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.
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.
Proposed Amendments in a circular issued on 18.01.2023, the Ministry of Corporate Affairs has proposed numerous changes in IBC.
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.
These two judgements would be of great importance because they have paved a way for the transfer of post-notice winding up petitions pending before the different High Courts.
The new framework allows Creditors to continue recovery process with Personal Guarantor after completion of the Corporate Insolvency Resolution Process.
A judgement has been held by Hon’ble Supreme Court that the powers of the NCLT under the IBC do not extend to adjudicating disputes relating to quasi- judicial or statutory authorities.
The institution of Insolvency proceedings against DHFL will result in Courts to venture out over new dimensions of prospective rights and liabilities of the financial service providers.
When the corporate debtor starts making default in the payment of the amount to its creditors and it goes on for some time, subsequently that corporate debtor/company is deemed as insolvent.
Based on the experience in other countries restructuring of corporate debt and need for a similar mechanism in India, a Corporate Debt Restructuring System was evolved, and detailed guidelines were issued.
SBI initiated proceedings against Veesons under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), demanding an outstanding amount of approximately INR 61 crores as Veesons did not pay its debts on time.
The IBC recognizes homebuyers under financial creditors to protect their rights even when a creditor, other than a homebuyer, invokes insolvency proceedings against the builder.
The default occurred after the cut-off date, the NCLAT held that the bar imposed under Section 10A was clearly attracted.
It is advisable to the creditors to make a plea of initiating Group Insolvency while filing an application for initiation of CIRP against a corporate debtor.
The LokSabha passed the IBC (Second Amendment) Bill 2019, which was first introduced by the Finance Minister Nirmala Sitharaman on 12 December 2019.
join For Updates