liability is invalid and cannot form the basis for initiating insolvency proceedings under Section 95 of the Insolvency and Bankruptcy Code, 2016. The...
IBC Not A Recovery Mechanism, Additional Claims Of Interest Beyond Amount In Petition Cannot Justify Admission Of Insolvency Plea: NCLT Mumbai
The National Company Law Tribunal, Mumbai, comprising Justice V.G. Bisht (Retd.) and Prabhat Kumar (Member - Technical), examined if a petition u/s 7 of the IBC could be admitted when the amount claimed in the petition is subsequently offered by the corporate debtor through a demand draft. The bench dismissed the petition and observed that IBC is not a recovery mechanism and the additional claims of interest beyond the amount mentioned in the petition cannot justify admission. ...
The Working Of The IBC – Some Thoughts And Reflections : Justice Anand Venkatesh Writes
1. The Insolvency and Bankruptcy Code (IBC), 2016 aims at timely reorganization and resolution of corporates, firms and individuals; to maximize the assets of such debtors for the benefit of all stakeholders. It has been said that introspection is a powerful tool for self-betterment. Aristotle is believed to have said that knowing yourself is the beginning of all wisdom. There is no doubt that what is true for individuals is true for institutions which they man and run. An institution which does...
Fresh Application U/S 7 Of IBC Can Be Filed Upon Default Under Restructured Terms: NCLAT
The National Company Law Appellate Tribunal (NCLAT) New Delhi bench of Justice Ashok Bhushan (Judicial Member), Mr. Barun Mitra (Technical Member) and Mr. Arun Baroka (Technical Member) has held that section 10A of the Insolvency and Bankruptcy Code, 2016 (IBC) does not prohibit parties from entering into an arrangement to restructure their debts during or after the section 10A period. If a restructuring agreement is executed between the parties, a fresh application under section 7 of the...
Issuance Of Second Demand Notice U/S 8 Of IBC With Significant Changes Amounts To Fresh Notice: NCLAT
The National Company Law Appellate Tribunal (NCLAT) New Delhi bench of Justice Ashok Bhushan (Judicial Member) and Mr. Barun Mitra (Technical Member) has held that issuance of a fresh demand notice with significant changes like claimed amount, date of default etc. triggers a time line therefore if any dispute is pending between the parties before the demand notice is issued, an application under section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) cannot be admitted. The present ...
Income Tax Refund Received By Bank During CIRP In Corporate Debtor's Account Cannot Be Withheld: NCLAT
The National Company Law Appellate Tribunal (NCLAT) New Delhi bench of Justice Ashok Bhushan (Judicial Member), Mr. Barun Mitra (Technical Member) and Mr. Arun Baroka (Technical Member) has held that Income Tax Refund received by the bank in the corporate debtor's account during Corporate Insolvency Resolution Process (CIRP) cannot be withheld on ground and such amount must be remitted to the liquidation bank account of the corporate debtor. Corporate Insolvency Resolution Process...
Secured Creditor Is Obligated To Contribute Towards Workmen's Dues When Security Interest Is Realised Under SARFAESI Act: NCLAT
The National Company Law Appellate Tribunal (NCLAT) New Delhi bench of Justice Ashok Bhushan (Judicial Member), Mr. Barun Mitra (Technical Member) and Mr. Arun Baroka (Technical Member) has held that the obligation to contribute towards workmen dues out of the realised fund cannot be avoided by the Secured Creditor when the security interest has been realised under the SARFAESI Act. Section 52(4) of the Insolvency and Bankruptcy Code, 2016 (IBC) permits a secured creditor to realise its...
Application U/S 7 Of IBC Shall Be Deemed Withdrawn If Modification Application Is Not Filed Within 30 Days: NCLAT
The National Company Law Appellate Tribunal (NCLAT) New Delhi bench of Justice Ashok Bhushan (Judicial Member) and Mr. Barun Mitra (Technical Member) has held that failure to file a modification application under third proviso section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) within 30 days, from the date of commencement of the 2020 Amendment Act, to comply with the requirement of 100 allottees or 10% of the total unit holders shall result in the original application being...
NCLT Is Bound To Appoint IRP Proposed By Corporate Debtor: Madras High Court
The Madras High Court on Monday held that the suggestions of the financial creditor, operational creditor, or corporate debtor with regard to the appointment of the IRP are liable to be accepted. While hearing a writ petition challenging the appointment of an Interim Resolution Professional (IRP) by the National Company Law Tribunal (NCLT), Chennai, the Madras High Court interpreted Sections 10 and 16 of the Insolvency and Bankruptcy Code, 2016. The petition was filed challenging the...
Unadjusted Trade Advance Payable With Interest Rate Qualifies As Financial Debt U/S 5(8) Of IBC: NCLAT
The National Company Law Appellate Tribunal (NCLAT) New Delhi bench of Justice Rakesh Kumar Jain (Judicial Member), Mr. Naresh Salecha (Technical Member) and Mr. Indevar Pandey (Technical Member) has held that unadjusted trade advance carrying interest rate payable by the Corporate Debtor till the entire payment is made satisfies the requirement of consideration against time value of money under section 5(8) of the Insolvency and Bankruptcy Code, 2016 (IBC) therefore qualifies as a ...
Assets Of Corporate Debtor Attached Under PMLA Are Not Part Of Resolution Estate, NCLT Cannot Direct Release Even If Attached During CIRP: NCLAT
The National Company Law Appellate Tribunal (NCLAT) New Delhi bench of Justice Rakesh Kumar Jain (Judicial Member), Mr. Naresh Salecha (Technical Member) and Mr. Indevar Pandey (Technical Member) has held that if property is alleged to be proceeds of crime and is under adjudication by a competent authority under a penal statutes, it cannot be considered part of the freely available resolution estate under the Insolvency and Bankruptcy Code, 2016 (IBC), therefore the Enforcement ...