The filing of voluntary insolvency proceedings by the promoters of Go Air in May 2023, being a first of its kind, gained a lot of limelight and the National Company Law Tribunal acted swiftly to admit the insolvency proceedings within a span of 10 days from the date of filing of the insolvency plea. At the time of initiation of proceedings against Go Air, the promptness on the part of the Promoters was being considered significant to assist an ailing airline company which stood grounded as on the date of initiation of insolvency proceedings.

The Hon’ble Supreme Court of India (“Supreme Court”) in Global Credit Capital Limited & Anr Vs SACH Marketing Pvt. Ltd & Anr, has established the following principles on classification of a debt under the Insolvency and Bankruptcy Code, 2016 (“Code”):

In the case of Shiv Charan and Ors. v Adjudicating Authority and Anr.¹, the Division Bench of the Hon’ble High Court of Bombay (“Bombay HC”) inter alia upheld the powers of the National Company Law Tribunal, Mumbai (“NCLT”) to direct the Enforcement Directorate (“ED”) to release attached properties of a corporate debtor, after the approval of a resolution plan by the NCLT, in light of Section 32A of the Insolvency & Bankruptcy Code, 2016² (“IBC”).

In the recent decision of the Anjani Kumar Prashar (Suspended Director of Grandstar Realty Pvt. Limited) v. Manab Dutta1, the National Company Law Appellate Tribunal (“NCLAT”) has held that the auction purchaser would also be a financial creditor vis‐à‐vis the creditors of the entity whose assets were purchased by the auction purchaser.

In the recent decision of Ashok Dattatray Atre & Ors. v. State Bank of India & Ors.1 National Company Law Appellate Tribunal (“NCLAT”) has reiterated that the extension of payment timelines under a resolution plan does not constitute a modification thereof, and the National Company Law Tribunal has the power to grant such extension even without the express concurrence of the committee of creditors (“CoC”).

Brief Facts

April, 2024 For Private Circulation - Educational & Informational Purpose Only A BRIEFING ON LEGAL MATTERS OF CURRENT INTEREST KEY HIGHLIGHTS * Bombay High Court: NCLT has jurisdiction to direct Directorate of Enforcement to release attached properties of a corporate debtor. ⁎ Delhi High Court: Designation of seat of arbitration is similar to an exclusive jurisdiction clause. ⁎ Bombay High Court: Orders issued by banks and financial institutions while declaring a wilful defaulter must be reasoned orders.

The Insolvency and Bankruptcy Code, 2016 (IBC) has been at loggerheads with the Prevention of Money Laundering Act, 2002 (PMLA) on various occasions in the corporate insolvency resolution process (CIRP) of a distressed entity. Courts and tribunals have passed varying judgments, either giving primacy to the IBC or allowing the Enforcement Directorate (ED), a functionary under the PMLA, to perform its duties irrespective of the ongoing CIRP of a company.

On 18 September 2023, the Insolvency and Bankruptcy Board of India (IBBI) introduced the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Second Amendment) Regulations, 2023 (CIRP Amendment Regulations). Here is a summary of the key changes made through these regulations:

September, 2023 For Private Circulation - Educational & Informational Purpose Only A BRIEFING ON LEGAL MATTERS OF CURRENT INTEREST KEY HIGHLIGHTS * Bombay High Court: Secured creditor may initiate recovery proceedings against secured asset owned by guarantor even if principal borrower is placed under moratorium. ⁎ Calcutta High Court: Application for removal of arbitrator must be made before the same court as envisaged in Sections 2(i)(e) and 42 of the Arbitration and Conciliation Act, 1996.

Introduction

Barely six years since the enactment of the Insolvency and Bankruptcy Code, 2016 (“Code”), the Code has already undergone various amendments from to time, to aid its broad objective of time bound insolvency resolution, maximisation of value of assets of corporate debtors and balancing the interests of all stakeholders. Besides the amendments, judicial pronouncements have also played an instrumental role in shaping the Code in its present form.