The government of India has effectively suspended fresh bankruptcy proceedings against persons impacted because of COVID-19 for at least six months, up to a maximum of one year. The amendments to IBC were promulgated, through the Insolvency and Bankruptcy Code Ordinance, 2020. The new rules come into effect immediately, as of June 5. The IBC (Amendment) Ordinance says that no business can be taken to bankruptcy tribunals for defaults during the period of the IBC’s suspension. The IBC (Amendment) Ordinance inserts new Section 10 A after Section 10. The Section pertains to suspension of initiation of corporate insolvency resolution process which says, “Notwithstanding anything contained in Sections 7, 9 and 10, no application for initiation of corporate insolvency process of a corporate debtor shall be filed, for any default arising on or after 25th March 2020 for a period of 6 months or such further period, not exceeding 1 year from such date, as may be notified in this behalf. Provisions of this Section shall not apply to any default committed under the said section before 25th March.

TOPIC: LITIGANT’S CAPACITY TO AMEND PETITION, IN VIEW OF CHANGE IN LAW

Amish Jaysukhlal Sanghrajka & Anr. Vs. Alshar Shanti Realtors Pvt. Ltd.

[NCLT, Mumbai, Date of  Order- 25.02.2019]

 

In this case a Miscellaneous Application was submitted by the Applicants on 16.07.2018 who had also filed a Petition on Form No.5 on 11.12.2017 in the capacity of Operational Creditor in respect of an Operational Debt of ₹66,28,000/- (Principal amount) and interest thereon of ₹21,74,792/- against M/s. Akshar Shanti Realtors Pvt. Ltd., Mumbai, alleged Corporate Debtor. Thereafter, on 06.06.2018 the Insolvency and Bankruptcy Code (Amendment) ordinance, 2018, came into existence vide which the payments made by homebuyers’ were said to have the commercial effect of borrowing so, that was to be regarded as a financial debt credited by the homebuyers to the realtors. In the light of the said amendment, the Petitioner submitted that although the Petition was filed u/s. 9 of IBC but in view of the amendment in Insolvency Code the claim of outstanding debt falls within the provisions of section 7 of the Insolvency Code, therefore, an amendment was sought.

 So the primary question of law involved in this case was whether a litigant can be permitted to carry out the amendment if required under changed provisions of a law?

 The respondent argued that the Petitioner had tried to abruptly change the terms and also demanded a refund. Moreover, the Petition filed u/s.9 of The Code was not maintainable because of the change in the provisions in IBC. The change came into effect from 06.06.2018 onwards, hence the Petition filed u/s.9 of IBC was not maintainable. The said amendment was not retrospective in nature, therefore, the Petition already filed u/s.9 must not be considered as Petition u/s.7 of the IBC.

 

After considering the arguments advanced by both sides, the NCLT held that the letter and spirit of the Ordinance as well as the view expressed by the Hon’ble Supreme Court in Chitra Sharma’s case was that the rights of the home buyers be not suffered. Keeping this message in mind, the Bench observed that the amendment had become mandatory due to a change in the law. It was not the case that the Petitioner himself is seeking amendment on his own to overcome any of his mistakes by carrying out rectification/ amendment. But the situation was that due to the “operation of law” the amendment in question was mandatorily required. Therefore, a conclusion was drawn that if a litigant seeks to carry out the amendment, if required under changed provisions of law, then such request be allowed for legal dispensation of a case. The amendment was thus a requirement of law and not own volition of the Petitioner.

Read Judgement at-

LINK-CLICK HERE

    Pre-packaged resolution plan to help expedite insolvency process: Experts

    Pre-packaged corporate insolvency resolution plan will help expedite resolution process for stressed assets as well as reduce the number of insolvency-related cases before the National Company Law Tribunal (NCLT), according to experts.The Insolvency and Bankruptcy Code (IBC) provides for a time-bound and market-linked resolution framework. An insolvency resolution has to be approved by NCLT.As part of efforts to fast-track processing of cases, the government has been mulling introduction of the provision for pre-packaged (pre-pack) corporate insolvency resolution plan wherein a restructuring plan would be agreed upon in advance between the company and its creditors.

    Read more at-

    https://www.outlookindia.com/newsscroll/prepackaged-resolution-plan-to-help-expedite-insolvency-process-experts/1829977 

      CBIC amends Special Procedure for Corporate Debtors under IBC

      The Central Board of Indirect Taxes and Customs (CBIC) has amended the Special Procedure for Corporate Debtors under the Insolvency and Bankruptcy Code, 2016.    

      Read more at-

      https://www.taxscan.in/cbic-amends-special-procedure-for-corporate-debtors-under-ibc/56944/  

       

      Government may introduce pre-packaged deals in IBC to mitigate COVID-19 delays

      Concerns over delay in arriving at bankruptcy resolutions amid the covid-19 pandemic has prompted the government to examine regulations for a pre-packaged Insolvency and Bankruptcy Code (IBC) scheme, said two people aware of the development.

      Read more at-

      https://www.livemint.com/industry/banking/government-may-introduce-pre-packaged-deals-in-ibc-to-mitigate-covid-19-delays-11588766509723.html 

      NCLT approves Ebix’s revival plan for Trimax IT Infrastructure

      The dedicated bankruptcy court has approved the revival plan for Mumbai-based Trimax IT Infrastructure & Services from the local subsidiary of Nasdaq-listed Ebix Inc.    

      Read more at-

      https://economictimes.indiatimes.com/news/economy/infrastructure/nclt-approves-ebixs-revival-plan-for-trimax-it-infrastructure/articleshow/75582640.cms  

        

        Investors may revise offers under IBC as covid-19 dents resolution process

        Investors who have bid for assets under the Insolvency and Bankruptcy Code (IBC) are expected to reassess their offers as cash flow projections have gone awry amid the covid-19 pandemic and the ensuing nationwide lockdown, experts said.  

        Read more at-

        https://www.livemint.com/industry/banking/investors-may-revise-offers-under-ibc-as-covid-19-dents-resolution-process-11588498777690.html 

          Banks seek suspension of insolvency proceedings for 2 years

          Indian banks are mulling proposing to the government that insolvency proceedings against bankrupt companies be suspended for at least two years in light of sharp fall in their valuation and lack of demand due to the economic impact of the COVID-19 pandemic, the Business Standard reported.

          Read more at-

          https://www.freepressjournal.in/business/banks-seek-suspension-of-insolvency-proceedings-for-2-years

           

            Relief For Firms Amid Lockdown, Changes To Bankruptcy Law Likely Soon
            A new law to spare companies hit by the coronavirus lockdown bankruptcy is expected to be cleared by the government through a special order or ordinance.The cabinet is likely to approve the ordinance when it meets next. The relief will not apply for companies already facing bankruptcy proceedings.

            Read more at:-

            https://www.ndtv.com/india-news/coronavirus-relief-for-firms-amid-lockdown-changes-to-bankruptcy-law-likely-soon-2210805?amp=1&akamai-rum=off  

              The Bill was passed by voice vote in Rajya Sabha.

              Parliament on Thursday passed amendments to the insolvency law that will help ring-fence successful bidders of insolvent companies from risk of criminal proceedings for offences committed by previous promoters.

              The Insolvency and Bankruptcy Code (Amendment) Bill, 2020 was passed by voice vote in Rajya Sabha. It was approved by Lok Sabha on March 6.

              The Bill replaces an ordinance.

              Replying to a short debate on the Bill, Finance Minister Nirmala Sitharaman said amendments are sync with time and also adhere to a Supreme Court order in “letter and spirit.”

              The Minister said need for amendment in the IBC arose because of “changing requirement” and “requirement of fine tuning” the law as several MPs wanted to know why the government was bringing in so many amendments to a new law.

              Stressing that the government is “very responsive” and has been talking to the industry, she assured the House that amendments to the IBC are are not being “unthinkingly done.”

              The IBC, which came into force in 2016, has already been amended thrice.

              Ms. Sitharaman said the government was taking care of the interest of home buyers and the requirement of minimum number of home buyers in the IBC has been included to avoid “frivolous litigations.”

              The Bill seeks to remove bottlenecks and streamline the corporate insolvency resolution process. It aims to provide protection to new owners of a loan defaulter company against prosecution for misdeeds of previous owners.

              The latest changes pertain to various sections of the IBC as well as introduction of a new section.

              https://www.thehindu.com/news/national/parliament-passes-amendments-to-insolvency-and-bankruptcy-code-bill-2020/article31047969.ece

                New Delhi: In its final judgement on the insolvency proceedings against Infrastructure Leasing & Financial Services (ILFS), the National Company Law Appellate Tribunal (NCLAT) approved the resolution framework proposed by the government, on Thursday.

                Rejecting the opposition of the creditors, the two-judge bench headed by Justice SJ Mukhopadhaya said the money invested in IL&FS by the Life Insurance Corporation (LIC), State Bank of India (SBI), Central Bank of India and the ILFS ..

                  Insolvency and Bankruptcy Board of India
                  Press Release
                  No. IBBI/PR/2020/03
                  28
                  th February 2020
                  Phase 3 of Valuation Examinations w.e.f. 1st June 2020
                  In pursuance of the rule 5 (3) of the Companies (Registered Valuers and Valuation) Rules,
                  2017, the IBBI, being the Authority, hereby publishes the syllabus and format of the ‘Valuation
                  Examinations’ to be conducted from 1st June 2020 for the asset classes as under:
                  a. Land and Building: Annexure I
                  b. Plant and Machinery: Annexure II
                  c. Securities or Financial Assets: Annexure III
                  2. The details of examination are available on IBBI website

                  https://ibbi.gov.in