Financial Creditors

Till the reference is answered by the Hon’ble Supreme Court the law laid down in the matter of India Resurgence ARC Pvt. Ltd. v. Amit Metaliks Ltd. & Anr. has to be followed – SMFG India Credit Co. Ltd. Vs. (CA) Kshitiz Gupta, RP Aditya Vidyut Appliances Pvt. Ltd. and Anr. – NCLAT New Delhi

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Till the reference is answered by the Hon’ble Supreme Court the law laid down in the matter of India Resurgence ARC Pvt. Ltd. v. Amit Metaliks Ltd. & Anr. has to be followed – SMFG India Credit Co. Ltd. Vs. (CA) Kshitiz Gupta, RP Aditya Vidyut Appliances Pvt. Ltd. and Anr. – NCLAT New Delhi Read Post »

Amount disbursed against consideration for the time value of money in the form of 50% of the share profit contemplating return of the amount after the completion of the project has the commercial effect of borrowing as defined under Section 5(8)(f) of IBC – Sumangal Dealmark Pvt. Ltd. and Ors. Vs. Citystar Infrastructures Ltd. – NCLT Kolkata Bench

In this case, the financial creditor is supposed to render financial assistance (which has been termed as interest free security deposit) which the corporate debtor is required to refund after the completion of the said project along with 50 per cent of the profit share.

Hon’ble NCLT Kolkata Bench held that the amount has been disbursed against consideration for the time value of money in the form of 50 per cent of the share profit. The disbursement contemplates return of the amount after the completion of the project. Thus, the transaction has the commercial effect of borrowing as defined under Section 5(8)(f) as well, apart from main Section 5(8) of IBC.

Amount disbursed against consideration for the time value of money in the form of 50% of the share profit contemplating return of the amount after the completion of the project has the commercial effect of borrowing as defined under Section 5(8)(f) of IBC – Sumangal Dealmark Pvt. Ltd. and Ors. Vs. Citystar Infrastructures Ltd. – NCLT Kolkata Bench Read Post »

Supreme Court sets Guidelines for Withdrawal and Settlement of Insolvency Cases under Section 12A of IBC read with CIRP Regulation 30A | Withdrawal application shall be moved through Resolution Professional only and NCLT Rule 11 or NCLAT Rule 11 or even the power under Article 142 no longer arises – GLAS Trust Company LLC Vs. BYJU Raveendran and Ors. – Supreme Court

In this landmark decision, Hon’ble Supreme Court covers following issues:

i. Nature of the proceedings after admission of the application: proceeding in personam or in rem.
ii. Legal framework for withdrawal and settlement of claims.
iii. Four stages of withdrawal of Insolvency cases: A procedure prescribed under the existing framework.
iv. Comprehensive framework to deal with withdrawal and settlement: Rule 11 of the NCLT Rules, or Rule 11 of the NCLAT Rules or even the power under Article 142 no longer arises.
v. Withdrawal application u/s 12A through IRP only, NCLT conducts an adjudicatory exercise and the procedure is not a mere technicality.
vi. Inherent Powers under Rule 11 of NCLT/ NCLAT Rules, 2016.
vii. Meaning of the phrase “any person aggrieved” under Section 61 and Section 62 of IBC.

Supreme Court sets Guidelines for Withdrawal and Settlement of Insolvency Cases under Section 12A of IBC read with CIRP Regulation 30A | Withdrawal application shall be moved through Resolution Professional only and NCLT Rule 11 or NCLAT Rule 11 or even the power under Article 142 no longer arises – GLAS Trust Company LLC Vs. BYJU Raveendran and Ors. – Supreme Court Read Post »

Is written financial contract a pre-condition or an exclusive requirement for proving existence of debt? – Rahul H. Mehta Vs. Gajendra Investment Ltd. and Anr. – NCLAT New Delhi

Issues covered in this case:

A. Is written financial contract a pre-condition or an exclusive requirement for proving existence of debt?
B. Issue of Interest charge and TDS deductions.
C. Issue of MoU and adjustment of debt with sister concern.
D. CIRP not for purposes of insolvency resolution but for pursuing some agenda other than insolvency resolution.

Is written financial contract a pre-condition or an exclusive requirement for proving existence of debt? – Rahul H. Mehta Vs. Gajendra Investment Ltd. and Anr. – NCLAT New Delhi Read Post »

Unilateral entry recorded in the books of the Corporate Debtor after filing of a petition under Section 7 of IBC cannot be considered – Mr. Kailash Motilal Kakrania and Anr. Vs. Apurva Oil and Industries Pvt. Ltd. – NCLAT New Delhi

Hon’ble NCLAT observed that there is no entry in the balance sheet, prior to the date of filing of petition under Section 7, regarding the said amount. Even in the books of account of the Corporate Debtor, the amounts are not adjusted against the financial debt, and are shown separately in the balance sheet as on 31.03.2022. The Hon’ble Bench referring Khushbu Dey Chem Pvt. Ltd. V. Chemical Suppliers India Pvt. Ltd. (2024) ibclaw.in 474 NCLAT set aside the impugned judgment of NCLT.

Unilateral entry recorded in the books of the Corporate Debtor after filing of a petition under Section 7 of IBC cannot be considered – Mr. Kailash Motilal Kakrania and Anr. Vs. Apurva Oil and Industries Pvt. Ltd. – NCLAT New Delhi Read Post »

Raising of amount by Company through Share Subscription-cum Shareholders Agreement is a Financial Debt – Spectrum Trimpex Pvt. Ltd. Vs. VPhrase Analytics Solutions Pvt. Ltd. – NCLT Mumbai Bench

Hon’ble NCLT Mumbai Bench refers Sanjay D. Kakade v. HDFC Ventures Trustee Co. Ltd & Ors. (2023) ibclaw.in 751 NCLAT and holds that since the transaction has the commercial effect of borrowing and there was a disbursement of money against the consideration for time value of money, the money was raised by the Corporate Debtor from the shareholders through Share Subscription-cum-Shareholders Agreement is a financial debt, as defined u/s 5(8) of the Code.

Raising of amount by Company through Share Subscription-cum Shareholders Agreement is a Financial Debt – Spectrum Trimpex Pvt. Ltd. Vs. VPhrase Analytics Solutions Pvt. Ltd. – NCLT Mumbai Bench Read Post »

Does Interim Moratorium under Section 96 of the IBC bar the insolvency applications against the Personal Guarantor? – YES Bank Ltd. Vs. Mr. Kunal Jiwarajka Personal Guarantor of JSK Marketing Ltd. – NCLT Mumbai Bench

Hon’ble NCLT Mumbai Bench held that:

(i) The scheme of Code does not contemplate manifold applications against the same Personal Guarantor by different lenders. Multiplicity of applications against the same Personal Guarantor is not contemplated under Chapter III.
(ii) If they have not filed any application during moratorium period, they have every right to file application and for computation of the period of limitation, period during which moratorium is in place is to be excluded.

Does Interim Moratorium under Section 96 of the IBC bar the insolvency applications against the Personal Guarantor? – YES Bank Ltd. Vs. Mr. Kunal Jiwarajka Personal Guarantor of JSK Marketing Ltd. – NCLT Mumbai Bench Read Post »

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