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 law regarding moratoriums imposed under Section 14 of the Insolvency and Bankruptcy Code[1] (hereinafter referred to as the IBC 2016) has been often explained and clarified by various judicial pronouncements, which aptly interpret the multitudes contained in Section 14 of the IBC.
In a recent judgment passed by the National Company Law Appellate Tribunal (NCLAT), in the case of Somesh Choudhary v Knight Riders Sports Private Limited & Anr1, it was held that claims arising out of Intellectual Property Rights would come within the ambit of Section 5 (21) of the Insolvency and Bankruptcy Code, 2016
The Hon’ble Supreme Court vide its order dated May 18, 2022 in Indian Overseas Bank Versus M/S Rcm Infrastructure Ltd. And Another[1] observed that the proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) cannot be continued once the Corporate Insolvency Resolution Process (CIRP) has been initiated and moratorium is ordered under the Insolvency and Bankruptcy Code, 2016.
Since the enactment of the Insolvency and Bankruptcy Code in 2016 (“IBC, 2016), the judiciary has been very active in settling disputes and addressing the gaps arising from this controversial legislation. Recently, yet another dispute arising out of a technical gap in the IBC has been resolved by the Apex Court in the case of M/s Consolidated Construction Consortium Limited v. M/s Hitro Energy Solutions Private Limited.1
Brief facts of the case
The Hon’ble Delhi High Court vide its order dated May 13, 2022, in Millennium Education Foundation Vs Educomp Infrastructure And School Management Limited, has held that the mere pendency of an insolvency petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 is not a bar for appointment of Arbitrator under the Arbitration and Conciliation Act, 1996.
The National Company Law Tribunal, Chennai Bench vide its order dated April 25, 2022 in Mr. N. Kumar v. Tata Capital Housing Finance Ltd.1 held that the project-wise Corporate Insolvency Resolution Process of a real estate company is outside the purview of the Insolvency and Bankruptcy Code, 2016 (IBC).
Brief facts of the case
Who is a corporate debtor?
A corporate debtor refers to a company, a limited liability partnership or any person who owes a debt to its creditors. Under the Insolvency and Bankruptcy code, a corporate debtor is liable to the financial and operational creditors for the payment of such debt.
What types of creditors are there with respect to a corporate debtor?
The Hon’ble Supreme Court vide its order dated April 18, 2022 in State Bank of India Vs Krishidhan Seeds Private Limited has observed that Section 18 of the Limitation Act, 1963 is applicable to proceedings under the Insolvency and Bankruptcy Code, 2016.
Brief Facts
Insolvency proceedings under the Insolvency and Bankruptcy Code, 2016 are overseen by the relevant adjudicating authority. The National Company Law Tribunal (NCLT) is the adjudicating authority involved in the insolvency proceedings of companies and Limited Liability Partnerships (LLPs), which are referred to as corporate debtors[1]. To initiate the Corporate Insolvency Resolution Process (CIRP) against a corporate debtor, the NCLT bench having territorial jurisdiction over the debtor’s registered office must be approached[2].