The Insolvency and Bankruptcy Code (for short “I&B Code”), enacted in 2016, marked a significant reform in India’s economic landscape by streamlining the insolvency resolution process and providing a balanced framework.
The designation and subsequent empowerment of an Insolvency Professional (IP) within the framework of a Corporate Debtor entail an array of responsibilities primarily focused on the effective management of the corporate entity.
It is evident upon reading Section 33(5) that this clause merely forbids the filing of a lawsuit or other legal action against the Corporate Debtor. It in no way precludes the filing of a lawsuit or starting another legal action against a ship or vessel owned by the corporate debtor.
The Supreme Court has made an attempt to shed light on this matter recently in K. Paramasivan v. The Karur Vysya Bank Ltd. An appeal is preferred before the apex court under which the NCLAT decision is challenged.
A debt arising from an advance payment given to a corporate debtor for the supply of goods or services would be deemed an operational debt.
The institution or continuation of a proceeding of dishonour of cheque against company under the provisions of Negotiable Instruments Act, 1888 fall within the ambit of moratorium provision of the IBC.
Mobilization Advance is an Operational Debt and not a Financial Debt referring to the abovementioned Supreme Court Judgement.
In the present case, debt pertaining to unpaid license fee was fully covered within the meaning of ‘operation debt’ under Section 5(21), and the Adjudicating Authority committed an error in holding that the debt claimed by the Operational Creditor is not an ‘operational debt’
Proceeding against the Corporate Debtor for the recovery of the dues and hence can file a petition against the Corporate Debtor under Section 7 of the Insolvency and Bankruptcy Code, 2016 before the Adjudicating Authority.
the Resolution Plan in question is in violation of section 30(2) (a) of the IBC. The NCLAT subsequently modified the Resolution Plan to include this claim in accordance with the law.
The Adjudicating Authorities have been given discretionary powers under section 7(5)(a) of I&B Code, 2016. The Authorities are required to apply their mind and take into consideration all facts and circumstances.
The interest component can include in the principal debt to acquire a minimum threshold limit i.e., 1 crore if delayed payment stipulated in the agreement or invoice.
The Supreme Court overturn decision of the a 5-Judge Bench order of the NCLAT that balance sheet entries do not amount to the acknowledgment of a debt and thus do not extend limitation under Section 18.
‘Financial Debt’ would have to be construed to include interest free loans advanced to finance the business operations of a corporate body.
The Supreme Court did not agree to the payment of amounts deposited by the promoter to homebuyers on the grounds that it would be preferential payment to one class of creditors.
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