In the recent decision of IDBI Bank v. Indian Oil Corporation Limited, the National Company Law Appellate Tribunal (“NCLAT”) has held that an irrevocable and unconditional bank guarantee can be invoked even during moratorium period in view of the amended provision under Section 14 (3) (b) of the Insolvency and Bankruptcy Code, 2016 (“IBC”).

Brief Facts

In its judgment on the 23 January 2023, the First Hall Civil Court (Commercial Section) (hereinafter the “Court”) presided by Mr. Justice Ian Spiteri Bailey delved into the salient features of a request made to the court for the dissolution and winding up of a company by a creditor or creditors of such company by means of an application in terms of Article 218(1) of the Companies Act, Chapter 386 of the Laws of Malta (the “Act”).

The Division Bench of the Delhi High Court (“Delhi HC”) in the case of Tata Steel BSL Limited v. Venus Recruiters Private Limited & Ors., etc. has put to rest the issue on avoidance applications proceedings surviving the conclusion of corporate insolvency resolution process (“CIRP”) under the Insolvency and Bankruptcy Code, 2016 (“IBC”).

The High Court’s recent decision in Bryant & Ors v. Badenoch Integrated Logging Pty Ltd [2023] HCA 2 (Gunns case) has important implications for liquidators and companies, as it has removed liquidators’ unfair advantage in unfair preference cases.

In BVIHC(COM) 2022/0119, Russell Crumpler and Christopher Farmer as Joint Liquidators of Three Arrows Capital Ltd (in liquidation) -and- (1) Zhu Su (2) Kyle Davies

The BVI Court has endorsed what is believed to be its first extra-territorial order summoning directors of a BVI company (in liquidation) to appear for private examination by joint liquidators.

A Win for Subcontractors and Suppliers

When a construction company goes broke, the subcontractors and suppliers often receive letters from the liquidator demanding repayment of so-called ‘unfair preferences’.

When an ongoing business relationship has existed between the creditor company and the company in liquidation, liquidators have historically worked out the amount of the ‘unfair preference’ on a ‘running account’ basis by reference to the so-called ‘peak indebtedness principle’. For example, if the following transactions took place:

Dispute Resolution analysis: When the owners and controllers of a company refused to identify the recipient of payments made out of the company during the course of arbitration proceedings, their defence to a claim under section 423 of the Insolvency Act 1986 was struck out and judgment was entered against them.

Integral Petroleum SA v Pretrogat FZE and ors [2023] EWHC 44 (Comm)

What are the practical implications of this case?

The Supreme Court of India (‘Supreme Court’) in the case of Kotak Mahindra Bank Limited vs. Girnar Corrugators Pvt. Ltd. and Ors. has held that the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (‘SARFAESI Act’) for recovery of dues payable to a secured creditor will prevail over the provisions of the Micro, Small and Medium Enterprises Development Act, 2006 (‘MSMED Act’).

Brief Facts

In the case of IL&FS Infrastructure Debt Fund v. McLeod Russel India Limited, the Kolkata bench of the National Company Law Tribunal (“NCLT”) held that in order to determine whether a shortfall undertaking will qualify as an instrument of guarantee as defined under Section 126 of the Indian Contract Act, 1872 (“Contract Act”), one has to look into the intention of the parties as reflected in the terms of such undertaking.

In a unanimous decision, the Supreme Court held that § 523(a)(2)(A) of the Bankruptcy Code precludes a debtor from discharging a debt obtained by fraud, regardless of the debtor’s own culpability. In Bartenwerfer v. Buckley, issued February 22, the Court concluded that “§ 523(a)(2)(A) turns on how the money was obtained, not who committed fraud to obtain it.”