Resolution Professional Can File Liquidation Application U/S 33 Of IBC If CIRP Period Expires Without Approved Resolution Plan: NCLAT

The National Company Law Appellate Tribunal (NCLAT) New Delhi bench of Justice Rakesh Kumar Jain (Judicial Member) and Mr. Naresh Salecha (Technical Member) has held that when the extended Corporate Insolvency Resolution Process (CIRP) period has expired and no resolution plan has been approved, it is incumbent upon the Resolution Professional to file an application for the liquidation of the corporate debtor. A discussion regarding the filing of a liquidation application and the...

No Right To Be Heard Can Be Given At Stage U/S 99 Of IBC, Resolution Professional's Role Is Only Recommedatory And Not Adjudicatory: NCLAT

The National Company Law Appellate Tribunal (NCLAT) Chennai bench of Justice Rakesh Kumar Jain (Judicial Member) and Mr. Jatindranath Swain (Technical Member) has held that no opportunity of being heard is required at the stage when a report under Section 99 of the Insolvency and Bankruptcy Code, 2016 (Code) is submitted, as the role of the Resolution Professional at this stage is merely to assist the Adjudicating Authority in deciding whether the application should be accepted or...

When Acknowledgment Of Debt By Repeated One-Time Settlement Proposals Is Not Controverted, Petition U/S 7 Of IBC Can Be Entertained: 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 when no contrary facts are presented by the Corporate Debtor to the arguments advanced by the Financial Creditor that multiple One Time Settlement (OTS) proposals made by the Corporate Debtor extended the limitation period with each new proposal, it cannot be contended that an...

Petition U/S 7 Of IBC Can Be Entertained For Default On Interest Component Of Loan If It Occurs After Section 10A Period: 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 an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (the Code), can be entertained based on the default in the interest component committed after the prohibited period under Section 10A of the Code, provided that the threshold limit of Rs. 1 crore under Section 4 of the Code is met. Brief Facts: ...

Hire Charges Cannot Be Calculated In CIRP Costs When Asset Is Not Used by Corporate Debtor: NCLAT New Delhi

The National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, consisting of Justice Ashok Bhushan (Chairperson), Barun Mitra (Member - Technical), and Arun Baroka (Member - Technical), dismissed an appeal arising from an order by the NCLT Mumbai. The tribunal held that the hire charges for the assets not used by the corporate debtor during the CIRP cannot be classified as CIRP costs under Regulation 31(b) of the CIRP Regulations. Background CIRP of the corporate...

Interest Mentioned In Unsigned Invoice Cannot Be Included In Calculation Of Threshold Limit U/S 4 Of IBC: NCLAT New Delhi

The National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, consisting of Justice Rakesh Kumar Jain, Member (Judicial), Mr. Naresh Salecha, Member (Technical) and Mr. Indevar Pandey, Member (Technical), dismissed an appeal arising from an order by the NCLT Chandigarh. The tribunal held that the interest specified in an unsigned invoice cannot be included in the calculation of the debt for the purpose of meeting the threshold limit under Section 4 of the IBC. ...

Lenient Approach To Be Adopted While Condoning Delay In Refiling, But Sufficient Cause Must Be Shown: NCLAT

The National Company Law Appellate Tribunal (NCLAT) New Delhi bench of Justice Ashok Bhushan (Judicial Member), Mr. Arun Baroka (Technical Member) and Mr. Barun Mitra (Technical Member) has held that a lenient approach has to be adopted by the court while condoning the delay in refiling the appeal; however, sufficient cause must still be shown before the application for condonation of delay in refiling the appeal can be allowed. Brief Facts: Challenging the order dated 04.08.2023...

Ten-Day Time Period U/S 99 Of IBC For Submission Of Report By Resolution Professional Is Directory, Not Mandatory: NCLAT

The National Company Law Appellate Tribunal (NCLAT) New Delhi bench of Justice Ashok Bhushan (Judicial Member), Mr. Arun Baroka (Technical Member) and Mr. Barun Mitra (Technical Member) has held that the 10-day period provided under Section 99 of the Insolvency and Bankruptcy Code,2016 (Code) within which the Resolution Professional has to submit the report after appointment, cannot be considered mandatory, as no consequences are prescribed in the provision itself for failure to submit...

Service Of Notice On Email Provided In Section 7 Petition Constitutes Sufficient Compliance With Rule 38(1) Of NCLT Rules: 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 service of notice on the email address provided in the petition filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 (the Code) constitutes sufficient compliance with Rule 38(1) of the NCLT Rules. Brief Facts: Bank of Baroda (BoB) sanctioned a credit facility on 03.09.2024 to Our Company Infrastructure ...

Petition U/S Section 7 Of IBC Cannot Be Entertained Based On Guarantee Invoked During Prohibited Period U/S 10A Of IBC: 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 the liability of the guarantor arises only when the guarantee executed by them in favor of the creditor is invoked. If such guarantee was invoked during the period prohibited under Section 10A of the Insolvency and Bankruptcy Code, 2016 (the Code), an application under Section 7 of the Code cannot be maintained. Brief Facts: ...

NCLAT Upholds Liquidation Of Go Airlines, Permits Submission Of Compromise/Arrangement Within 90 Days Of Liquidation Order

The National Company Law Appellate Tribunal (NCLAT), New Delhi bench of Justice Ashok Bhushan (Chairperson), Barun Mitra (Technical Member) and Arun Baroka (Technical Member) have held that the Committee of Creditors (CoC), acting under its commercial wisdom and in accordance with Section 33(2) of the Insolvency and Bankruptcy Code, 2016, was within its rights to resolve to liquidate the Corporate Debtor, Go Airlines (India) Ltd., in the absence of any compliant resolution plan. The...

Dissenting Financial Creditors Are Entitled To Receive Payments On Pro-Rata Basis Of Resolution Plan Value Rather Than Liquidation Value: NCLAT

The National Company Law Appellate Tribunal (NCLAT) Chennai bench of Justice Sharad Kumar Sharma (Judicial Member) and Mr. Jatindranath Swain (Technical Member) has held that dissenting financial creditors are entitled to receive payments on a pro-rata basis of the Resolution Plan rather than the liquidation value. Further, it was held that priority in payment means that whenever the Successful Resolution Applicant remits the amount in installments, the dissenting financial creditors ...