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 27, Issue AUGUST / SEPTEMBER | Sep 05, 2020

Editor's Message
Ashish Chhawchharia

Greetings to all INSOL India members and readers! On behalf of the editorial board and myself, I pray that you and your loved ones are safe. As the Coronavirus disease (COVID-19) pandemic tears through our lives, it has caused some irreparable damage and brought our economy to its knees. Over the last few months, the Government and RBI have introduced several relief measures to alleviate the pain, pursuant to which we can see some revival and hope. Of course, the undying spirit of Indians and will to survive means that we will emerge stronger on the other side.
 
As the world changes and we endeavor to adapt to it, we have seen new businesses emerge and the old way of doing things being challenged.
 
Priorities including continuing education and judiciary have been a focus and this has led to some drastic changes in the delivery models. NCLT, NCLAT, and Supreme Court judges have rapidly adapted to delivering justice via remote online hearings. The IPA's updated guidelines state that considering the COVID-19 pandemic, it is necessary to continue online delivery of education beyond September 30, 2020, in addition to the classroom mode, wherever possible. They are now valid until March 31, 2021, subject to revocation or extension.
 
Recently there have been some interesting changes in the CIRP regulations with respect to Approval of Resolution Plans by the CoC whereby they are now required to vote on all compliant plans simultaneously rather than on the highest scoring plan only.
 
Interestingly, IBBI has proposed to impose a limit on the number of assignments to be handled by an Insolvency Professional at a certain point of time in a discussion paper dated July 1, 2020, dealing with the issue on ‘Restricting the Number of Assignments to be Handled by the IP’. The objectives as stated in the discussion paper is that it will increase the efficiency of an IP, and in turn, help achieve the objective of maximization of the value of assets of the Corporate Debtor. Such limits are not known to have been imposed in any other jurisdiction
 
Further, everyone eagerly awaits the outcome of the proceedings in Delhi High Court on the plea challenging the Insolvency and Bankruptcy Code (IBC) Ordinance 2020 which suspended proceedings against COVID-related defaults for a period of six months. It claimed that suspension of section 10 of the IBC will push the companies towards liquidation, discourage entrepreneurship, and defeat the objectives of the Code. The court has sought Centre's reply by August 31, 2020.
 
In this edition, we give an overview of the amendments to insolvency law (including the changes in 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.  Also, it features an interesting article on the Cross-Border insolvency framework in India and where it could be headed.
 
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 to our editorial team at newsletter@insolindia.com.
 
 

President's Message
A. S. Chandhiok

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

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.
Upcoming Events and Activities
17th
September, 2020

Venue: INSOL International

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Headlines

The Insolvency and Bankruptcy Code, 2016 (“IBC”) is silent on the appropriate authority which would exercise adjudicatory functions to adjudicate the disputed claims. The Supreme Court in … read more

NCLAT set aside Insolvency proceeding of Sarda Agro Oils by stating reason that the claims were filed three years after declaring the account non- performing asset. This 3 judge- bench gave the … read more

Cross-Border Insolvency refers to treatment of financially burdened debtors where the assets of the debtors are in more than one country or the creditors are in more than one country. It deals in … read more

On July 10, 2020, The Insolvency and Bankruptcy Board of India (“IBBI”) released the IBBI (Online Delivery of Educational Course and Continuing Professional Education by Insolvency … read more

On August 5, 2020, the IBBI enacted the IBBI (Liquidation Process) (Third Amendment) Regulations, 2020 (“LP Amendment Regulations”). By virtue of the LP Amendment Regulations, a … read more

On August 5, 2020, the IBBI enacted the IBBI (Voluntary Liquidation Process) (Second Amendment) Regulations, 2020 (“VLP Amendment Regulations”). The VLPAmendment Regulations substituted … read more

On August 7, 2020, the IBBI enacted the IBBI (Insolvency Resolution Process for Corporate Persons) (Fourth Amendment) Regulations, 2020 (“CIRP Amendment Regulations”). The CIRP Amendment … read more

The Insolvency & Bankruptcy Board of India (IBBI) has proposed to impose a limit on the number of assignments to be handled by an Insolvency Professional (IP) at a certain point of time in a … read more

Pre-dominance of cash transactions, independence of directors, and frequent changes of auditors are among the potential red flags for insolvency professionals in detecting avoidance transactions … read more

The Delhi High Court sought the Centre's reply on a plea challenging the Insolvency and Bankruptcy Code (IBC) Ordinance 2020 which suspended proceedings against defaults arising on or after March 25 … read more

The economic fallout owing to the COVID-19 pandemic has caused significant financial stress to borrowers. As a result, numerous firms may face risks relating to their viability, and it could also … read more

On August 6, 2020, the RBI extended the scheme permitted under its ‘Micro, Small & Medium Enterprises (MSME) Sector – Restructuring of Advances’ circular dated February 11, 2020. … read more

Securities and Exchange Board of India (“SEBI”) on August 5, 2020, notified amendments to the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) … read more

On July 1, 2020, the Securities and Exchange Board of India (“SEBI”) notified the SEBI (Issue of Capital and Disclosure Requirements) (Third Amendment) Regulations, 2020. By virtue of the … read more

Securities and Exchange Board of India (“SEBI”) on July 1, 2020, notified amendments to the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) … read more

Articles

By TALWAR THAKORE & ASSOCIATES

The Indian insolvency landscape saw an encouraging shift to a creditor-in-possession regime in the year 2016 with the introduction of the Insolvency and Bankruptcy Code, 2016 (IBC). The core objective of IBC is to achieve time-bound insolvency …

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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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