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 23, Issue FEBRUARY | Feb 18, 2020

Editor's Message
Divyanshu Pandey

“Greetings and a warm welcome to all INSOL India members and friends.

 

The hallmark of an effective insolvency regime is that it should be dynamic and adaptive. With the passing of the third amendment to IBC and modifications to the relevant regulations, it gets manifested that all the important participants in the insolvency ecosystem recognise this. Be it the executive, legislature, the regulator or the judiciary, their efforts are to make the most of the learnings and plug the loopholes arising in the implementation journey of IBC. However, one needs to be judicious enough to realise that in the name of being equitable and just, the remit of any authority does not strike at the fundamental principles of insolvency resolution. Time has come that we give a message to the world, that we have a sound and stable insolvency framework which is not always in state of flux due to judicial pronouncements or legislative changes.

 

In this edition, we give an overview of the changes introduced to the IBC by the third amendment, changes to CIRP and Liquidation regulations, provide snapshots of some of the important judicial pronouncements along with the news in 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 newsletter. You may write to our editorial team at newsletter@insolindia.com

 

President's Message
A. S. Chandhiok

Greetings and welcome to yet another issue (twenty third edition) of your INSOL India Newsletter!

 

Last month witnessed some remarkable amendments to the Insolvency and Bankruptcy Code, 2016 (IBC). No doubt, IBC is one of the most significant legislations by the Indian Government enacted to address the economic menace of distressed debts in the country, which was on a faster growth track too. No legislation will bring the desired result unless its full implementation is done successfully. The IBC also had its share of teething troubles. Since its enactment, a slew of amendments followed, which became essential to achieve its objective.

 

When legal proceedings started to increase, certain critical inconsistencies and gaps became evident in respect of the corporate insolvency resolution processes (CIRP). And then, certain judicial pronouncements came to be viewed as contrary to the IBC’s envisioned priority of distribution. The other points of conflict were that financial and operational creditors must be given similar percentage of haircut; and that there is discrimination amongst financial creditors on the basis of existing priorities or security interest.  Another judicial view was that the Committee of Creditors (CoC) has no role to play in determining the manner of distribution of proceeds of a resolution plan amongst the financial or operational creditors.  This is based on the assumption that since the financial creditors in the Committee of Creditors are interested parties, there will be conflict of interest.  Another contributing factor is that initiation of CIRP has taken more time than the prescribed fourteen days, in several cases. Another striking development is litigation by tax authorities against successful resolution applicants for recovery of pre-CIRP tax dues!  The amendment of 2019 is brought to address these burning issues.  More details are in the following pages and therefore, no reiteration is needed here. The present amendments as well as the judicial pronouncements will continue to  storm the minds of professionals, for resolution at the earliest is of paramount interest. 

The NCLAT on August 28, 2019, in the case of Shweta Viswanath Shirke and Others v. The Committee of Creditors and Another set aside initiation of corporate insolvency resolution process initiated by financial creditors subject to payment by promoters/shareholders to all stakeholders in terms of Section 12A with liberty to the Enforcement Directorate and others to continue their investigation processes. The Adjudicating Authority in the case of Bhushan Power & Steel, approved the resolution plan of JWA. However, the matter has been taken to the appeal court and is pending there.

 

Prof. Scott Pryor, Campbell University School of Law, Raleigh, N.C., has written an article titled “Re-Secure in India,” in the  American Bankruptcy Institute Journal, touching the IBC. The article can be accessed only by members of the American Bankruptcy Institute (www.abi.org). We will try to get his permission to host the same on our website.

 

The Government of India has announced merger of ten public sector banks to form new four banks, to have financially strong public sector banks in the country. Integration of technology platforms would be a key challenge for the policy of the government to merge various banks into four major banks in the country on the basis of their IT compatibilities instead of geographic positioning.  

 

My request in one of the previous issues is worth repeating. The newsletter will grow as much as its readers respond. Readers’ response is always welcome!

 

SIG 24
AAA Insolvency Professionals LLP
ASC Consulting Private Limited
AZB & Partners
Chandhiok & Mahajan, Advocates and Solicitors
Cyril Amarchand Mangaldas
Dhir & Dhir Associates
Duff & Phelps
Edelweiss Asset Reconstruction Company Ltd.
Ernst & Young Global Limited
Grant Thornton India LLP
J Sagar Associates
Kesar Dass B & Associates
Khaitan & Co
KPMG India private Limited
Link Legal
Luthra & Luthra Law Offices New Delhi
PHOENIX LEGAL
Shardul Amarchand Mangaldas Shroff & Co.
Talwar Thakore & Associates
E-Newsletter Editorial Board
Editorial Team
Divyanshu Pandey
Partner, J. Sagar Associates
Editorial Team
Ashish Chhawchharia
Partner - Advisory, Head - Restructuring Services, Grant Thornton Advisory Pvt Ltd
Editorial Team
Anju Agarwal
Director, ASC Consulting Pvt. Ltd.
Editorial Team
Ashwin Bishnoi
Partner, Khaitan & Co.
Headlines

The President of India on August 05, 2019 assented to the Insolvency and Bankruptcy (Amendment) Act, 2019 (“Amendment Act”). The Amendment Act was brought in force with an aim to ensure … read more

The IBBI has introduced certain amendments to the CIRP Regulations vide the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Second Amendment) … read more

The IBBI has introduced certain amendments to the Liquidation Regulations vide the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Amendment) … read more

The Supreme Court of India (“SC”) in the case of Pioneer Urban Land and Infrastructure Limited and Anr. vs. Union of India and Ors upheld the constitutional validity of the Insolvency … read more

Vide its order dated August 28, 2019, the National Company Law Appellate Tribunal (“NCLAT”) passed a conditional order permitting the promoters of Sterling Biotech Limited … read more

The Mumbai Bench of the National Company Law Tribunal (“NCLT”), vide its order dated September 04, 2019, approved the resolution plan submitted by Patanjali Ayurved Limited … read more

The Principal Bench of the National Company Law Tribunal (“NCLT”), vide its order dated September 05, 2019, approved the resolution plan submitted by JSW Steel Limited (“JSW”) … read more

Two separate corporate insolvency resolution process (“CIRPs”) proceedings have been initiated against Jet Airways (India) Limited (“Jet”), one in India where the registered … read more

IBBI pursuant to its circular dated 7th September, 2019, has approved MCA 21 and CERSAI database as repositories under Regulation 21 of the Insolvency and Bankruptcy Board of India (Information … read more

Mr Anurag Thakur, MoS for Finance, addressing the annual general meeting of the IBA said that the banks and financial institutions should first attempt to resolve the stressed assets outside IBC … read more

Articles

By Prof. Pryor C. Scott

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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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