A key concern in respect of the Insolvency and Bankruptcy Code, 2016 (Code) since its inception has been the differential treatment of operational creditors and financial creditors. For context, financial creditors have a purely financial arrangement with the corporate debtor, while operational creditors are those who are owed money by the corporate debtor for the provision of goods supplied or services rendered.

Under the Insolvency and Bankruptcy Code, 2016 (Code), a financial creditor may initiate corporate insolvency resolution process (CIRP) if there is a default of INR 10 million, by filing an application before the National Company Law Tribunal (NCLT). The settled principle is that an application made by a financial creditor under the Code must be admitted and CIRP initiates against the corporate debtor, if the NCLT is satisfied that a default has occurred in payment of debt.

Under the Insolvency and Bankruptcy Code, 2016 (Code), a trade creditor may initiate corporate insolvency resolution process if there is an unpaid operational debt above INR 10 million. An ‘operational debt’ under the Code means a claim in relation to goods and services. The insolvency courts have provided divergent views on the issue of whether rental dues or license fees for use of premises would qualify as an ‘operational debt’ under the Code.

このニュースレターは、2022年6月のインドの破産法の進展に関する重要な最新情報をカバーしています。

This newsletter covers key updates about the developments in Indian insolvency laws during the month of June 2022

In its recent consultation (“Managing the failure of systematic Digital Settlement Asset (including stablecoin) firms”), the Government has proposed that one of two special administration regimes (SARs) which currently apply to certain financial institutions (the Financial Market Infrastructure Special Administration Regime (FMI SAR) or the Payment and E-Money Special Administ

Summary

Almost a year to the day since the High Court rejected the Amigo loans group's previous proposal for a scheme of arrangement, on 23 May 2022, Mr Justice Trower sanctioned the group's latest scheme proposal which would create the conditions for the group to resume lending and resolve the claims of thousands of the group's customers arising from its lending practices.

In its June 6, 2022 opinion in Siegel v. Fitzgerald, the United States Supreme Court resolved a circuit split and invalidated a 2017 statute that increased U.S. Trustee fees in 48 states—but not Alabama or North Carolina—as unconstitutional under the uniformity requirement of the Constitution’s Bankruptcy Clause. See Siegel v. Fitzgerald, 596 U.S. ___ (2022).

U.S. Trustee Fees, a History

The active trading of loans made to a borrower that has become unable to repay in full (known as non-performing loans or distressed debt) has been a feature of the North American and European loan markets for a number of years.

The Insolvency Service has published a report on the research commissioned by it on the use of Company Voluntary Arrangements ("CVAs") by large companies in the retail trade, accommodation and food and beverage sectors.