Background

The partly liberalized Indian economy has been aptly referred to in the Economic Survey of India 2015-16 as one that had transitioned from ‘socialism with limited entry to “marketism” without exit.

Given the vexed ‘twin balance sheet’ problem chafing both banks and corporates in India, the Insolvency and Bankruptcy Code, 2016 (IBC/Code) was a critical structural reform. Many issues have surfaced since the Code was operationalised and the courts and the Central Government have stepped in to iron out such issues in the last one year.

Introduction

The Insolvency and Bankruptcy Board of India (hereinafter referred to as the “IBBI”) has constituted the Insolvency law Committee vide notification no. 35/14/2017 dated November 16, 2017 (hereinafter referred to as the “Committee”).

In order to protect honest creditors against the unscrupulous debtors who are using insolvency as a shield to evade of their liabilities, the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “IBC”) was incorporated. The IBC works in pursuit of insolvency resolution process in a time-bound manner for maximization of value of assets which promotes entrepreneurship, availability of credit and balance the interests of all the stakeholders.

Introduction –

The Delhi High Court in the case of Power Grid Corporation of India Ltd. vs Jyoti Structures Ltd.[1], vide its order dated December 11, 2017, ruled that Section 14(1)(a) of the Insolvency and Bankruptcy Code, 2016, (hereinafter referred to as the ‘IBC’) would not apply to proceedings which are beneficial to the corporate debtor.

Legal provision –

Introduction:

Key points

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.

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:

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

Debt recovery in India has been a challenge with creditors and debtors disputing rights and obligations in legal wrangles under various provisions under applicable laws making the process time consuming and costly.