Background
On 24th March 2020, the Central Government by notification, revised the threshold limit of the amount of default for the applicability of the provisions of the Insolvency and Bankruptcy Code, 2016, from Rs. 1 Lakh to Rs. 1 crore.
The Goods and Services Tax (GST) Council during its 39th meeting, held on 14 March 2020, decided that a special procedure should be prescribed for corporate debtors undergoing the corporate insolvency resolution process (CIRP) under the provisions of the Insolvency and Bankruptcy Code, 2016 (IBC), in order to enable such entities to comply with the provisions of the GST laws.
Below are the key highlights of the newsletter:
- Supreme Court: No provision under the IBC requiring the resolution plan to match liquidation value; and an approved resolution plan cannot be withdrawn under Section 12A of the IBC
- NCLAT: No default by real estate developer if possession delayed due to reasons beyond control
- Supreme Court: Provident Fund benefits payable to contractual employees from date of filing writ petition and not retrospectively
- NCLT: Automatic waiver of legal proceedings is not permitted in a resolution plan
In yet another landmark decision in relation to the corporate insolvency resolution process (CIRP) of Jaypee Infratech Limited (JIL), the Supreme Court in Anuj Jain, Interim Resolution Professional for Jaypee Infratech Limited vs. Axis Bank Limited Etc. Etc. (Civil Appeal Nos. 8512-8527 of 2019) dated 26.02.2020, has laid down the law on two aspects:
➢ the essential elements of a preferential transaction under Section 43 of the Insolvency and Bankruptcy Code 2016 (Code); and
There are hundreds of cases that have been filed and closed under Insolvency and Bankruptcy Code, 2016(“IBC”) or are being battled out. There are many lessons that can be learnt from the obvious mistakes committed by some of the best lawyers, courts, and creditors. This article analyses such a case that has omitted the grey area of having matters filed against the same corporate debtor both as per the Companies Act, 1956(“1956 Act”) and Insolvency and Bankruptcy Code,2016.
FACTS
IBC – Threshold limit proposed to be enhanced for CIRP
At present Rs 1 lakh is the threshold limit to file an application in NCLT for triggering the incidence of Corporate Insolvency Resolution Process(CIRP) under Insolvency & bankruptcy Code,2017(IBC).
This had resulted into flooding of applications in NCLT. In last three and half year, approx. 23,000 cases have come to the NCLT under IBC.It is pertinent to note that almost 65% of such cases are settled prior to the admission under IBC.
The World Health Organisation (WHO) declared COVID-19 as a “pandemic” on March 11, 2020.
The Covid-19 pandemic is having an overwhelming impact on global order. These are testing times for nations. For India and for most other countries, the outbreak presents twin challenges, not only containing the virus spread, but also limiting the economic impact in an already slowing economy.
Threshold enhanced with force majeure awaited in Insolvency & Bankruptcy Code(IBC) due to COVID-19
In order to check the economical slowdown in the business, the Finance Minister on 24th March,2020 has announced various reliefs and relaxations in IBC due to the pandemic outburst of Covid-19 as below: