I. INTRODUCTION
On October 3rd, 2023, the Ministry of Corporate Affairs (MCA) amended Section 14(1) of the Insolvency and Bankruptcy Code, 2016 thereby exempting the transactions, arrangements, or agreements related to aircraft, aircraft engines, airframes, and helicopters in the aviation industry from the operation of the moratorium imposed upon the admission of an insolvency plea.
The National Company Law Appellate Tribunal, Principal Bench, New Delhi (“NCLAT”) has in the case of SVA Family Welfare Trust & Anr v. Ujaas Energy Limited & Ors inter alia held that a resolution plan can contain a clause which extinguishes security interest, such as personal guarantees, after paying compensation to the financial creditor in whose favour such security interest was created.
INTRODUCTION
One of the biggest changes brought in by the Insolvency and Bankruptcy Code, 2016 (“Code”) was the demarcation between treatment of interest vis-à-vis financial debt and operational debt. Over time, Courts have interpreted the Code with the aim to strengthen the foundation and resolve uncertainties. One such exercise, which has greatly impacted the insolvency regime, is the inclusion of interest in operational debt.
PHASE 1 – EXCLUSION OF INTEREST
Introduction
Introduction
On April 26, 2024, in what has been hailed as a pivotal moment for Indian aviation and insolvency law, the Delhi High Court (“High Court”) directed the Directorate General of Civil Aviation (“DGCA”) to deregister planes leased to Go First within five working days, providing much-sought after relief to the lessors of the aircraft.
In a decision delivered by Delhi High Court on June 24, 2024 in the case of The National Sewing Thread Company Limited v. Deputy Commissioner of Income Tax (2024 DHC 4771-DB) it was held that once a resolution plan is approved by the adjudicating authority, the claims not included in the resolution plan stand extinguished, and the same is binding on all stakeholders, including the Central and State governments.
The issue of release/enforcement of third party guarantees as part of a resolution plan of the borrower has been the subject of litigation across various judicial forums in India.
To clarify this issue, the Insolvency and Bankruptcy Board of India (IBBI) has proposed amendments to IBBI (Insolvency Resolution Process for Corporate Persons) Regulations 2016 as part of its recent discussion paper.
Since the inception of the Insolvency and Bankruptcy Code, 2016 in December 2016, India has witnessed not only a paradigm shift from the conventional ‘debtor in possession’ to a progressive ‘creditor in control’ but has also produced desirable results under the new statutory debt resolution regime.