On 5 May 2017, a day after the recent Banking Regulation (Amendment) Ordinance, 2017 (Ordinance) received Presidential assent, the Reserve Bank of India (RBI) issued a circular on ‘Timelines for Stressed Assets Resolution’ (Circular). The Circular amends the existing “Framework for Revitalising Distressed Assets in the Economy – Guidelines on JLF and CAP” dated 26 February 2014 (JLF Framework) and mandates members of a joint lenders forum (JLF) to follow strict timelines in implementing the corrective action plan (CAP) or suffer penal consequences for non-compliance.
Set out below is a short update on the Banking Regulation (Amendment) Ordinance, 2017 issued by the Government of India yesterday (Ordinance) inter alia empowering the Reserve Bank of India (RBI) to intervene and issue directions to banks for resolution of stressed assets. The Government has promulgated the Ordinance with immediate effect, instead of waiting for an enactment to be passed by Parliament, which could at the earliest, have been possible only in the next parliamentary session in July 2017.
According to decision no. 17441, of 31 August 2016, of the First Division of the Supreme Civil Court, the liability of directors without management power cannot originate from a general failure to supervise – that would be identified in the facts as a strict liability – but must be attributed to the breach of the duty to act in an informed way, on the basis of both information to be released by executive directors and information that non-executive directors can gather on their own initiative.
Background
Background
1 NEWSFLASH 4 April 2017 Introduction By way of background, the Insolvency and Bankruptcy Code, 2016 (Code) was enacted with the primary objective to consolidate and amend the laws relating to reorganisation and insolvency resolution of corporates, firms and individuals in a time bound manner to maximise the value of their assets. The genesis of the Code is rooted in the long-term vision of providing an effective legal framework for timely resolution of insolvency and bankruptcy, which would support development of credit markets and encourage entrepreneurship.
In a recent order admitting a petition for insolvency resolution filed by Essar Projects India Limited (Operational Creditor) against MCL Global Steel Private Limited (Corporate Debtor), the National Company Law Tribunal (Mumbai Bench) (NCLT) has clarified what constitutes a ‘disputed debt’ within the meaning of Sections 8 and 9 of the Insolvency and Bankruptcy Code, 2016 (Code) and Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016.
Facts of the case
The Court of Florence (November 2, 2016) confirmed that the debtor can retain part of his assets, with a view to support the company’s recovery and in derogation to principles of liability of the debtor.
The case
A company applied for concordato preventivo, based on a plan providing for, on one side, the sale of those assets not functional to the business and, on the other side, the company to continue to trade retaining those other assets which were needed for the activities to be carried on.
A ruling of the Court of Padua of 31 December 2016 is compared with few other known Court decisions regarding the extension of the effects of a debt restructuring agreement to dissenting financial creditors
The case
Two companies having an indebtedness mainly towards banks and leasing companies, jointly submitted to the Court a request for confirmation of a debt restructuring agreement providing for a two-year moratorium of payment of principal and a restructuring of interests.
The Court of Cassation (decision No. 4915 of 27 February 2017) lowered the threshold allowing the Bankruptcy Court to review the feasibility of the concordato preventivo proposal.
The case