Personal Guarantors Cannot Misuse Insolvency Process To Defeat Creditor Recovery: NCLT Chennai

The National Company Law Tribunal (NCLT), Chennai, has recently ruled that personal guarantors cannot misuse the insolvency process to delay or obstruct legitimate recovery actions by creditors. In an order passed on October 10 by a coram of Judicial Member Jyoti Kumar Tripathi and Technical Member Ravichandran Ramasamy, the tribunal noted that the Interim Resolution Professional (IRP) had “mechanically recommended” acceptance of the personal guarantor's application without considering his...

Liability Of Personal Guarantor Arises Only Upon Demand Made In Accordance With Guarantee Deed: NCLT Hyderabad

The National Company Law Tribunal (NCLT), Hyderabad Bench-II, has recently ruled that the liability of the personal guarantor to the corporate debtor arises only upon a valid demand being made in strict accordance with the terms of the guarantee deed. The bench of Rajeev Bhardwaj (Member-Judicial) and Yogendra Kumar Singh (Member-Technical) observed that, “Rule 3(1)(e) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal...

NCLT Delhi Sanctions Maruti Suzuki's Merger With Suzuki Motor Gujarat

The Principal Bench of the National Company Law Tribunal on Thursday approved the merger of Maruti Suzuki India Limited with its wholly owned subsidiary, Suzuki Motor Gujarat Private Limited. The coram, comprising President Justice Ramalingam Sudhakar and Technical Member Ravindra Chaturvedi, noted that there was no impediment to approving the scheme, given the positions taken by the relevant statutory authorities.“In light of the foregoing facts and discussion, particularly the positions...

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...

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...

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...

Shareholder Advances Recorded As 'Repayable On Demand' Qualify As Financial Debt: NCLT Mumbai

The National Company Law Tribunal (NCLT) Mumbai bench of Sushil Mahadeorao Kochey (Judicial Member) and Prabhat Kumar (Technical Member) admitted a petition under section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) filed by Euro Corporate Services Pvt. Ltd. (formerly Distent Barter Pvt. Ltd.) against Royal Fantasy Constructions Pvt. Ltd (Corporate Debtor) holding that the loan advanced to the corporate debtor constituted a financial debt under section 5(8) of the IBC. It held...