In continuation of Reserve Bank of India’s (RBI) efforts to ease financial stress caused by the Covid-19 pandemic, the RBI issued the circular on the Resolution Framework for Covid-19 Related Stress dated 6 August 2020 (August 6 Circular). The August 6 Circular creates a limited time window for certain categories of borrowers affected by Covid-19 pandemic related business disruption to be allowed resolution plans in the nature of restructuring while permitting the borrower accounts to retain their status as ‘standard’.
Background:
In practice, it is not uncommon for bankruptcy debtors to file suit against creditors or debt collectors for stay and discharge injunction violations. Often, they will do so before making any meaningful attempt to communicate with the creditor or debt collector to request that they stop their improper collection efforts.
On 24 July 2020, the National Company Law Appellate Tribunal (NCLAT), in its decision in GRIDCO Limited v Surya Kanta Sathapathy and Others [C.A. (AT) (Insolvency) 1271 of 2019] (GRIDCO judgement), held that the termination of a Power Purchase Agreement (PPA) during the subsistence of a moratorium would be in violation of Section 14(1) of the Insolvency and Bankruptcy Code 2016 (IBC). FACTUAL BACKGROUND |
In a significant judgment dated 9 June 2020 titled ‘Indus Biotech Private Limited v.
Introduction
Background
Ever since the Hon’ble Finance Minister of India announced the suspension of initiation of corporate insolvency under the Insolvency and Bankruptcy Code 2016 (IBC) in wake of the COVID-19 pandemic, there have been several market speculations about the nature and extent of the proposed suspension and its implications. With the promulgation of the amendment ordinance to IBC, most of these speculations have been put to rest, however owing to the language of the Ordinance, a new set of issues may have arisen.
Introduction
In the very unusual period in which we find ourselves today, it seems to be common wisdom that an avalanche of commercial loan defaults is coming. As such, it is a good time to take a fresh look at the terms and provisions used in commercial workout documents, whether in a simple agreement that extends a maturity date or in a complex forbearance document that restructures the collateral arrangement and financial covenants.