Summary: In EPC Constructions India Ltd. v. Matix Fertilizers & Chemicals Ltd., the Supreme Court addressed whether holders of non-cumulative redeemable preference shares can initiate insolvency proceedings under Section 7 of the IBC, as financial creditors. The Court held that preference shareholders are not creditors and cannot trigger insolvency proceedings, as preference shares remain part of the share capital even upon maturity, and conversion of debt into preference shares permanently extinguishes the original creditor relationship.
The Insolvency and Bankruptcy Code, 2016 (“IBC”), was enacted to inter alia provide a consolidated framework to resolve insolvency in a time-bound manner and to maximise the value of assets. This objective is further aided by a moratorium under Section 14 that halts legal proceedings against the corporate debtor, and the immunity provision under Section 32A, which offers a fresh slate to resolution applicants upon plan approval.
The Insolvency and Bankruptcy Code, 2016 (“Code”), has marked a significant shift in India’s corporate insolvency landscape, transitioning from a debtor-centric approach to a creditor-centric approach. With the committee of creditors (“CoC”) now driving the resolution process, it has become imperative for “related parties”, likely to sabotage the resolution process of a corporate debtor, to be excluded from the same.
The National Company Law Appellate Tribunal, New Delhi (“NCLAT”), has clarified and resolved the ambiguity surrounding the question of jurisdiction of the National Company Law Tribunal (“NCLT”) to entertain insolvency applications against personal guarantors where no corporate insolvency resolution process (“CIRP”) is pending against the corporate debtor. The issue was addressed through a recent judgment dated January 23, 2025, in Anita Goyal vs. Vistra ITCL (India) Ltd.
Recently, in State Bank of India v. India Power Corporation Ltd., Civil Appeal 10424 of 2024, the Hon’ble Supreme Court adjudicated upon the issue of certified copy of Order that is filed along with the appeal.
The Hon’ble Supreme Court analysed several provisions of NCLT Rules and NCLAT Rules and held as follows:
i) Both the certified copy submitted free of cost as well as the certified copy which is made available on payment of cost are treated as “certified copies” for the purpose of Rule 50 of NCLT Rules.
Liability management transactions which may favour a subset of creditors over another are increasingly common in the US leveraged finance markets. 2024 may be seen as the year in which these US imports began to make a real impact in Europe. Which strategies could creditors employ to protect themselves from unfavourable treatment where such transactions are attempted?
The securitization or structured finance market has evolved from its early origins focused primarily on financial assets (e.g., mortgages, receivables, loans credit card accounts, etc.) to the world of non-traditional or esoteric securitizations with exciting new assets.
Following an overhaul of the Singapore insolvency regime which came into force on 30 July 2020, the insolvency and restructuring framework was consolidated in the omnibus Insolvency, Restructuring and Dissolution Act 2018 (IRDA). One of the key features of the IRDA was to amend the then-existing construct of statutory avoidance actions in Singapore.
Overview of statutory avoidance provisions following IRDA
The US appears likely to enter a default cycle in the near future, according to senior fund managers and economists. A recent bout of M&A transactions involving chapter 11 cases point in the same direction. Taking deals involving bankruptcy cases as a proxy for distressed M&A, 16 such transactions were announced in the US in Q1, up 14.3 percent year on year, according to Dealogic. The aggregate value of those deals reached US$1.8 billion, a gain of 76 percent from the same period in 2023.
In Foo Kian Beng v OP3 International Pte Ltd (in liquidation) [2024] SGCA 10 (OP3 International)1 the Singapore Court of Appeal considered the trigger for when the director's duty to consider the interests of creditors is engaged (referred to in the judgment as the Creditor Duty).
The Court held that: