The Ministry of Corporate Affairs by notification dated 03 October 2023 (read here) exempted transactions, arrangements or agreements relating to aircraft, aircraft engines, airframes and helicopters under the Cape Town Convention and Protocol from the moratorium provisions of the Insolvency and Bankruptcy Code, 2016.

Group Insolvency: Introduction

Group means two or more enterprises, which directly or indirectly are in a position to exercise 26% or more voting rights in other enterprise or appoint more than 50% members of the Board of Directors in the other enterprise or control the management or affairs of the other enterprise.[1]

November, 2023 For Private Circulation - Educational & Informational Purpose Only A BRIEFING ON LEGAL MATTERS OF CURRENT INTEREST KEY HIGHLIGHTS ⁎ Delhi HC: Claims settled under a resolution plan become non-arbitrable and a reference of those claims would amount to reopening of the resolution plan. ⁎ Delhi HC: Transfer of liabilities from a previous loan agreement makes the arbitration clauses in subsequent agreements, binding. * NCLAT: No bar on the initiation of CIRP, if default is committed prior to Section 10A Period and continues during the Section 10A Period.

On October 4, 2023, a 2 (two) judge bench of the Hon’ble Supreme Court of India (“Supreme Court”) in the case of Union Bank of India v. Rajat Infrastructure Pvt. Ltd and Sunview Assets Pvt Ltd. held that the powers of the Supreme Court under Article 142 of the Constitution of India, 1950 ("Constitution”), being inherent in nature, are complementary to those powers which are specifically conferred by statute.

Brief Facts

The National Company Law Tribunal, Kolkata Bench (“NCLT”), in EPC Constructions India Limited through its Liquidator – Abhijit Guhathkurtha v. M/s Matix Fertilizer and Chemicals Limited has ruled that preference shareholders cannot step into the shoes of a financial creditor unless their preference shares become redeemable.

Brief Facts

In a recent development, the Supreme Court dismissed the review petitions filed against its decision in State Tax Officer v Rainbow Papers Ltd., which had disturbed the settled position that in insolvency resolution proceedings, statutory dues (including tax claims) fall in the category of operational debt. Instead, the Supreme Court held that statutory dues qualify as debts owed to a secured creditor, and a resolution plan that ignores such debts is liable to be rejected.

Rainbow Papers: The Judgment

In State Tax Officer (1) v. Rainbow Papers Ltd., 2022 SCC OnLine SC 1162 ("Rainbow Papers"), the Supreme Court dealt with the question as to whether the provisions of the Insolvency and Bankruptcy Code, 2016, ("IBC") (specifically Section 53) overrides Section 48 of the Gujarat Value Added Tax Act, 2003 ("GVAT Act").

Section 48 of the GVAT Act provides as follows.

Section 48. Tax to be first charge on property:

The changes corresponding to the proposals are suggested in the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, and the IBBI (Liquidation Process) Regulations, 2016. The draft regulations have been annexed to the proposals.

Comments on the proposals and the draft regulations have been sought by November 28, 2023.

The Board’s proposals are as follows: –

• Registration of corporate debtor’s real estate projects under RERA

In a recent decision in the case of Infrastructure Leasing and Financial Services Ltd. v. HDFC Bank Ltd. and Another, the Supreme Court of India (“Supreme Court”) has held that the rents receivable by a borrower which was assigned to a lender of a lease rental discounting facility would not be treated as an asset of the borrower, and thus fall outside the purview of the asset and security freeze order of the National Company Law Appellate Tribunal (“NCLAT”).

Brief Facts

On 31 October, 2023, in Sanjay Kumar Agarwal v State Tax Officer 1, 2023 SCC OnLine SC 1406, the Supreme Court of India (SC) in the exercise of its powers of review under Article 137 of the Constitution of India, (Rainbow Review) affirmed the view expressed by another bench of the SC in State Tax Officer (I) v. Rainbow Papers Limited 2022 SCC OnLine SC 1162 (Rainbow Judgment) that may have far reaching effects on the treatment of dues to the Government or governmental authorities in insolvency resolution proceedings under the Insolvency and Bankruptcy Code, 2016 (IBC).