The Supreme Court of India, in its recent judgment passed in the case of M. Suresh Kumar Reddy v Canara Bank and Ors., has held that the existence of a financial debt and proof of default on the part of Corporate Debtor are the only factors to be considered by the Adjudicating Authority to admit an Application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 (“Code”).

Background

The regime under the Insolvency and Bankruptcy Code, 2016 (“IBC”), is largely creditor centric. In fact, extraordinary as it may sound, corporate insolvency resolution process (“CIRP”) under IBC is nothing short of a puppet show, with the Committee of Creditors (“CoC”) as the puppet master. The CoC, comprising of financial creditors of the corporate debtor, is paramount in terms of making the most significant decisions of the process and plays a vital role in resolving the debt.

In a recent judgment in the case of ABG Shipyard, the Supreme Court has decided an extremely relevant question of law concerning the liquidation process under the Insolvency & Bankruptcy Code, 2016 (“IBC”).

Premise

Since the advent of the Insolvency & Bankruptcy Code, 2016 (“IBC”), the insolvency law regime in India has been consolidated and uniformized. Courts have repeatedly held that the IBC is a code in itself and that one need not look elsewhere in deciding matters under it.

Introduction

In 2016, with the birth of the Insolvency and Bankruptcy Code, 2016 (“IBC”), for the first time in its history, the country witnessed a comprehensive legislation which provided for a consolidated insolvency regime, whether it be for companies, partnership firms or individuals.

This article discusses the applicability of IBC to companies in which the Government of India has a stake.

What the law does not say

Introduction

The Insolvency & Bankruptcy Code, 2016 (“IBC”) has been one of the most talked about debated, evolving legislations of recent times. It has brought with itself, a sea change in the manner that debt is resolved in India. From its very advent in late 2016, IBC has been embroiled in long fought interpretational tussles which have resulted in various gaps being filled in by the Supreme Court of India. In fact, the legislation itself has undergone several and frequent amendments.