The legal framework w.r.t. law of insolvency in India has seen considerable progress since the introduction of Insolvency and Bankruptcy Code, 2016 (“IBC”). The Legislature, taking cue from various judgments passed by the courts and the grey areas identified during the implementation of the provisions of IBC, introduced various amendments from time to time. However, notwithstanding such amendments, various legal questions involving interpretation and implementation of provisions of IBC keep arising posing challenges before the Courts to resolve the same.

The English High Court has exercised its cram down power and sanctioned the Part 26A restructuring plans proposed by four of Cineworld’s UK operating companies, in face of significant opposition from its landlord creditors, including a novel injunction application by two landlords to exclude their leases from the plans. In sanctioning the plan, Cineworld’s UK Group avoided administration at the end of September.

The National Company Law Appellate Tribunal (New Delhi Bench) (“NCLAT”) in two recent judgments passed in Raiyan Hotels and Resorts Pvt. Ltd. vs. Unrivalled Projects Pvt. Ltd. [Company Appeal (AT) (Insolvency) No. 1071 of 2023] and Aryan Mining & Trading Corpn Pvt. Ltd. vs Kail limited and Anr. [Company Appeal (AT) (Insolvency) No.

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Introduction

Today, the UK Supreme Court considered for the first time the existence, content and engagement of the so-called “creditor duty”: the alleged duty of a company’s directors to consider, or to act in accordance with, the interests of the company’s creditors when the company becomes insolvent, or when it approaches, or is at real risk of, insolvency.

The Insolvency and Bankruptcy Code, 2016 (“IBC”) being a relatively new legislation, has witnessed inconsistent interpretation of its various provisions, especially in respect of certain legal issues, which are grey areas i.e. the issues which are not specifically dealt with under the existing provisions of IBC. One of such interesting legal issue is effect of breach of settlement agreements, entered into between two parties, where one party promises to pay a certain amount to the other party.

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In a recent judgment, the Supreme Court of India, while keeping up the efforts of plugging various loopholes in Insolvency & Bankruptcy Code, 2016 (“Code”), decided an interesting legal issue relating to the scope of Section 5(20) of the Code, which provides the definition of “operational creditor”.

The Apex Court, in the case of Consolidated Construction Consortium Limited vs. Hitro Energy Solutions Private Limited, was seized of the following legal questions:

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The Supreme Court in a recent judgment of Indus Biotech Pvt. Ltd. vs. Kotak India Venture (Offshore) Fund [AIR 2021 SC 1638] has settled an important question of law: ‘whetheran application filed under Section 8 of Arbitration & Conciliation Act, 1996 (‘A&C Act’) can be said to be maintainable in a proceeding initiated under Insolvency and Bankruptcy Code, 2016 (‘IBC’)’.

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On Wednesday 24 March, the government confirmed that it will be extending the current temporary restrictions on statutory demands and winding-up petitions and the temporary suspension of directors’ liability for wrongful trading put in place under the Corporate Insolvency and Governance Act 2020, until 30 June 2021.

The extensions, set out in the Corporate Insolvency and Governance Act 2020 (Coronavirus) (Extension of the Relevant Period) Regulations 2021, laid before parliament on 24 March, will come into effect on 26 March 2021.