Analysis of Minimum amount of default under Section 4 of Insolvency and Bankruptcy Code 2016 (IBC)

CIRPCIRP Application and withdrawal Analysis of Minimum amount of default under Section 4 of IBC   Section 4 provides minimum threshold limit of default to file application to initiate Insolvency Resolution and Liquidation for Corporate Persons under the Code. The status…

Declaration of moratorium and public announcement [Section 13, 14 & 15 of the Insolvency and Bankruptcy Code 2016 (IBC)]

CIRPDeclaration of moratorium and public announcement Declaration of moratorium and public announcement [Section 13, 14 & 15 of the IBC] After initiation of CIRP as application filed under section 7 or 9 or 10, the next process of the CIRP…

Persons who may initiate CIRP against Corporate Debtor under Insolvency and Bankruptcy Code 2016 (IBC)

"Decoding the Code" Persons who may initiate Corporate Insolvency Resolution Process(CIRP) Chapter-II of the Insolvency and Bankruptcy Code, 2016 (referred as 'IBC' or 'the Code') covers Corporate Insolvency Resolution Process(CIRP). This part of the decoding the code analyse followings definitions:…

Can a bank file an application for initiating CIRP against another (bank) when a default has occurred Insolvency and Bankruptcy Code 2016 (IBC)?

A financial creditor or an operational creditor cannot file application for initiating CIRP against financial service provider even if they maybe corporate entities because these are not corporate debtors under the Insolvency and Bankruptcy Code, 2016.  Financial Service provider can file application to initiate CIRP against any corporate debtor, if the corporate debtor commits defaults. However, if a bank takes loan from the another (bank) or from any financial service provider, the debt taker bank cannot file application for initiating CIRP against other bank(or against financial service provider) as debt owned bank is out of purview of the Code as a financial service provider as discussed in the this article.  Similarly, insurer is out of purview of the Code.

Remedy to file a suit or an application against the corporate debtor after completion of the period of moratorium in accordance with Section 60(6) of the Insolvency and Bankruptcy Code 2016 (IBC)

The cases in which the Adjudicating Authority or Appellate Tribunal could not decide the claim on merit, such claims or issues can be raised before an appropriate forum in terms of Section 60(6) of the Code. The Financial Creditors and the Operational Creditors whose claims have been decided by the Adjudicating Authority or this Appellate Tribunal, such decision being final and is binding on all such Financial Creditors and the Operational Creditors in terms of Section 31 of the Code. Their total claims stand satisfied and, therefore, they cannot avail any remedy under Section 60(6) of the Code. The Financial Creditors in whose favour guarantee were executed as their total claim stands satisfied to the extent of the guarantee, they cannot reagitate such claim from the Principal Borrower.

Analysis of withdrawal of CIRP proceeding pursuant to settlement under Section 12A of IBC

Section 12A is inserted by second amendment in IBC on recommendation by  Insolvency Law Committee Report submitted in Mar, 2018 to provide facility to withdraw application made under section 7, 9 or 10 on settlement even if CIRP has been initiated. Before the Section 12A, there was no provision in the Code or the regulations in relation to permissibility of withdrawal post admission of a CIRP application. As discussed above, only rule 8 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016t provide facility to withdraw the application on a request by the applicant before it is admitted by the NCLT.