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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 26, Issue JULY | Jul 27, 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 friends. I sincerely hope and pray that you and your loved ones are safe.
I am connecting with you all after a long hiatus. I would like to take this opportunity to welcome my colleague, Ashwin Bishnoi, Partner, Khaitan & Co, on the editorial board of INSOL India Newsletter.
As we move into different phases of unlock down, the reality which is getting fast accepted is that the virus is here to stay. However, the wheel of our lives, and consequentially of the economic activity, which had come to a screeching halt, is to be spurred into action. The above approach is evidently visible in the insolvency law eco system as well. All stakeholders, be it the regulator, the adjudicating authorities, the insolvency professionals, the creditors and the various professionals involved in the insolvency process are discharging their respective duties. It is certainly commendable. This spirit has not been defused even with the promulgation of the Ordinance which suspends initiation of CIRP under IBC on account of Covid-19.
With the promulgation of the Ordinance, the curiosity and questions on the form and shape in which Finance Minister’s announcement of suspension of insolvency proceedings (on March 24, 2020) will be implemented has also been put to rest. Like two sides of the coin, there will be proponents and opponents of any action. The fact that initiation of CIRP as a remedy is not available for a certain period is a reality now.
I see the Ordinance presenting a great opportunity to all the stakeholders to think of various tools that can be deployed towards effective insolvency resolution. An effective insolvency eco system cannot be premised only on a court supervised process. It is our role and duty as stakeholders in the insolvency eco system to think about alternatives and how to implement them effectively. The suspension period prescribed in the Ordinance presents a great opportunity for : (i) adjudicating authorities to clear the back log of cases and to think of deploying technology tools to make the process more effective; (ii) the regulator to revisit and refine the regulations on the basis of inputs received from the stakeholders; (iii) for the insolvency professionals to showcase and hone their skills of crisis management; and (iv) for the creditors to think over – should an application under IBC be the first option to avail? Or, are there alternatives to resolve insolvency outside IBC?
In this edition, we give an overview of the amendments to insolvency law (including the ordinance for suspension of IBC), 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 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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Hope all readers of this newsletter are safe and keeping well. As Coronavirus Disease has become the most threatening invasion today, we have to owe our unconditional allegiance to the safety measures prescribed by our medical men. We are duty bound to adhere to the same.
As mentioned in the previous column, Covid lockdown has made the law practice and justice delivery quite slow and have become technology driven more than ever before.
The number of resolution applications have been reduced to all time low because of the pandemic, thereby reducing the prospects for meaningful resolution.
During this period, the threshold limit under the IBC has been enhanced from Rs.1 lakh to Rs.1 crore by notification dated 24.3.2020. This notification has been a subject matter of judicial decision before the Adjudicating Authority (NCLT) Chennai, in Arrowline Organic Products matter.
Through an ordinance promulgated by the President of India, an insertion by way of Section 10A has been made to the Insolvency and Bankruptcy Code. The said section provides that no application shall ever be filed for initiation of corporate insolvency and resolution process of corporate debtor for any default arising on or after 25th March, 2020 for a period of six months or such further period, not exceeding one year. This, however, does not close other options including mediation, which is now recognised by the judgment of NCLT, between the parties and reach out to a resolution.
This has also been a subject matter of judicial pronouncement by the Adjudicating Authority (NCLT, Chennai) in Siemens Gamesa Renewable Power matter. The NCLT held that the proviso to Section 10A permanently prohibits initiation of CIRP in relation to defaults occurring during the period of six months (or oneyear, if extended), commencing from March 25, 2020. The Tribunal observed that “ordinance is intended to shield and protect the entire body of corporate debtors, irrespective of the reason attributable to such default arising during the said period whether they are admitted or not as otherwise the inclusion of corporate debtor as an applicant under Section 10 would not have been included within the main provision.”
The Appellate Tribunal (NCLAT) has now given an elbow room to corporate debtors by allowing them to exit the insolvency process even after appointment of an interim Resolution Professional. A new window of opportunity to them!
Turn the pages for more interesting items and news.
Though we are dealing with insolvency and bankruptcy etc., considering the pandemic havoc, let us remember our ancient peacebenediction for universal welfare – “Sarve bhavantu sukhinah; Sarve santu nairaamayah” (Let all be happy; Let all be free from illness and sorrow!)
A.S. Chandhiok
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| E-Newsletter Editorial Board |
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| Headlines |
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In light of the COVID-19 pandemic which has adversely impacted businesses, financial markets and economies all over the world, including India, creating uncertainty and stress for businesses … read more
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The NCLT, vide an order dated 12 May 2020, directed that any new insolvency application filed by a financial creditor under section 7 of the Insolvency & Bankruptcy Code, 2016 (“IBC”) … read more
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Continuing its efforts to ensure an updated and functionalregulatory framework conducive for stakeholders, the IBBI has sought comments from the public on the existing regulations under the IBC. The … read more
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The Central Board of Excise & Customs (“CBIC”) had directed, videnotificationdated 23 March 2020, that corporate debtors shall be liable to obtain a new registration under the GST regime … read more
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During the period of suspension of initiation of CIRP under the IBC, creditors (both financial and operational) have the option of exercising substitute / alternate remedies (to the IBC) for recovery … read more
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SEBI has announced relaxations in the pricing methodology for preferential issues by listed companies having stressed assets and exempt allottees of preferential issues from open offer obligations in … read more
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The following amendments have been introduced by SEBI to the Takeover Regulations:
Regulation 3(2): Aproviso has been introduced in regulation 3(2) and is placedbefore the existing provisos with … read more
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On 16 June 2020, SEBI notified amendments to the SEBI(Infrastructure Investment Trusts) Regulations, 2014 and the SEBI(Real Estate Investment Trusts) Regulations, 2014. The amendments, inter alia, … read more
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This amendment substituted the erstwhile Regulation 12(1)(a) ofthe Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016, with the following clause, namely:
… read more
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Publisher : Sandeep Bajaj, Managing Partner and Aakanksha Nehra, Associate Partner, PSL Advocates and Solicitors
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Publisher - Sandeep Bajaj, Managing Partner, Aakanksha Nehra, Associate Partner and Devansh Jain, Senior Associate, PSL Advocates and Solicitors
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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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