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| INSOL India is an independent leadership body representing practitioners and other associated professionals specialising in the fields of restructuring, insolvency and turnaround. It is an association with an architecture that facilitates key stakeholders to come together and share experiences while preserving their independence. |
Welcome to INSOL India Newsletter Volume HSH, Issue FA | Dec 26, 2020
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| Editor's Message |
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Divyanshu Pandey
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Greetings to all INSOL India members and readers. On behalf of the editorial board, I sincerely hope and pray that you and your loved ones are safe.
The approval of Jet Airways resolution plan by its committee of creditors is like a silver lining on the clouds in the Indian insolvency eco system. It was a complex case and odds were piled up against a successful resolution on account of COVID and its adverse impact on the aviation sector. It is an achievement for all the stakeholders involved in the process. I take this opportunity to make a special mention for my editorial board colleague, Ashish Chhawchharia, for ably anchoring the insolvency resolution process.
The suspension of initiation of insolvency proceedings has been extended by another three months. As I had mentioned earlier, this period presents an opportunity to strengthen our eco system and we as stakeholders must continue in our efforts to achieve this objective.
The recent circular issued by SEBI prescribing a framework for debenture trustee to sign the intercreditor agreement under the Prudential Framework for Resolution of Stressed Assets is a welcome move. It will help in having a coordinated approach for out of court insolvency resolution and will strengthen the out of court insolvency resolution option- a complementary tool for any evolved insolvency framework. In addition to this, measures like specifying eligibility parameters for accounts which can be considered RBI’s Resolution Framework for Covid-19 Related Stress, passage of Banking Regulation (Amendment) Act, 2020 (which enables the RBI to initiate a scheme of reconstruction or amalgamation of a co-operative bank) and passage of Bilateral Netting of Qualified Financial Contracts Act, 2020 (which facilitates bilateral netting of financial contracts) are steps in the right direction to strengthen our financial system.
In this edition, we give an overview of the abovementioned measures along with snapshots of some of the important judicial pronouncements and news of events and developments related to insolvency regime in India.
I hope you will find the newsletter informative. As always, please do share your valuable feedback, especially on the topics you would like us to address. Also, I encourage the readers to share their vast knowledge on this subject by contributing articles to this monthly newsletter. You may write in to our editorial team at newsletter@insolindia.com
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| President's Message |
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A. S. Chandhiok
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As mentioned in the previous columns, Covid lockdown has kept the courts, tribunals and other establishments locked down. Now the High Court has opened on trial and rotational basis from September 1, but we have to keep our fingers crossed as to how it will go, considering the daily increase in Covid infection.
This time also, we have amendments to the IBBI Regulations. One is by way of a clarification to the Liquidation Process. It relates to fee to the liquidator corresponding to the amount realised by him or to the amount distributed by him. This clarification has been necessitated to minimise discrepancy in the amount realised or distributed by the liquidator. This would help eliminate any loophole and make the process fault-free. Time will tell how friction-free this clarification would be, inasmuch the term “corresponding” looks a bit opaque. There are other amendments, details whereof are in other pages.
The IBBI now proposes to impose a limit on the number of assignments an Insolvency Professional can handle at a given point of time. The number of assignments is linked or say equated with the turnover of the corporate debtor. Five assignments have been permitted where turnover is of less than a thousand crore and only one assignent is permitted where the turnover is more than fifty thousand crore.
Needless to say, the challenges ahead are very likely to demand new processes that are more effective and faster.
The litigation before the High Court of Delhi challenging the IBC Ordinance 2020, which suspended proceedings against defaults arising on or after March 25, 2020 for a period of six months because of the pandemic, was to be listed on August 31. We have yet to know the outcome of the hearing.
The NCLAT has observed that a judicial member and a technical member should form part of a bench in conformity with the order passed by the Supreme Court in Sonu Cargo Movers (I) Pvt. Ltd. v. Union of India (2019). The Appellate Tribunal held that insolvency proceedings would be governed by the Limitation Act and date of default would reckon three years of limitation.
Looked at closely, almost every matter will seemingly have a funny side also. Some are worthy of a smile.
The reader will certainly find much news and more information in the following pages. No doubt, we would always welcome readers’ suggestions and inputs to improve the newsletter. Please do not forget this.
Enjoy reading, stay safe and take care.
A.S. Chandhiok
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| E-Newsletter Editorial Board |
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DISCLAIMER
INSOL India is a society registered under the provisions of Societies Registration Act XXI of 1860. A certificate to this effect was issued by the Registrar of Societies, Government of National Capital Territory of Delhi on 11th January 2000.
The formation of INSOL India fulfilled the long cherished desire of the members of the legal fraternity, chartered accountants, company secretaries and other persons, bodies and institutions in India, to have an association to promote closer co-operation, exchange of ideas, dissemination of information and an empathetic understanding of law of insolvency and related lawhe formation of INSOL India fulfilled the long cherished desire of the members of the legal fraternity, chartered accountants, company secretaries and other persons, bodies and institutions in India, to have an association to promote closer co-operation, exchange of ideas, dissemination of information and an empathetic understanding of law of insolvency and related laws.
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