INTRODUCTION:

INTRODUCTION:

The Supreme Court in a recent judgment of Indus Biotech Pvt. Ltd. vs. Kotak India Venture (Offshore) Fund [AIR 2021 SC 1638] has settled an important question of law: ‘whetheran application filed under Section 8 of Arbitration & Conciliation Act, 1996 (‘A&C Act’) can be said to be maintainable in a proceeding initiated under Insolvency and Bankruptcy Code, 2016 (‘IBC’)’.

INTRODUCTION:

The Government of India announced that Sections 7, 9 and 10 of the Insolvency & Bankruptcy Code, 2016 shall continue to remain suspended for another three months i.e. till March 31, 2021 on account of the COVID -19 pandemic. Sections 7, 9 and 10 deal with the initiation of corporate insolvency proceedings by financial and operational creditors against corporate debtors.

The question whether a counter claim filed against a Corporate Debtor is liable to be stayed during moratorium has been considered by the Courts/NCLT/NCLAT time and again. Since its inception, the Insolvency & Bankruptcy Code, 2016 (hereinafter referred to as the “Code”) has been a hotbed of discussions and debates amongst the legal experts. Under the Code, the concept of moratorium is envisaged under Section 13 and 14 and provides for a time period within which the following against the Corporate Debtor are prohibited:

INTRODUCTION:

The Insolvency and Bankruptcy Code, 2016 (‘Code’) was enacted by the Parliament with the aim to provide and revamp the framework for insolvency resolution in India in a time bound manner and for the promotion of entrepreneurship, credit availability and balancing of different interests of each and every stakeholder of a Company.

Following are the various modes for existing business in India –

• Transfer of shares for exiting business in India
• Voluntary Liquidation in Existing Business in India
• Winding up by the National Company Law Tribunal when Exiting Business in India
• Other Options for Exiting Business in India

This article discusses all of the above mentioned points in greater detail-

Transfer of shares for exiting business in India

1. Legal provisions governing transfer of shares

(Bankr. S.D. Ind. Dec. 4, 2017)

The bankruptcy court grants the motion to dismiss, finding the defendant’s security interest in the debtor’s assets, including its inventory, has priority over the plaintiff’s reclamation rights. The plaintiff sold goods to the debtor up to the petition date and sought either return of the goods delivered within the reclamation period or recovery of the proceeds from the sale of such goods. Pursuant to 11 U.S.C. § 546(c), the Court finds the reclamation rights are subordinate and the complaint should be dismissed. Opinion below.

(Bankr. E.D. Ky. Nov. 22, 2017)

(B.A.P. 6th Cir. Nov. 28, 2017)

The Sixth Circuit B.A.P. affirms the bankruptcy court’s dismissal of the Chapter 12 bankruptcy case. The court finds that the bankruptcy court failed to give the debtor proper notice and opportunity to be heard prior to the dismissal. However, the violation of due process was harmless error. The delay in filing a confirmable plan and continuing loss to the estate warranted the dismissal. Opinion below.

Judge: Preston

Attorney for Appellant: Heather McKeever