1. The Launch

The Supreme Court of India has rejected the contention which sought to narrowly define operational debt and operational creditors under the Insolvency and Bankruptcy Code, 2016 to only include those who supply goods or services to a corporate debtor and exclude those who receive goods or services from the corporate debtor.

The Court noted that a demand notice for an operational debt by an operational creditor does not necessarily need to be accompanied by an invoice, but it may be sent where such debt arises under a ‘provision of law, contract or other document’.

Introduction:

In a recent judgment, the Supreme Court of India, while keeping up the efforts of plugging various loopholes in Insolvency & Bankruptcy Code, 2016 (“Code”), decided an interesting legal issue relating to the scope of Section 5(20) of the Code, which provides the definition of “operational creditor”.

The Apex Court, in the case of Consolidated Construction Consortium Limited vs. Hitro Energy Solutions Private Limited, was seized of the following legal questions:

The Indian distressed assets sector has seen sustained interest from investors due to several legal developments over the past few years. While the outcomes so far have been a mixed bag, a flexible approach and consistent regulatory focus on resolving distressed assets promises to unleash the potential in the sector. 

The original version of this article was first published in the Trilegal Quarterly Roundup.

今回のニュースレターでは、2021 年 12 月の破産倒産法関連の主なアップデートについて取り扱ってい ます。最高裁判所（＝SC）、会社法上訴審判所（＝NCLAT）、会社法審判所（＝NCLT）において下され た重要な判決についてまとめる共に、2016 年破産倒産法の改正についても解説しています

We are happy to present the second issue of our e-magazine – Trilegal Quarterly Roundup.

Liquidation brings about the formal end to a company, in case it has been insolvent or impotent to pay its responsibilities. It is a procedure of terminating the affairs of a company by the virtue of realizing the assets, discharging the liabilities, and distributing the surplus, among the shareholders. For such a proceeding to take place, an administrative person namely, a liquidator has to be appointed by the board of directors. Ultimately, the name of the company is stricken out from the register of companies.

The National Company Law Appellate Tribunal (NCLAT) vide its order dated 3 January 2022 in Jayanthi Ravi v Chemizol Additives Pvt Ltd ruled that the advance extended by a director to the company which is recorded as a loan in the minutes of the meeting of the board of directors would be classified as financial debt under the Insolvency and Bankruptcy Code, 2016 (IBC).

INTRODUCTION

This newsletter covers key updates about developments in insolvency law during the month of December 2021.

Decided on 13 September 2021 | Supreme Court of India

The division bench of the Hon’ble Supreme Court (“SC“) comprising of Justice D.Y. Chandrachud and Justice M.R. Shah in and Ors. 2021 SCC Online SC 707 has settled the issue with respect to seeking modification and withdrawal of the Resolution Plan (“Plan“) submitted to the Hon’ble National Company Law Tribunal (“NCLT”) after approval by the Committee of Creditors (“CoC“) in a Corporate Insolvency Resolution Process (“CIRP“).