Bankruptcy Law Reforms Committee (“BLRC”) was very clear while setting out the objectives of the new insolvency law for the country and speedy resolution/decision making in an insolvency situation was stated to be one of such foremost objectives. Fragmented laws governing an insolvency and lack of a cohesive framework governing the rights of various stakeholders during insolvency was identified as a primary reason for inefficiency of the pre-existing legal framework.

The Bombay High Court recently quashed a provision of a central government office memorandum that enabled public sector banks to request issuance of look out circulars (LoCs) against wilful defaulters. In Viraj Chetan Shah v Union of India, the court held that this provision violated the fundamental right to life (Article 21) as well as the fundamental right to equality (Article 14). The government is reportedly contemplating a statutory basis for PSBs to initiate LoCs.

The Insolvency and Bankruptcy Code, 2016 (IBC) has been at loggerheads with the Prevention of Money Laundering Act, 2002 (PMLA) on various occasions in the corporate insolvency resolution process (CIRP) of a distressed entity. Courts and tribunals have passed varying judgments, either giving primacy to the IBC or allowing the Enforcement Directorate (ED), a functionary under the PMLA, to perform its duties irrespective of the ongoing CIRP of a company.

The rights of secured creditors under the Insolvency and Bankruptcy Code, 2016 (Code) have been a matter of continuous litigation and uncertainty. Early on, the challenge presented itself when during the insolvency resolution of Essar steel (India) Ltd., the National Company Law Appellate Tribunal (NCLAT) directed the distribution of resolution plan proceeds equally amongst all classes of creditors, including financial, operational, secured and unsecured creditors.

Executive Summary

In a radical departure from settled case law, the English High Court has eroded the protections of English law creditors guaranteed by the Rule in Gibbs¹ .

Executive Summary

Investors in LMA-based intercreditor agreements¹ (ICA) should be reassured by the commercial approach recently taken by the High Court in construing the "Distressed Disposal" provisions (DD Provisions).

Introduction
Critical supplies
Issues with concept of critical supplies
Comment

Introduction

It is now two years since the 30 April 2021 introduction of the Administration (Restrictions on Disposal etc. to Connected Persons) Regulations 2021 (the "Regulations") and a good time to look back at whether the Regulations have achieved their purpose, what issues remain and what the next two years might look like.

Summary

Key Points

Introduction
Source of delay
Comment

Introduction

Information utilities (IUs) established under the Insolvency and Bankruptcy Code provide authenticated information about debt and default, which an adjudicating authority can rely on as evidence of money owed by the company facing insolvency.