Background and purpose of the proposals
On 8th January proposals for a new ‘Prepackaged Insolvency Resolution Process’ ("PIRP") were issued by the Indian Ministry of Corporate Affairs for public consultation, and we have considered them from a foreign perspective.
The proposals are continuing evidence of the Indian Government’s admirable ongoing commitment to swift further development and improvement of the insolvency framework that was introduced five years ago in the Insolvency and Bankruptcy Code (“IBC”).
It is timely, with further reform of the new Indian Bankruptcy Code (IBC) in prospect, to outline our thoughts on some of the current issues on which various market participants have requested an understanding of the approach and learnings of overseas practitioners.
The Indian Insolvency and Bankruptcy Code 2016 (Code) introduces a completely new insolvency and resolution regime for India. Key provisions of the Code and related regulations came into effect this month, the latest of them being the provisions relating to the liquidation of corporates and related regulations which came into effect on 15th December. The provisions of the Code that are now in effect introduce a new corporate insolvency resolution process and liquidation process, along with corresponding rules and regulations.
In Berryman v Zurich Australia Ltd [2016] WASC 196 it was decided that a bankrupt's entitlement to claim a TPD benefit under a life insurance policy is not an entitlement that is divisible amongst the bankrupt's creditors, and therefore such an entitlement does not vest in the Official Trustee in bankruptcy. Tottle J of the Supreme Court of Western Australia ruled that the bankrupt insured could continue an action in his own name to recover the TPD benefit. Life insurers may need to adjust their claims' payment practices in light of the Berryman decision.
Introduction
The Insolvency and Bankruptcy Code, 2016 (Code) has just been passed by both Houses of the Indian Parliament. The key objectives of the Indian government in driving this legislation forward were to improve India‘s poor ranking on the ease of doing business index created by the World Bank Group and to stimulate the growth of the Indian capital markets, and the stated intention of the Code is to replace the relevant insolvency, restructuring and winding up provisions which are spread over a number of Indian statutes.
Our role