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“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

Background

A scheme of arrangement is an oft used mechanism for company restructuring, which may take the form of a ‘merger’, a ‘demerger’ or even a ‘compromise’ with creditors. Sections 391-394 of the Companies Act, 1956 (“1956 Act”), read with the Companies (Court) Rules, 1959, were the relevant statutory framework governing this. Continue Reading Objections at the first motion stage: Light at the end of the rainbow?

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  

Critiquing the Regulatory Threshold for an ‘Officer Who is in Default’ under the Companies Act, 2013

In Part I of this series, we had discussed the ambiguities surrounding the rectification of non-compliances under the Companies Act, 2013 (“Act”). In Part II, we seek to address another critical aspect of the Act – the imposition of liability on a company’s officer for offences and non-compliances by the Company.[1]Continue Reading Critiquing the Regulatory Threshold for an ‘Officer Who is in Default’ under the Companies Act, 2013

Flipping the Script on Reverse Mergers: Analysis of The Latest Amendment to Merger Rules

Introduction

The Ministry of Corporate Affairs (MCA) on September 9, 2024, amended Rule 25A of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 (effective from September 17, 2024), by introducing sub-rule 5. The amendment is intended to promote seamless mergers and amalgamations between a foreign holding company incorporated outside India and an Indian company, being a wholly-owned subsidiary company incorporated in India, i.e., an inbound cross-border reverse merger.Continue Reading Flipping the Script on Reverse Mergers: Analysis of The Latest Amendment to Merger Rules