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 Employment (Collective Redundancies and Miscellaneous Provisions) and Companies (Amendment) Act 2023 (Collective Redundancies AmendmentAct) came into operation on 1 July 2024.
The Employment (Collective Redundancies and Miscellaneous Provisions) and Companies (Amendment) Act 2023 (Act) came into effect on 1 July 2024.
Redefine Australian Investments Limited (Company), an Irish-registered company was placed in voluntary liquidation on 24 January 2018. Martin Ferris was appointed as the liquidator (Liquidator).
The Proceedings
The Employment (Collective Redundancies and Miscellaneous Provisions) and Companies (Amendment) Act 2024 (Act) has been signed into law but awaits a commencement order to bring it into operation.
In summary, the Act amends the Companies Act 2014 (Companies Act) by modifying the attribution test for related companies to contribute to the debts of the company being wound up, broadening the operative time for unfair preferences, and varying the test for reckless trading.
1. Related company contribution
Following on from the UK Supreme Court decision in Sequana (discussed here), the recent UK High Court (UKHC) decision in Hunt v Singh [2023] EWHC 1784 (Ch), further considered the duty of directors to take into account the interests of creditors in certain circumstances.
The High Court (Court) recently dismissed a petition seeking the winding up of a biofuel company (Company).
The ex tempore judgment is of note because it considers the standing of the Petitioner to bring the application and the consequences of a relevant witness not being cross-examined by the Petitioner on his affidavit evidence regarding the solvency of the Company.
Background
The scheme of arrangement (Rescue Plan) prepared by the examiner of Mac Interiors Limited (Company) has not been approved by the High Court following strong objections from the Revenue Commissioners (Revenue).
In its challenge, Revenue argued that there had been an error in “class composition” or, in other words, an error in the classification of creditors that voted on the Rescue Plan.
Class Composition
A previously unsettled aspect regarding the High Court’s (Court) jurisdiction to appoint an examiner to a company which is not formed or registered under the Companies Act 2014 (2014 Act), has been considered in the recent case of In the matter of MAC Interiors Ltd [2023] IEHC 395.
Earlier this year, a group of bondholders advised by William Fry and owed over US$175m by GTLK Europe DAC (GTLK Europe) and GTLK Europe Capital DAC (GTLK Capital) (collectively the Companies) petitioned for the winding up of the Companies on a number of grounds, including that they had failed to discharge scheduled interest payments and the accelerated debt constituted by the bonds following the interest payment defaults.