DOES RESOLUTION PLAN NEED TO MATCH THE LIQUIDATION VALUE? -EASYLEGALTAX
Justice Anirudh Bose speaking through two-judges bench in the case of Maharashtra Seamless Ltd (MSL) v. Padmanabhan Venkatesh and others. The SC was called upon to decide, firstly, whether the code contemplates that the sum forming part of the resolution plan should match the liquidation value or not. And secondly, whether Section 12-A is the applicable route through which a successful Resolution Applicant can retreat. The NCLAT has approved the resolution plan computing of amount of Rs.477 crores, this has given the Resolution Applicant pennies from the heaven as they would get assets valued at Rs.597.54 crores at much lower amount.
Section 14: moratorium -EASYLEGALTAX
The moratorium regarding Insolvency and Bankruptcy Code, 2016 ('IBC') implies a period wherein no legal procedures for recovery, enforcement of security interest, sale or transfer of assets, or termination of essential contracts can be established or proceeded against the Corporate Debtor. This brings up a fascinating issue on the issue of the pertinence of the Moratorium to the procedures under Section 138 of the Negotiable Instruments Act, 1891 (NI Act).
INSOLVENCY PROFESSIONAL UNDER THE IBC, 2016 -EASYLEGALTAX
The Insolvency and Bankruptcy Code, 2016 (IBC) was introduced to consolidate laws relating to insolvency resolution of corporate persons, firms and individuals. While the Code in itself is very intricate and accommodates point by point mechanism of insolvency resolution, the obligation and duty of an Insolvency Professional/Resolution Professional (IP/RP) can't be ignored.
WHY NCLAT ORDERS ARE APPLEALLABLE TO SUPREME COURT ONLY? -EASYLEGALTAX
On the vide recommendation of Justice Eradi Committee on law relating to insolvency and winding up of companies, the NCLT and NCLAT was established on 1st June, 2016. The jurisdiction of NCLT and NCLAT extents to the Companies Act, 2013 and Limited Liability Partnerships under the Insolvency and Bankruptcy Code, 2016. The NCLT and NCLAT has limited subject-matter jurisdiction specifically in the matters related to the companies and their liquidation and insolvency. The establishment of the NCLT and NCLAT was also challenged in the SC but the court upheld their establishment.
PENDENCY OF SUIT OR ANY PROCEEDINGS NOT A BAR TO ADMIT AN APPLICATION BY A FINANCIAL CREDITOR OF IBC
The National Company Law Appellate Tribunal (NCLAT) has held that the pendency of a suit with respect to a dispute associated with a default cannot be a ground to reject an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (I&B Code) by a Financial Creditor. A pre-existing dispute cannot be a subject matter of Section 7 of the I&B Code, though it may be relevant under Section 9 of IBC, the NCLAT has held.
The procedure of filing an application by an operational creditor under Insolvency and Bankruptcy Code (IBC)
Section 6 of the Insolvency and Bankruptcy Code,2016 (“IBC”) provides that only three categories of persons can initiate Corporate Insolvency Resolution Process(“CIRP”) namely financial creditors, operational creditors and the corporate debtor itself. Procedure for initiating the corporate insolvency process in all the three cases are different.
Whether the Resolution Professional has jurisdiction to determine” the claim Filed by Financial Creditor
The National Company Law Appellate Tribunal (NCLAT) in a recent judgment while upholding the Judgment passed by the NCLT, Chennai has held that the ‘Resolution Professional’ have no jurisdiction to “determine” the claim. The Resolution Professional could have only “collated” the claim, based on evidence and the record of the ‘Corporate Debtor’ or as filed by the Financial Creditor.
WHETHER A SOLE PROPRIETOR FIRM ENTITLED TO INITIATE IBC PROCEEDINGS, NCLT ANSWERS IN NEGATIVE
The Adjudicating Authority i.e., National Company Law Tribunal, New Delhi while deciding an Application under Section 9 of the I & B Code has held that a ‘Sole Proprietary Concern’ is not a person within the meaning of Section 3(23) of the Insolvency and Bankruptcy Code, 2016 (I&B Code). Hence, the Adjudicating Authority held that the Proprietary Concern is not entitled to initiate insolvency proceedings before the Adjudicating Authority under the I&B Code.
Whether the suspended board of directors entitled to managerial remuneration while the Company is undergoing CIRP
While the powers of the Board are suspended and the Directors continue to perform their duties, are they entitled to managerial remuneration while the CIRP is under progress? The relevant provision dealing with the directors of the Corporate Debtor which is undergoing CIRP is explained under Section 17 (1)(b) of the Insolvency and Bankruptcy Code
Whether an IRP can dispossess any person from Corporate Debtor's property which is under litigation
The above question of law has been referred by the Bench of NCLT, Mumbai. Ld. Member Judicial, Shri Bhaskara Pantula Mohan while deciding the Application filed by one Pravin Blaggan (who was in occupancy of the Shed) held that the IRP is allowed to take possession of the shed, whereas, Ld. Member Technical, Shri Nallesenapathy held that the IRP was not empowered to dispossess any person in the case in hand, especially when the same is sub judice before a civil court.