Search Results for: financial creditor against a corporate person

Threshold limit of the Corporate Insolvency Resolution Process as per NCLT

There is no specific threshold limit for the NCLT Delhi under the IBC 2016. The IBC provides that a financial creditor, operational creditor, or the corporate debtor itself can initiate the insolvency resolution process with the NCLT.

The Conundrum of Reverse Corporate Insolvency Resolution Process

Reverse CIRP is still in an experimentation process and we should wait for more cases in which Reverse CIRP is applied and then observe its effect.

CIRP proceedings could be initiated against both corporate co-borrowers, but the recovery of the same amount could not be made from both parties: SC

CIRP proceedings under section 7 can be initiated against corporate debtors who are co-borrowers but there can be no double recovery of the same amount from both.

Are Corporate Guarantors equivalent to Corporate Debtors

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.

Operational Debt Includes Advance Payment Made to a Corporate Debtor for the supply of Goods or Services: SC

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.

Proposed Amendment by the Ministry of Corporate Affairs

Proposed Amendments in a circular issued on 18.01.2023, the Ministry of Corporate Affairs has proposed numerous changes in IBC.

Landowner in a development agreement cannot be considered a Financial Creditor

The Corporate Debtor would carry on construction and out of total saleable construction 32% will be of landowner and remaining 68% will be of the Corporate Debtor.

No bar to withdraw admitted CIRP application before constitution of the committee of creditors: Supreme Court

The withdrawal of an application for CIRP by the applicant would not prevent any other financial creditor from taking recourse to a proceeding under IBC.

6 Steps of Corporate Insolvency Process

CIRP is a process to determine the capability of repayment of the defaulted corporate. For this purpose, IRPs are appointed. They evaluate the assets and liabilities to determine the capability of repayment.

Mobilization Advance is Financial Debt or Operational Debt?

Mobilization Advance is an Operational Debt and not a Financial Debt referring to the abovementioned Supreme Court Judgement.

Personal Guarantor under section 95 is exempted from section 10A of IBC, 2016

Section 10A proceedings are not applicable against the Personal Guarantor under section 95 of the Insolvency and Bankruptcy Code, 2016.

The Corporate Guarantor can initiate CIRP against the Corporate Debtor under “Right to subvention”

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.

Is Adjudicating Authority under obligation to accept an application against a Corporate Debtor u/s 7?

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.

Whether CIRP against Corporate Guarantor be initiated in respect of loan account of the principal borrower

Section 7 of the Code permits a financial creditor to initiate a CIRP procedure against the guarantor being a corporate debtor in accordance with the default committed by the principal borrower.

NOIDA: A FINANCIAL CREDITOR OR AN OPERATIONAL CREDITOR

Both operational creditors and financial creditors own certain advantages over each other. But Financial creditors are given some priorities over other creditors such as they are members of the creditor’s committee and have voting power etc and operational is not a member of the creditor’s committee.