National Company Law Appellate Tribunal has held that ‘Moratorium’ under Section 14 of the Insolvency and Bankruptcy Code will not only be applicable to the property of the ‘Corporate Debtor’ but also on its ‘Personal Guarantor’.

Brief Facts:

Background:

The Hon’ble Calcutta High Court on February 2, 2018, upheld the validity of Section 7, 8 and 9 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred as ‘IBC 2016’ or ‘the Code’) in the case of Akshay Jhunjhunwala & anr. v. Union of India[1].

Introduction

A bench of Supreme Court comprising of Justice R.F. Nariman and Justice Sanjay Kishen Kaul in the case of M.D. Frozen Foods Exports Pvt. Ltd. And Ors. Vs Hero Fincorp Ltd., in Civil Appeal No. 15147 of 2017 dealt with the issue that whether an NBFC is entitled to initiate proceedings under SARFAESI Act and arbitration proceedings, simultaneously, with respect to a loan account.

Background

In our previous publication on the subject, we had discussed the changes introduced by the Ordinance dated 23 November 2017 (the Ordinance), amending the Insolvency and Bankruptcy Code, 2016 (Code) (see our Ergo Newsflash dated 24 November 2017).

On 15 December 2017, the Hon’ble Supreme Court of India (Supreme Court) delivered a landmark judgment in Macquarie Bank v. Shilpi Cables, Civil Appeal 15135/2017 on whether Section 9(3)(c) of the Insolvency and Bankruptcy Code 2016 (Code) is mandatory and whether a demand notice of an unpaid operational debt can be issued by a lawyer on behalf of the operational creditor. The Supreme Court allowed the appeals of Macquarie Bank against the judgment of the National Company Law Appellate Tribunal (Appellate Tribunal) in Shilpi Cable Technologies v.

The National Company Law Appellate Tribunal, New Delhi (NCLAT) on 7 November 2017 passed a judgment in the case of M/s Speculum Plast Private Limited v. PTC Techno Private Limited, putting to rest the question of the applicability of the Limitation Act, 1963 (Limitation Act) to the corporate insolvency resolution process under the Insolvency and Bankruptcy Code, 2016 (IBC). The present judgment comes in the wake of the decision of the NCLAT in Neelkanth Township and Construction Pvt. Ltd.

In a recent decision of M/s Ksheeraabd Constructions Private Limited v M/s Vijay Nirman Company Private Limited, the National Company Law Appellate Tribunal (NCLAT) has held that proceedings pending under Section 34 of the Arbitration and Conciliation Act, 1996 (Act) does not constitute a ‘dispute’ under Section 8 of the Insolvency and Bankruptcy Code, 2016 (Code) and cannot come in the way of initiation of the insolvency resolution process, in terms of Section 9 of the Code.

Background

Introduction:

Incorporated with the objective of promoting maximization of value of assets in a time bound manner, the Insolvency and Bankruptcy Code (hereinafter referred to as “IBC”) works towards effective protection to honest creditors against unscrupulous debtors who may misuse insolvency to evade of their liabilities. The conducive and efficacious implementation of the IBC has instilled confidence in the creditors for a systematic and speedy reform. The remedy under the IBC is also available to the unpaid employees of the debtor which is now being recognized judicially as well.