The introduction of the FSP Rules is a critical and timely first step in resolving financial firms in India. These Rules provide a unique interplay between the processes outlined in the Insolvency and Bankruptcy Code (IBC) and the principles that are distinct but complementary to financial firms. The regulator, the Committee of Creditors (CoC), and the adjudicating authority each have a specific role to play in this process. The FSP Rules will bring much-needed relief to the stakeholders involved in the financial sector, as they now have a clear path to implement resolution plans. However, it is essential to note that the FSP Rules are an interim measure, and comprehensive legislation in this regard will be crucial. As the resolution of FSPs is undertaken through these Rules, it is crucial to monitor the implementation of this framework closely. The FSP Rules provide a necessary first step in addressing the challenges faced by the financial sector, but a comprehensive legislative framework is needed to provide a lasting solution. Therefore, the FSP Rules are a critical first step in resolving financial firms in India, providing a clear path for stakeholders to implement resolution plans. However, ongoing monitoring and the development of comprehensive legislation are needed to address the challenges faced by the financial sector fully.
Author wise: Yash Gupta
Bar on Personal Guarantors as Resolution Applicants under IBC: Understanding the Implications of Invoking Guarantee – By Adv. Yash Gupta and Adv. Nitish Gajraj
The IB Code has undergone several amendments since its inception, and one such amendment that has been introduced is the insertion of Section 29A, which has garnered considerable attention and criticism alike. Further, a specific provision was included in Sub-Section (h) of Section 29A to address the eligibility of Guarantors to Corporate Debtor (CD). This Sub-Section aims to disqualify any "person" who has provided a personal guarantee to a creditor from becoming a resolution applicant once the creditor invokes their personal guarantee. This article aims to discuss Section 29A of the IBC concerning the ineligibility of personal guarantors as a resolution applicant.
Examining the Right of Subrogation under IBC: Current Status and Implications – By Adv. Yash Gupta and Adv. Vishawjeet Singh
The IBC prioritizes the revival and rehabilitation of the corporate debtor over the recovery of debt by the personal guarantor. This means that the personal guarantor's right of subrogation is sacrificed to achieve the IBC's objective. The extinguishment of the personal guarantor's right of subrogation is a departure from the established principles of contracts of guarantee. This has led to debates and discussions about the fairness of the IBC towards personal guarantors. Once the Principal Debtor's creditors have been reimbursed by the guarantor, the IBC regime does not provide for the right to subrogation, and the guarantor cannot proceed against the Principal Debtor under the IBC. Denying the right of subrogation to guarantors may have a negative impact on the credit market, as guarantors may be reluctant to participate in transactions without recovery rights.
Withdrawal of CIRP application under Section 12A of IBC: A Comprehensive Guide – By Adv. Yash Gupta
A comprehensive analysis of withdrawal of CIRP application under Section 12A of IBC at various stage with judicial pronouncements.
Asset Reconstruction Company- A way ahead as a Resolution Applicant under IBC- Adv. Yash Gupta
The entry of major ARCs in the resolution process is likely to improve the response of the resolution scenario, as these entities are well-equipped with the requisite knowledge and expertise to manage and turn around non-performing assets. However, it is crucial to note that the effectiveness of this move will depend on the policies that each ARC decides to finalize, especially with respect to their respective sectoral exposure limits. In essence, the success of allowing ARCs as resolution applicants will hinge on the specific policies and procedures that they put in place, particularly with regards to their sectoral focus and how much exposure they are willing to take on in a particular sector. These policies will play a critical role in determining the level of competition, speed, and effectiveness of the resolution process.
Implication of Section 53 of the IBC corresponding to the State Taxes as Statutory Dues – By Yash Gupta
The statutory dues which would otherwise falls under clause (e) of Section 53(1) will now be on the same plane with other specified debts including debts on account of workman’s dues for a period of 24 months preceding the liquidation commencement date, as the debts owed to a secured creditor include the State under the GVAT Act. However, this will invite the state of dubiety and will be Greek to the Resolution Professionals if not been interceded by the Legislature by way of an amendment keeping in mind the intent of the Insolvency and Bankruptcy Code, 2016.
