08/05/2024

Explanation-I read with Section 29A(j) of IBC speaks about connected person to the Resolution Applicant and not to the Corporate Debtor – Mr. Narayanam Nageswara Rao Vs. Mr. K. Sivalingam, RP of NCS Sugars Ltd. and Anr. – NCLT Hyderabad Bench

Hon’ble NCLT Hyderabad Bench held that the from the Explanation-I read with Section 29A(j) of IBC, the same speaks about connected person to the Resolution Applicant and not to the Corporate Debtor. The Resolution Applicant herein, being an ex-director of the Corporate Debtor, contention of the respondent that the applicant is disqualified to submit resolution plan as CD is debarred by SEBI and that the applicant is a connected party to the CD is not maintainable. Further, legislature while passing the Bill, has given some special relaxation under Section 29A to MSME promoters so that they are allowed to participate in the resolution process of corporate debtor. Therefore, in the above backdrop, the impugned decision made by the Committee of Creditors in the 18th Meeting held on 07.03.2024 disqualifying the Applicant, needs our interference. The point is accordingly decided.

Explanation-I read with Section 29A(j) of IBC speaks about connected person to the Resolution Applicant and not to the Corporate Debtor – Mr. Narayanam Nageswara Rao Vs. Mr. K. Sivalingam, RP of NCS Sugars Ltd. and Anr. – NCLT Hyderabad Bench Read Post »

For any debt to qualify as a Financial Debt, the disbursement of debt should be against consideration for the time value of money irrespective of whether the debt is interest bearing or not is material – Metamorphosis Trading LLP Vs. Sankalp Engineering and Services Pvt. Ltd. – NCLAT New Delhi

Hon’ble NCLAT held that a plain reading of Sections 5(7) and 5(8) of the IBC shows that for any creditor to become financial creditor under Section 5(7) of IBC, there must be a financial debt and for any debt to qualify as a financial debt, that debt along with interest, if any, should have been disbursed against the consideration for the time value of money. Use of expression ‘if any’ as suffixed to the word ‘interest’ leaves no shadow of doubt that the component of interest is not a sine qua non for bringing the debt within the fold of financial debt. What is material however is that the disbursement of debt should be against consideration for the time value of money irrespective of whether the debt is interest bearing or not.

For any debt to qualify as a Financial Debt, the disbursement of debt should be against consideration for the time value of money irrespective of whether the debt is interest bearing or not is material – Metamorphosis Trading LLP Vs. Sankalp Engineering and Services Pvt. Ltd. – NCLAT New Delhi Read Post »

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