IBC Does Not Require Prior CIRP Against Corporate Debtor To Initiate Guarantor Insolvency: NCLAT Delhi

The New Delhi National Company Law Appellate Tribunal (NCLAT) on 14 July held that financial creditors can directly initiate insolvency proceedings against personal guarantors without any pending Corporate Insolvency Resolution Process (CIRP) or liquidation proceedings against the corporate debtor. Judicial Member Justice Mohd Faiz Alam Khan and Technical Member Naresh Salecha allowed appeals filed by UCO Bank against orders of the Kolkata Bench of the National Company Law Tribunal (NCLT),...

NCLAT Issues Notice In Jiostar's Appeal Against Rejection Of Insolvency Plea Against Absolute Legends

The National Company Law Appellate Tribunal (NCLAT) on Monday issued notice in an appeal filed by Jiostar India Pvt. Ltd. against an order rejecting its insolvency plea against Absolute Legends Sports Pvt. Ltd., the promoter of the Legends League Cricket Masters T20 tournament. The appellate tribunal observed that the National Company Law Tribunal (NCLT) had failed to consider Jiostar's contention that the Media Rights Agreement had been duly signed on its behalf by Ankush Mahajan. A bench of...

Liquidator's Sale Of Corporate Debtor's Shell Entity Valid After Creditor Consultation: NCLAT New Delhi

The New Delhi Bench of the National Company Law Appellate Tribunal (NCLAT) on 14 June held that a liquidator can sell the shell legal entity of a corporate debtor through public auction during liquidation after consulting creditors, where all assets of the corporate debtor have already been realised and dissolution is the only remaining option. Judicial Member Justice Mohd Faiz Alam Khan and Technical Member Naresh Salecha upheld the sale of Abhijeet MADC Nagpur Energy Pvt. Ltd.'s legal entity,...

IBC Cannot Be Used to Validate Illegal Constructions Or Defeat Town Planning Laws: NCLAT

The National Company Law Appellate Tribunal (NCLAT) in Delhi has held that while a corporate debtor's subsisting contractual and development rights under a hire-purchase agreement may constitute assets under the Insolvency and Bankruptcy Code (IBC), the insolvency process cannot be used to legitimise unauthorised construction or defeat statutory town planning laws. A bench of Judicial Member Justice Mohd. Faiz Alam Khan and Technical Member Naresh Salecha observed: “We emphasise that...

NCLAT New Delhi Upholds CIRP Against Simbhaoli Sugar, Holds Farmers' Claims Must Be Considered

The New Delhi Bench of the National Company Law Appellate Tribunal (NCLAT) on 13 July upheld the admission of Corporate Insolvency Resolution Process (CIRP) against Simbhaoli Sugar Limited, holding that the insolvency proceedings were initiated independently of the Reserve Bank of India (RBI) circular later struck down by the Supreme Court. Officiating Chairperson Justice Yogesh Khanna and Technical Member Ajai Das Mehrotra dismissed appeals filed against the order of the Allahabad Bench of the...

Acknowledged Interest On ICDs Forms Part Of Financial Debt Under IBC: NCLAT New Delhi

On 13 July, the New Delhi Bench of the National Company Law Appellate Tribunal (NCLAT) held that acknowledged interest on Inter Corporate Deposits (ICDs) forms part of “financial debt” under the Insolvency and Bankruptcy Code, 2016 (IBC). Judicial Member Justice N Seshasayee, along with Technical Members Indevar Pandey and Arun Baroka, allowed an appeal filed by Wild Dreams Trading Company Pvt. Ltd. against the Chandigarh Bench of the National Company Law Tribunal (NCLT), which had rejected its...

Equity Investment Without Repayment Obligation Does Not Qualify As Financial Debt: NCLAT New Delhi

The New Delhi Bench of the National Company Law Appellate Tribunal (NCLAT) on 1 July held that an amount advanced under a Subscription and Shareholders Agreement (SSA) towards purchase of equity shares and convertible warrants does not qualify as “financial debt” under the Insolvency and Bankruptcy Code, 2016 (IBC), unless the agreement creates a repayment obligation. Judicial Member Justice Mohd Faiz Alam Khan and Technical Member Ajai Das Mehrotra dismissed Metamorphosis Trading LLP's appeal...

Delayed Homebuyer Claim Cannot Be Rejected When RP Failed To Verify Records: NCLAT New Delhi

The New Delhi Bench of the National Company Law Appellate Tribunal (NCLAT) on 30 June held that a genuine homebuyer cannot be denied the benefit of an approved resolution plan merely because the homebuyer filed the claim belatedly, when the delay occurred due to the Resolution Professional's (RP) failure to identify and notify the homebuyer despite the corporate debtor's records reflecting the allotment. Judicial Member Justice N Seshasayee and Technical Members Arun Baroka and Indevar Pandey...

Appeal Against Deferred Intervention Application In Insolvency Case Not Maintainable: NCLAT Chennai

The Chennai Bench of the National Company Law Appellate Tribunal (NCLAT) on 15 June held that an appeal under Section 61(1) of the Insolvency and Bankruptcy Code, 2016 cannot be filed against an order that only defers an intervention application for consideration along with a revised resolution plan after reconsideration by the Committee of Creditors (CoC). Judicial Member Justice Sharad Kumar Sharma and Technical Member Jatindranath Swain dismissed the appeal filed by AYRA Consortium, a...

NCLAT New Delhi Expunges Remarks Against Mahavir Medicare RP, Clarifies RP's Independent IBC Duty

The New Delhi Bench of the National Company Law Appellate Tribunal (NCLAT) on 6 July, held that a Resolution Professional (RP) must independently ensure that the Corporate Insolvency Resolution Process (CIRP) complies with the Insolvency and Bankruptcy Code, 2016 (IBC), and cannot merely implement the decisions of the Committee of Creditors (CoC). Judicial Member Justice N. Seshasayee with Technical Members Arun Baroka and Indevar Pandey allowed the application filed by the RP and expunged the...

Director's Resignation Did Not Discharge His Liability Under Deed Of Guarantee In Technofab Case: NCLAT

The National Company Law Appellate Tribunal (NCLAT) in Delhi has upheld the initiation of personal insolvency proceedings against a former director of Technofab Engineering Limited, holding that under the terms of the deed of guarantee executed in the case, his resignation from the company did not discharge him from liability. The tribunal also held that the subsequent renewal of State Bank of India's credit facilities did not amount to a variation. A bench of Judicial Member Justice N....

Expeditious Resolution Under IBC Cannot Override Natural Justice: NCLAT

The National Company Law Appellate Tribunal (NCLAT) in Delhi has held that the objective of speedy insolvency resolution under the Insolvency and Bankruptcy Code cannot come at the cost of fairness, setting aside an order that had closed a corporate debtor's right to file its reply in a pending insolvency case.A bench of Judicial Member Justice N. Seshasayee and Technical Member Indevar Pandey observed: “The objective of the Code is undoubtedly expeditious resolution. However, such expeditious...