Insolvency and Bankruptcy Code

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Navigating Legal Crossroads: Interplay between IBC and NI Act

INTRODUCTION

The intersection between the Insolvency and Bankruptcy Code, 2016 (“IBC”), and the Negotiable Instruments Act, 1881 (“NI Act”), has caused significant judicial deliberation, particularly concerning creditor rights, financial discipline, and the resolution of financial distress. Section 138 of the NI Act holds the drawer of the cheque liable in case of dishonour of cheque due to insufficient funds. The provision imposes penal consequences on the drawer, serving as a deterrent against indiscriminate issuances of cheques and safeguarding creditors’ interests.[1]Continue Reading Navigating Legal Crossroads: Interplay between IBC and NI Act

Real Estate Insolvency: Waivers contemplated under approved resolution plan override transfer / change in shareholding charges demanded by Industrial Development Authorities

In a recent judgment[1], the Hon’ble Supreme Court has upheld the approval of a resolution plan which provided that there should be an exemption from payment of (i) any type of fees/ penalties for renewal of sub-lease; and (ii) transfer charges due to change in directorship/ shareholding in favour of the resolution applicant…

Interim Moratorium Not An Escape From Consumer Penalties: Supreme Court Clarifies

INTRODUCTION

While expanding the jurisprudence of the Insolvency and Bankruptcy Code, 2016, (“IBC”), the Division Bench of the Supreme Court (“SC”), in Saranga Anilkumar Aggarwal v. Bhavesh Dhirajlal Sheth and Ors.,[1] held that an interim moratorium under the IBC does not apply to execution proceedings for penalties imposed under the Consumer Protection Act, 1986 (“Consumer Protection Act”). Once an insolvency application is admitted by the National Company Law Tribunal, moratorium under the IBC comes into effect, which is a temporary suspension of legal actions against the debtor. Continue Reading Interim Moratorium Not An Escape From Consumer Penalties: Supreme Court Clarifies

“Related Party” Creditor Under IBC: Making A Case For Purposive Interpretation

The Insolvency and Bankruptcy Code, 2016 (“Code”), has marked a significant shift in India’s corporate insolvency landscape, transitioning from a debtor-centric approach to a creditor-centric approach. With the committee of creditors (“CoC”) now driving the resolution process, it has become imperative for “related parties”, likely to sabotage the resolution process of a corporate debtor, to be excluded from the same. For this purpose, the Code stipulates that “related parties” should not (i) regain control of the company either by means of submitting a resolution plan (Section 29A); or (ii) be allowed to influence the resolution process by participating and voting in CoC meetings (first proviso to Section 21(2)).Continue Reading “Related Party” Creditor Under IBC: Making A Case For Purposive Interpretation

Simultaneous IBC Proceedings against Corporate Debtor and Corporate Guarantor: Critical Takeaways from BRS Ventures Case

The legal landscape governing insolvency resolution in India has undergone significant transformation since the advent of the Insolvency and Bankruptcy Code, 2016 (“IBC”). One of the contentious issues in this evolving framework is whether simultaneous insolvency proceedings can be initiated against both the corporate debtor and its corporate guarantor for the same debt. The recent Supreme Court judgment in BRS Ventures Investments Ltd. v. SREI Infrastructure Finance Ltd. (2024 INSC 548) offers clarity on the treatment of such proceedings and reinforces key principles governing the relationship between creditors, debtors, and guarantors.Continue Reading Simultaneous IBC Proceedings against Corporate Debtor and Corporate Guarantor: Critical Takeaways from BRS Ventures Case

Proving default: IU reports not the be-all and end-all

As per the scheme of the Insolvency and Bankruptcy Code, 2016 (“Code”), an application for initiation of corporate initiation resolution process (“CIRP”) can be filed by the debtor itself or by a financial or operational creditor. The Code provides for filing of record of default recorded with the Information Utility (“IU”) as evidence of default, along with other specified documents.Continue Reading Proving default: IU reports not the be-all and end-all  

Untangling legal knot: SC’s ruling on “security deposits” as financial or operational debt under IBC

Introduction

For initiating proceedings under the Insolvency and Bankruptcy Code 2016 (“IBC”), categorisation of a creditor as either a “financial creditor” or an “operational creditor” is a rather significant first step. Such categorisation is not merely organisational, but essential since the rights, obligations and procedural requirements for realisation of debt by financial and operational creditors also differ under the IBC.Continue Reading Untangling legal knot: SC’s ruling on “security deposits” as financial or operational debt under IBC

SUPREMACY OF THE IBC VIS-A-VIS THE ELECTRICITY ACT[1]

INTRODUCTION:

In a recent judgement of Paschimanchal Vidyut Vitran Nigam Ltd. v. Raman Ispat Private Ltd. and Ors. (being Civil Appeal No.7976 of 2019), the Hon’ble Supreme Court has held that Section 238 of the Insolvency and Bankruptcy Code, 2016 (“IBC/Code”) overrides the provisions of the Electricity Act, 2003, despite the latter containing two specific provisions being Section 173 and 174 which have overriding effect over all other laws.Continue Reading Supremacy of the IBC vis-a-vis The Electricity Act [1]