Insolvency & Restructuring

Insolvency Practice: The Insolvency and Bankruptcy Code, 2016 was built around a single organising principle – rescue the business first, recover value second. Where a corporate debtor is in financial distress, the Code creates a time-bound collective process in which creditors, the resolution professional, and resolution applicants work toward a plan that preserves the enterprise as a going concern. Liquidation is the backstop, not the objective. Acuity Law’s Insolvency and Restructuring practice operates with this principle at its centre. Whether acting for a resolution applicant seeking to rescue a distressed asset, a creditor seeking to protect and recover its dues, a resolution professional managing the process, or a liquidator tasked with maximising recovery, the practice brings a consistent focus: navigate the law to ensure the asset is rescued where rescue is possible, and to ensure that the best available value is recovered where it is not.

A corporate insolvency resolution process under the IBC is a multi-stakeholder exercise. A single CIRP involves the resolution professional managing the corporate debtor as a going concern, a Committee of Creditors evaluating resolution plans, operational creditors asserting claims, resolution applicants structuring their bids, and regulators exercising oversight. Each participant has distinct legal rights and obligations. Acuity Law acts across all of them. The practice advises financial creditors (including banks, NBFCs, and bondholders), operational creditors, resolution applicants bidding for distressed assets, resolution professionals and liquidators requiring legal support, and corporate debtors where pre-insolvency restructuring is the preferred path. The range of the practice allows the firm to understand the full picture of any insolvency matter, and to give each client advice that is calibrated to their specific position within it.

Insolvency matters in India rarely involve only the IBC. A resolution plan for a distressed business may require analysis of the tax treatment of debt write-offs, the FEMA implications of a foreign resolution applicant’s bid, competition clearance for a change of control, and the legal status of regulatory licences that are critical to the business’s value. Acuity Law’s Insolvency and Restructuring practice draws on the firm’s corporate, tax, FEMA, and regulatory advisory capabilities to address these intersections within a single engagement. IFLR1000 has recognised the practice as Other Notable in Restructuring and Insolvency in its India Rankings across four consecutive years, and awarded the firm Deal of the Year in Restructuring and Insolvency for its role in the Essar Steel matter.

Restructuring Practice: Corporate restructuring under the Companies Act, 2013 sits at the intersection of insolvency law, corporate law, and employment law, and it calls for integrated advice across all three. Chapter XV of the Companies Act provide the legal architecture for court-sanctioned compromises, arrangements, mergers, and amalgamations. A scheme of arrangement under Section 232 requires approval from the National Company Law Tribunal, following a structured process of creditor and shareholder meetings, statutory disclosures, and regulatory clearances. Where the entities involved are regulated businesses, such as NBFCs, banks, or insurance companies, the process also requires the consent of the relevant sector regulator before the NCLT will sanction the scheme. The employment dimension of a restructuring is equally significant. A court-sanctioned scheme will ordinarily provide for the automatic transfer of employees from the transferor to the transferee entity, preserving continuity of service, accrued gratuity, and provident fund entitlements. Where the restructuring involves headcount reduction, the requirements of the Industrial Relations Code, the standing orders of the establishment, and any applicable voluntary retirement scheme must be addressed alongside the corporate process. Failure to do so creates litigation risk that can survive the scheme itself.

Acuity Law has deep expertise in restructuring businesses and has advised on restructurings of this kind for regulated entities. The firm advised NABARD on the restructuring of its business involving the merger of NABSAMRUDDHI Finance Limited into NABKISAN Finance Limited.

RECOGNITION

Acuity Law’s insolvency and restructuring work has been recognised by IFLR1000, the international financial law publication, for both deal quality and consistent practice ranking:

Our Insolvency and Restructuring practice advises stakeholders across all phases and all positions in the insolvency process:

Acting for Resolution Applicants

A resolution applicant is the rescuer in the IBC framework. We advise resolution applicants from the earliest stage of evaluating a distressed asset through to plan approval and implementation:

• Advising on eligibility to submit a resolution plan under Section 29A of the IBC, including analysis of related party restrictions, connected person disqualifications, and NPA-related eligibility issues.
• Structuring the resolution plan, including treatment of financial and operational creditor claims, management of contingent liabilities, and the commercial terms of acquisition of the corporate debtor.
• Legal, regulatory, and litigation due diligence on the corporate debtor, including analysis of pending proceedings, avoidance transaction exposure, and the status of key regulatory licences and contracts.
• Drafting and negotiating the resolution plan documentation, including conditions precedent, implementation timelines, and post-approval obligations.
• Advising on regulatory approvals required to implement the plan, including competition clearance under the Competition Act, FEMA approvals for foreign resolution applicants, and sector-specific licences and no-objections.
• Tax structuring of the resolution plan, including the treatment of carried-forward losses, debt write-off implications under the Income Tax Act, and GST on asset transfers and business acquisitions.
• Representing resolution applicants in NCLT proceedings where the plan is subject to objection or challenge by dissenting creditors or the corporate debtor’s management.

Acting for Financial Creditors and the Committee of Creditors

Financial creditors sit at the centre of the IBC’s decision-making architecture. We advise them at every stage of a CIRP, from initiation through to distribution:

• Drafting and filing applications under Section 7 of the IBC for initiation of CIRP on behalf of financial creditors, including banks, NBFCs, debenture trustees, and foreign lenders.
• Advising on claim submission and verification, and on the rights of financial creditors as members of the Committee of Creditors.
• Advising the Committee of Creditors on its duties, the exercise of commercial wisdom in evaluating resolution plans, and the standard of review applicable to its decisions.
• Legal analysis of resolution plans submitted to the CoC, including compliance with the IBC, CIRP Regulations, and applicable Supreme Court decisions on creditor priority and plan feasibility.
• Advising on the distribution waterfall for resolution proceeds among secured and unsecured financial creditors, operational creditors, and other claimants, in light of the jurisprudence following Essar Steel.
• Representing financial creditors before the NCLT, NCLAT, and the Supreme Court in proceedings arising from CIRP, including challenges to admission, plan objections, and appeals.

Acting for Operational Creditors

Operational creditors (trade creditors, service providers, employees, and statutory bodies) occupy a distinct position in the IBC framework. We advise them on strategy, claim protection, and recovery:

• Drafting and serving demand notices under Section 8 of the IBC and filing applications under Section 9 for initiation of CIRP.
• Advising on the choice between IBC proceedings and recovery before the Debt Recovery Tribunal, civil courts, or arbitration, based on the nature of the debt and the strategic position of the creditor.
• Advising operational creditors on claim submission in an ongoing CIRP, the verification process, and their rights in relation to the distribution of resolution proceeds.
• Representing operational creditors in settlement negotiations with corporate debtors, including pre-CIRP settlements and applications for withdrawal under Section 12A of the IBC once a CIRP has been admitted.
• Advising on the treatment of disputed operational debts and the strategy for establishing the existence of debt where the corporate debtor has raised a pre-existing dispute.

Supporting the Resolution Professional and Liquidator

The resolution professional and the liquidator are the legal custodians of the insolvency process. We provide targeted legal support to insolvency professionals across the full arc of their responsibilities:

• Advising resolution professionals on their duties under the IBC and CIRP Regulations, including management of the corporate debtor as a going concern, contracts and employee obligations, and the handling of operational matters during CIRP.
• Advising on the identification, investigation, and prosecution of avoidance transactions, including preferential transactions, undervalued transactions, transactions defrauding creditors, and extortionate credit transactions under Sections 43 to 51 of the IBC.
• Advising liquidators on the conduct of the liquidation process, including asset realisation, the distribution waterfall under Section 53 of the IBC, and the rights of secured creditors who elect to realise their security outside the liquidation process.
• Advising on the compromise and arrangement route under Section 230 of the Companies Act, 2013 as an alternative to liquidation where a viable deal can be structured with creditors.
• Advising on the Pre-Packaged Insolvency Resolution Process (PPIRP) for MSMEs, including eligibility, base resolution plan structuring, and the interaction with creditors’ rights.
• Legal support for the resolution professional in managing regulatory interactions, including with sector regulators, tax authorities, and statutory bodies, during the CIRP.

Pre-Insolvency Restructuring and Distressed Asset Advisory

For many clients, the right outcome is achieved before a formal insolvency process is commenced. We advise on the full range of restructuring options available to distressed businesses and their creditors:

• Advising corporate debtors and their promoters on restructuring options before formal insolvency, including out-of-court lender workouts, one-time settlements, and the RBI’s restructuring frameworks for stressed assets.
• Advising promoters and management on their legal obligations in a distress situation, including the risk of personal liability for fraudulent trading, undervalued transactions, and wrongful conduct under the IBC.
• Advising lenders and investors on distressed debt acquisition strategy, including the structuring of debt purchases, the rights acquired by a distressed debt buyer in any subsequent CIRP, and post-acquisition recovery options.
• Security enforcement advisory for secured creditors, including enforcement under the SARFAESI Act, 2002, the appointment of receivers, and the interaction between SARFAESI proceedings and an ongoing CIRP.
• Corporate restructuring under the Companies Act, 2013, including schemes of arrangement and amalgamation as an alternative or complement to insolvency proceedings.

NCLT, NCLAT, and Appellate Proceedings

Insolvency proceedings in India are litigated intensively, and the jurisprudence under the IBC continues to evolve rapidly. We represent all classes of stakeholders in contested proceedings across all levels:

• Representing financial creditors, operational creditors, resolution applicants, and corporate debtors before NCLT Benches across India in all IBC-related proceedings.
• Challenging and defending resolution plans, liquidation orders, claim determinations, and Section 29A eligibility decisions before the NCLAT and the Supreme Court of India.
• Representing parties in avoidance transaction applications and in proceedings arising from the conduct of promoters and directors during the period preceding insolvency.
• Applications for interim relief, stay of CIRP, and enforcement of moratorium provisions under Section 14 of the IBC.
• Writ petitions before High Courts and the Supreme Court where constitutional, jurisdictional, or regulatory questions arise in the context of an insolvency matter.