FSP-Financial Service Providers [FSP]

Whether NABARD shall get priority payment over other creditors? – National Bank for Agriculture & Rural Development (NABARD) Vs. SREI Equipment Finance Ltd. – NCLT Kolkata Bench

Hon’ble NCLT Kolkata Bench has held that:

(i) Upon conjoint reading of Section 5(8) and section 3(31), which creates a charge on the book debts of the Corporate debtor, is clear that the present case of NABARD giving a loan to the Corporate debtor is clearly a Financial debt and since the same has been secured against the book debts of the CD in favour of NABARD, it makes NABARD a Secured creditor.
(ii) RP is dutybound to treat it as a SECURED Financial Creditor for all intents and purposes of the code. There is no other special treatment to any of creditors envisaged in the code and all Secured creditors have to be treated equally as a class.
(iii) Nowhere in the code a special treatment is envisaged within a class. It is also noteworthy that NABARD had filed its claim with the Administrator in FORM C and the claim had been collated by the Administrator and the claim was admitted. The claim of NABARD was accepted as NABARD had given financial debt to SEFL and also had securities of SEFL assigned as charge. Hence, NABARD clearly falls into the category of a Secured Financial Creditor.

Whether NABARD shall get priority payment over other creditors? – National Bank for Agriculture & Rural Development (NABARD) Vs. SREI Equipment Finance Ltd. – NCLT Kolkata Bench Read Post »

NCLAT upholds the decision of NCLT New Delhi Bench, that against a Financial Service Provider application under Section 7 of IBC is not maintainable Globe Capital Market Ltd. Vs. Narayan Securities Ltd. – NCLAT New Delhi

Hon’ble NCLAT holds that when the Respondent is a Financial Service Provider, application under Section 7 is not maintainable since he is not included in the definition of corporate person as defined in Section 3(7) of the Code. The Adjudicating Authority has not committed any error in rejecting the application as not maintainable.

NCLAT upholds the decision of NCLT New Delhi Bench, that against a Financial Service Provider application under Section 7 of IBC is not maintainable Globe Capital Market Ltd. Vs. Narayan Securities Ltd. – NCLAT New Delhi Read Post »

The business decision of the CoC is not to be interfered with by the Adjudicating Authority or this Tribunal unless it is shown that there is violation of Section 30(2) of the IBC – Authum Investment and Infrastructure Ltd. Vs. Rajneesh Sharma Administrator of SREI Equipment Finance Ltd. and SREI Infrastructure Finance Ltd. and Ors. – NCLAT New Delhi

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The business decision of the CoC is not to be interfered with by the Adjudicating Authority or this Tribunal unless it is shown that there is violation of Section 30(2) of the IBC – Authum Investment and Infrastructure Ltd. Vs. Rajneesh Sharma Administrator of SREI Equipment Finance Ltd. and SREI Infrastructure Finance Ltd. and Ors. – NCLAT New Delhi Read Post »

Whether attachment order passed prior to initiation of CIRP of Award Debtor shall remain unaffected to ensure the realization of the decretal dues or arbitral award? – Candor Gurgaon Two Developers & Projects Pvt. Ltd. Vs. Srei Infrastructure Finance Ltd. – Calcutta High Court

Hon’ble Calcutta High Court held that:
(i) Following the procedure as laid down under the IBC, 2016, once Resolution Applicant submits resolution plan and it is approved by the committee of creditors, the Adjudicating Authority is to take the call and once such plan is accepted the moratorium under Section 14 of the Code ceased to operate. But that does not permit the proceeding including one in the execution to dance back to life. The provision as laid down under Section 31 of the Code of 2016 takes over.
(ii) The execution proceeding appears to be not maintainable for the simple reason that if by way of execution the claim is satisfied and thereby the quantum of money is realized and given to the Corporate Creditor (in this case the Award Holder) it would amount to preferential transaction, which is not permitted under Section 43 of the IBC, 2016.
(iii) The provision of Section 231 of the IBC, 2016 is eloquent about ouster of jurisdiction of Civil Code in respect of matter in which the Adjudicating Authority or the Board is empowered by or under the Code of 2016. The order of attachment in favour of the Award Holder, in view of Section 238 of the IBC, 2016 as a natural corollary shall be void.

Whether attachment order passed prior to initiation of CIRP of Award Debtor shall remain unaffected to ensure the realization of the decretal dues or arbitral award? – Candor Gurgaon Two Developers & Projects Pvt. Ltd. Vs. Srei Infrastructure Finance Ltd. – Calcutta High Court Read Post »

A Stock Broker registered with SEBI and Trading Member of NSE is a Financial Service Provider as per Section 3(17) of IBC and by virtue of Section 3(7) read with Section 3(8) and Section 227 of the Code, Section 7 CIRP application is not maintainable – Nitin Pannalal Shah Vs. Vipul H Raja – NCLAT New Delhi

Hon’ble NCLAT held that:

(i) Section 3(16)(e) of IBC is an inclusive definition.

(ii) The Stock Brokers, who are covered by the Regulation 1992 are subject to various obligation and duties towards Investors and from the nature of activities as contained in the Memorandum of Association of both the Corporate Debtors, they clearly fall within the definition of ‘Financial Service Provider’.

(iii) Section 5(8)(g) has to be read harmoniously with Section 7 and Section 5(7) and 5(8). Section 5(8)(g) cannot be read in any manner that financial service providers are also covered under Section 5(8)(g).

(iv) Both the Corporate Debtors, i.e. Simandhar Broking Ltd. and M/s. Astitva Capital Market Private Limited being registered Broker with SEBI and Trading Member of the NSE are providing services, which are ‘financial services’ within the meaning of definition of Section 3(16) of the Code and by virtue of Section 3(7) read with Section 3(8) and Section 227 of the Code, Section 7 Application filed by Corporate Debtors were not maintainable.

A Stock Broker registered with SEBI and Trading Member of NSE is a Financial Service Provider as per Section 3(17) of IBC and by virtue of Section 3(7) read with Section 3(8) and Section 227 of the Code, Section 7 CIRP application is not maintainable – Nitin Pannalal Shah Vs. Vipul H Raja – NCLAT New Delhi Read Post »

NCLT approves Consolidated Resolution Plan of Rs. 14,867.50 crores submitted by NARCL in group insolvency of SREI Equipment Finance Ltd. and SREI Infrastructure Finance Ltd., FSP – Rajneesh Sharma, Administrator of SREI Equipment Finance Ltd. and SREI Infrastructure Finance Ltd. Vs. National Asset Reconstruction Company Ltd. (NARCL) – NCLT Kolkata Bench

On 11.08.2023, NCLT Kolkata Bench has approved the Resolution Plan of National Asset Reconstruction Company Ltd. (NARCL) in consolidated CIRP of SREI Equipment Finance Ltd. and SREI Infrastructure Finance Ltd.
NARCL is a government entity, has been incorporated on 07.07.2021 with majority stake held by Public Sector Banks and balance by Private Banks with Canara Bank being the Sponsor Bank. NARCL is registered with the Reserved Bank of India as an Asset Reconstruction Company under SARFAESI Act, 2002.
NARCL and IDRCL will infuse funds into the Corporate Debtors and other funds towards Assignment Payments, and provide for Corporate Debtors to undertake repayment obligations in the manner set out in this Resolution Plan, aggregating to INR 14,867.50 crores, which amount shall be utilized for funding payments proposed to be made to the stakeholders of the Corporate Debtors, subject to the terms of this Resolution Plan.

NCLT approves Consolidated Resolution Plan of Rs. 14,867.50 crores submitted by NARCL in group insolvency of SREI Equipment Finance Ltd. and SREI Infrastructure Finance Ltd., FSP – Rajneesh Sharma, Administrator of SREI Equipment Finance Ltd. and SREI Infrastructure Finance Ltd. Vs. National Asset Reconstruction Company Ltd. (NARCL) – NCLT Kolkata Bench Read Post »

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