In its first detailed ruling on some of the substantive legal questions under the Insolvency and Bankruptcy Code, 2016 (Code), the Hon’ble Supreme Court (Apex Court) has delivered a landmark order in the matter of Innoventive Industries Ltd v ICICI Bank and Another with an expressly avowed objective of ensuring that all the courts and tribunals across the country take notice of a ‘paradigm shift in the law’ ushered in by the Code.

Brief Background

Securities and Exchange Board of India (SEBI) in its meeting today has taken decisions that will make M&A and private investment in public equity (PIPE) transactions easier.

Open Offer Exemption for Distressed Public M&A

Introduction

The term ‘dispute’ assumes great importance under the Insolvency and Bankruptcy Code, 2016 (Code). This is because under Section 9(5)(ii)(d) of the Code, an operational creditor’s application for initiating corporate insolvency is liable to be rejected if a ‘notice of dispute’ in relation to ‘existence of a dispute’ is received by such an operational creditor from a corporate debtor. The term ‘dispute’ is defined in Section 5(6) and referred to in Section 8(2) of the Code in the following manner:

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.

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