COMPANY UNDER LIQUIDATION BARRED FROM INITIATING CIRP OF ANOTHER COMPANY UNDER I&B CODE.
The National Company Law Appellate Tribunal (NCLAT) in an Appeal preferred by Mr. Abhay N. Manudhane, the Liquidator of Gupta Coal India Pvt. Ltd. (‘Corporate Debtor’) against the order dated 30th May, 2019 passed by the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench has upheld the judgment passed by the Adjudicating Authority, Mumbai Bench whereby an Application filed under Section 9 of the I&B Code by the Liquidator of the Corporate Debtor against another Company was dismissed.
NCLAT HELD THAT APPLICABILITY OF SECTION 29A OF IBC WHILE CONSIDERING SECTION 12A OF IBC
In a very recent judgment, the Hon’ble NCLAT in the matter of Shweta Vishwanath Shirke & Ors. vs. Committee of Creditors, while dismissing the Order for liquidation of M/s Sterling Biotech, passed by the Adjudicating Authority, Mumbai Bench, has held that Section 29A of IBC is not applicable for entertaining/considering an application under Section 12A of IBC. The NCLAT while deciding the Appeals observed that the application moved under Section 12A having been approved by the 'Committee of Creditors' by more than 90% of the voting share as required under the Code, it was not open to the Adjudicating Authority to reject the same and that too on the ground that the promoter, who has moved the Application under Section 12A is ineligible under Section 29A to file a Resolution Plan.
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.
Treatment of Expression of Interest Received Outside The Timeline As Mentioned In FORM G -EasyLegalTax
Whether fresh expression of interest can be accepted beyond the last date of receipt of expression of interest as per the Invitation for Expression of Interest (Form G) under Regulation 36A(1) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.
Moratorium Under Insolvency and Bankruptcy Code -EasyLegalTax
Insolvency and Bankruptcy Code, 2016 (“IBC”) has given new hope to the financial market in India. Before IBC the debt recovery system in India was in a complete clutter, which was affecting the Indian Economy. The IBC has introduced the concept of moratorium under Section of the I & B Code in a Company which undergoes the corporate insolvency resolution process (in short CIRP) as soon as a Petition/Application either filed by a Financial Creditor or an Operational Creditor or a Corporate Applicant is admitted.