This is the 1st article in a 2-part series on employment contracts vis-à-vis CIRP. The article examines whether a resolution professional can enforce an employment contract (for an employee, not a ‘workman’) during the moratorium period.

As we continue our journey through the evolving insolvency landscape of 2023, we will delve into two landmark cases that further shaped the legal framework governing insolvency proceedings in India. Building upon the foundations laid in Part 1 of this series, we now turn our attention to M/s. Next Education India Pvt. Ltd. Vs. M/s. K12 Techno Services Pvt. Ltd and Ajay Kumar Radheyshyam Goenka v. Tourism Finance Corporation India Ltd.

M/s. Next Education India Pvt. Ltd. Vs. M/s. K12 Techno Services Pvt. Ltd.

Introduction

The modification or withdrawal of Resolution Plans under the Insolvency and Bankruptcy Code, 2016 (“Code / IBC”) had always been a contentious subject, with the National Company Law Tribunal (“Adjudicating Authority / NCLT”) and National Company Law Appellate Tribunal (“NCLAT”) taking conflicting views in the past.

The Supreme Court of India (Supreme Court) in State Tax Officer v Rainbow Papers Limited (Rainbow Papers Judgment) held that a statutory authority, in whose favor a charge is created under a statute, would be treated as a secured creditor under the Insolvency and Bankruptcy Code 2016 (IBC). The Rainbow Papers Judgment was distinguished by the Supreme Court in Paschimanchal Vidyut Vitran Nigam Limited v Raman Ispat Private Limited2 (PVVNL Judgment).

December, 2023 For Private Circulation - Educational & Informational Purpose Only A BRIEFING ON LEGAL MATTERS OF CURRENT INTEREST KEY HIGHLIGHTS ⁎ Supreme Court: Rents receivable can be assigned by a debtor to a creditor as actionable claim. ⁎ Supreme Court: The constitutional validity of provisions of IBC pertaining to the personal guarantors upheld. ⁎ NCLAT: An operational creditor who is a participant in meetings of the CoC has no right to seek a copy of the information memorandum.

1. Introduction 

GoFirst’s insolvency has highlighted issues surrounding the insolvency resolution of commercial airlines. This article analyses the issues facing stakeholders, and the adequacy of extant regulations to address these.

Group Insolvency: Introduction

Group means two or more enterprises, which directly or indirectly are in a position to exercise 26% or more voting rights in other enterprise or appoint more than 50% members of the Board of Directors in the other enterprise or control the management or affairs of the other enterprise.[1]

November, 2023 For Private Circulation - Educational & Informational Purpose Only A BRIEFING ON LEGAL MATTERS OF CURRENT INTEREST KEY HIGHLIGHTS ⁎ Delhi HC: Claims settled under a resolution plan become non-arbitrable and a reference of those claims would amount to reopening of the resolution plan. ⁎ Delhi HC: Transfer of liabilities from a previous loan agreement makes the arbitration clauses in subsequent agreements, binding. * NCLAT: No bar on the initiation of CIRP, if default is committed prior to Section 10A Period and continues during the Section 10A Period.

The National Company Law Tribunal, Kolkata Bench (“NCLT”), in EPC Constructions India Limited through its Liquidator – Abhijit Guhathkurtha v. M/s Matix Fertilizer and Chemicals Limited has ruled that preference shareholders cannot step into the shoes of a financial creditor unless their preference shares become redeemable.

Brief Facts