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 withdrawal of an application for CIRP by the applicant would not prevent any other financial creditor from taking recourse to a proceeding under IBC.
Mobilization Advance is an Operational Debt and not a Financial Debt referring to the abovementioned Supreme Court Judgement.
‘Financial Debt’ would have to be construed to include interest free loans advanced to finance the business operations of a corporate body.
The NCLAT had to decide whether the NCLT/CoC may provide resolution applicants repeated chances to alter their individual resolution plans and whether the CoC was authorised to entertain fresh or revised resolution plans without exhausting available bids.
This judgement is a step in the right direction because it recognizes the authority of a non-petitioning creditor to request for a transfer of the winding up proceedings. It assures that A creditor is not deprived of their right just because they didn’t participate in the initial winding up procedure against corporate debtor.
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.
The Committee of Creditors (CoC) is the preeminent dynamic body in a Corporate Insolvency Resolution Process (CIRP). Choices with respect to the organization of the corporate borrower are taken at the gatherings of the Committee, in light of a dominant part vote of the individuals.
Homebuyers are now considered financial creditors, whereas operational creditors, who are from the business world, may have a better understanding of the industry but still lack those rights.
The Committee of Creditors (CoC) has complete wisdom and right to decide the fate of the company under CIRP. Lets understand all about Committee of Creditors under Insolvency Laws
A perfect decision by the SC where the parties perform activities to avoid any commercial transactions which are collusive in nature or where financial creditor escape the bar under Section 21(2) first proviso of the IBC.
As per the settled law there is no law or provision which states that either the Adjudicating or the Appellate Authority has the powers to question the resolution plan approved by the COC until and unless the same is barred by some irregularity.
The IBBI has disclosed that work is in progress to amend the IBC to make it compliant with cross border insolvency processes.
The matter is that in a situation where the Applicant is unable to prove the amount advanced as loan without proper documentations, such loan amount would not meet the requirements of a “Financial Debt”.
The Appellants cannot be permitted to pursue alternative remedy of suit/arbitration proceeding even if pending as Resolution Plan is binding on all the stakeholders.
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