Iron­ing out creases in in­sol­vency law

Business Standard - - BUSINESS LAW -

Com­plex is­sues aris­ing from in­sol­vency pro­ceed­ings have re­sulted in a series of judg­ments by the Supreme Court in re­cent weeks. In one of them last week, it up­held the or­der of the Na­tional Com­pany Law Ap­pel­late Tri­bunal (NCLAT) in the ap­peal, K Sasid­har vs In­dian Over­seas Bank, and stated the tri­bunal had justly con­cluded that the res­o­lu­tion plan of the con­cerned cor­po­rate debtor had not been ap­proved by the req­ui­site per­cent­age of vot­ing share of the fi­nan­cial cred­i­tors; and in the ab­sence of any al­ter­na­tive res­o­lu­tion plan pre­sented within the statu­tory pe­riod of 270 days, the in­evitable se­quel was to ini­ti­ate the liq­ui­da­tion process un­der Sec­tion 33 of the In­sol­vency and Bank­ruptcy Code. In an­other judg­ment, in the case, Vi­jay Ku­mar vs Stan­dard Char­tered Bank, the court set aside the NCLAT or­der and ruled that sus­pended board of di­rec­tors of a com­pany un­der­go­ing in­sol­vency pro­ceed­ings and its op­er­a­tional cred­i­tors must be given all the doc­u­ments of the res­o­lu­tion plan so that they might mean­ing­fully par­tic­i­pate in meet­ings held by the com­mit­tee of cred­i­tors. In yet an­other or­der, in the case, Bril­liant Al­loy Ltd vs S Ra­jagopal, the court per­mit­ted the with­drawal of Cor­po­rate In­sol­vency Res­o­lu­tion Process (CIRP) even af­ter the Res­o­lu­tion Pro­fes­sional is­sued an in­vi­ta­tion for ex­pres­sion of in­ter­est from res­o­lu­tion ap­pli­cants to sub­mit res­o­lu­tion plans. In the case, Shashi Prakash vs NEPC Mi­con, the court em­pha­sised that the ju­ris­dic­tion of the civil court is com­pletely barred in mat­ters which are now in the do­min­ion of the NCLT.

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