The introduction of pre-pack framework may prove to be an efficient way to strengthen the existing insolvency resolution mechanism as it will provide an alternate avenue for resolution of distressed companies. However, the Code would have to be amended and rules and regulations for pre-packs will have to be put in place. The pre-pack regime has to be well tailored to suit the Indian context while keeping in mind that this framework can only serve as an alternative to the existing statutory regime for some specific corporates and sectors and cannot replace the existing mechanism.
Netting is a practice that is bound to reduce the NPA risks of the banks in the country and thereby promote financial stability. However, the Netting Law’s inherent conflict with IBC and the lack of a clear procedure to enforce closed-out netting will require immediate response by the authorities to ensure smooth implementation. It remains to be seen how netting will impact cross-border insolvencies as there might be claims from or against foreign creditors hailing from jurisdictions that do not follow the concept of netting.
Non-rescheduling the date of CoC meeting by Resolution Professional on the request of a Resolution Applicant tantamount to denial of Natural Justice, hence CoC directed to reconvene themselves and consider resolution plan afresh – The author expressed himself in disagreement of the ruling, explained in the Epilogue.
The Code was enacted and brought into force to safeguard the interest of all the stakeholders in the process of providing credit/debt to various establishments. However, the interest of the creditors has taken a setback during this COVID-19 pandemic, primarily due to uncertainties arising out of suspension of new insolvency proceedings and simultaneous increase in the default threshold u/s. 4 of the IB Code from Rs. One lakh to Rs. One Crore w.e.f. 24.03.2020. The President of India, with objective to relieve the corporate debtors of the financial stress owing to limited business during subsistence of Covid-19, promulgated ordinance dated 05.07.2020, whereby, the government has suspended initiation of insolvency proceedings with respect to any default arising on or after 25th day of March, 2020 for a period of six months. Therefore, leaving both the financial and operational creditors without any effective and substantial remedy to recover their debits. However, I will enumerate herein certain alternative legal remedies, though conventional, but are available with ever creditor for recovering their debts in cases of defaults.
The Insolvency and Bankruptcy (Application to Adjudicating Authority) (Amendment) Rules, 2020 Dated 24.09.2020 (By Anil Goel, Founder of AAA Insolvency Professional LLP) Government of India, Ministry of Corporate Affairs, vide Notification No. GSE 583(E) dated 24th September 2020, have amended…
The NCLAT, seeing merits in the argument of the appellant, held that the NCLT order and the consequent CIRP proceedings were bad in law and hence liable to be set aside. It was held that the service was improper as the proper mode of Service as per Rules 5 and 6 of IBAA Rules were not followed. Relying upon the judgment of the Hon’ble Supreme Court in the Neerja Realtor’s case, it was also held that In- Sequentia, an attempt must be made to serve by way of Registered Post/Speed Post followed by E-mail. Publication as a mode of service is permitted only if the other options are exhausted and if it appears that the Debtor is deliberately avoiding service. Further, the Hon’ble NCLAT was also pleased to find that the various inter-party emails produced by the Appellant show that there was a bona fide pre-existent dispute as held by the Hon’ble Supreme Court in Mobilox’s case  ibclaw.in 01 SC and hence the Section 9 application was itself not maintainable. On this premise the Order of the NCLT was set aside and the CIRP process was closed.
MINISTRY OF CORPORATE AFFAIRSNOTIFICATIONNew Delhi, the 24th September, 2020 S.O. 3265(E).—In exercise of the powers conferred by section 10A of the Insolvency and Bankruptcy Code, 2016 (31 of 2016) [as inserted by section 2 of the Insolvency and Bankruptcy Code…