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Insolvency & Restructuring

Insolvency Law

OVERVIEW

We engage in advising and assisting financial creditors, corporate debtors, operational creditors and insolvency professionals under the Insolvency and Bankruptcy Code, 2016 (IBC).

 

ROLE

  • From the point of view of a corporate debtor, our expertise lies in devising strategy under the IBC, Companies Act, 2013, guidelines issued by the Reserve Bank of India and other applicable laws to restructure the business.
  • We are also at the forefront in aiding and assisting operational creditors and financial creditors in drafting applications for initiating insolvency proceedings against corporate debtors and providing negotiation support to settle or claim unpaid dues
  • Our practice also includes representing financial creditors, corporate debtors or operational creditors in National Company Law Tribunal and the appellate tribunal /courts on various matters relating to the IBC
Corporate Insolvency

The Insolvency and Bankruptcy Code, 2016 (Code) was enacted to revamp the insolvency and bankruptcy laws and resolve problems being faced by creditors due to non-repayment of outstanding dues by corporate borrowers.

This primer deals with the fundamental principles of corporate insolvency, its related procedure and relevant law in India.

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The Insolvency and Bankruptcy Board of India

(Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (CIRP Regulations) were formulated to carry out the provisions of the Insolvency and Bankruptcy Code, 2016 (Code). These regulations are applicable to the corporate insolvency resolution process (CIRP). Here we present an overview of the CIRP Regulations and related procedures.

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Insolvency Resolution of Personal Guarantors of Corporate Debtors

Under the Indian insolvency law, creditors may initiate insolvency resolution proceedings against personal guarantors of a corporate debtor on failure to repay under a guarantee contract. In this primer we have covered the fundamental principles of the insolvency process of a personal guarantor, its related procedure and relevant law in India.

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Key Professionals

Souvik Ganguly

Managing Partner
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Vidushi Maheshwari

Partner
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Renjith Nair

Partner
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Akhil Ramesh

Senior Associate
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Altamash Qureshi

Senior Associate
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Richa Phulwani

Richa Phulwani

Senior Associate
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Related Posts

October 3, 2023

Amendments to Corporate Insolvency Resolution Process

On 18 September 2023, the Insolvency and Bankruptcy Board of India (IBBI) introduced the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Second Amendment) Regulations, 2023 (CIRP Amendment Regulations). Here is a summary of the key changes made through these regulations: 1. In applications seeking initiation of corporate Insolvency resolution process of…
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November 29, 2023

Leased petroleum assets to be exempt from moratorium under the Insolvency and Bankruptcy Code, 2016

By a notification dated 14 June 2023 (read here), the Ministry of Corporate Affairs has exempted petroleum assets leased by a company undergoing insolvency proceedings from the moratorium provisions of the Insolvency and Bankruptcy Code, 2016. The exemption ensures that oil wells do not become inactive if a company faces insolvency, allowing the Ministry of Petroleum…
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February 17, 2023

No look back period for fraudulent transactions under insolvency laws

Introduction The objective of the Insolvency and Bankruptcy Code, 2016 (Code) is to maximize the value of the assets of the corporate debtors and to ensure their revival. One vital aspect for reviving a debt-ridden company is reversal of avoidance transactions i.e., preferential, undervalued, defrauding creditors and extortionate transactions. The Code empowers the resolution professional…
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January 27, 2023

Avoidance application survives insolvency process

Introduction The Insolvency and Bankruptcy Code, 2016 (Code) contains four types of avoidable transactions that are to be avoided, otherwise it would affect the financial position of the corporate debtor - preferential, undervalued, defrauding creditors and extortionate transactions. The Code mandates that the Resolution Professional / the Liquidator (Insolvency Professional) should determine if the corporate debtor…
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July 29, 2022

Licensing of premises is a ‘Service’ under insolvency law

Under the Insolvency and Bankruptcy Code, 2016 (Code), a trade creditor may initiate corporate insolvency resolution process if there is an unpaid operational debt above INR 10 million. An ‘operational debt’ under the Code means a claim in relation to goods and services. The insolvency courts have provided divergent views on the issue of whether…
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March 1, 2024

Revision of CIRP Regulations to Streamline Corporate Insolvency Resolution Process

On 15 February 2024, the Insolvency and Bankruptcy Board of India (IBBI) notified the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Amendment) Regulations, 2024 (read here) to streamline the corporate insolvency resolution process (CIRP). A summary of the key amendments are as follows:  These amendments, effective from 15 February 2024,…
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April 9, 2024

Compulsorily Convertible Debentures: Whether debt or equity?

Compulsorily Convertible Debentures (CCDs), a hybrid instrument, has gained prominence in the last two decades. However, its classification as equity or debt has been the subject of discussions, mainly due to conflicting perspectives under different laws. This initial divergence surfaced from the framework of guidelines under the Foreign Exchange Management Act, 1999 (FEMA), which deemed…
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February 29, 2024

Streamlining liquidation: Key changes to the liquidation regulations

On 12 February 2024, the Insolvency and Bankruptcy Board of India (IBBI) introduced the Insolvency and Bankruptcy Board of India (Liquidation Process) (Amendment) Regulations, 2024 (read here), aimed at enhancing the effectiveness and accountability of the liquidation process. A summary of the key amendments are as follows: These amendments, effective from 12 February 2024, are…
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March 1, 2024

Revision of CIRP Regulations to Streamline Corporate Insolvency Resolution Process

On 15 February 2024, the Insolvency and Bankruptcy Board of India (IBBI) notified the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Amendment) Regulations, 2024 (read here) to streamline the corporate insolvency resolution process (CIRP). A summary of the key amendments are as follows:  These amendments, effective from 15 February 2024,…
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March 25, 2020

Dilution of Rights of Service Providers Under the Insolvency Law

In a recent judgment, i.e., on 17 January 2020, the Indian appellate insolvency tribunal, namely, the National Company Law Appellate Tribunal (NCLAT) held in M. Ravindranath Reddy v. G. Kishan, that the lease of immovable property cannot be considered as supply of goods or rendering any services and therefore the due amount cannot fall within…
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October 11, 2022

Supreme Court rejigs priority of tax dues under IBC

The Insolvency & Bankruptcy Code, 2016 (Code) provides a structure for realisation of debts owed to the creditors in the event of liquidation. In this structure, secured creditors are given preference to recover their dues over statutory dues / crown debts owed to the State. However, recently in State Tax Officer v. Rainbow Papers Ltd.…
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October 10, 2022

IBBI prescribes fee structure for insolvency professionals

Under the Insolvency and Bankruptcy Code, 2016 (Code), the resolution professional or the interim resolution professional (collectively referred as RP) is vested with the responsibility of running the business of the corporate debtor as a going concern and conducting the corporate insolvency resolution process (CIRP). The RP must also ensure that CIRP is conducted in…
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September 14, 2022

Commercial wisdom of the liquidator upheld by the Supreme Court

Under the Insolvency and Bankruptcy Code, 2016 (Code), if a corporate debtor is unable to pay its debts, then insolvency resolution proceedings (CIRP) may be initiated against the corporate debtor and attempts are made to revive the corporate debtor by inviting resolution plans. If the revival process fails, the corporate debtor must be liquidated. The…
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August 29, 2022

Affixing Liability: Lifting the Corporate Veil Under Insolvency Law in India

Under corporate law, it is a well settled principle that a company has a juristic existence which is independent of its shareholders. An exception to this principle is the doctrine of lifting of corporate veil i.e., looking past the separate identity of the company and affixing liability on the actual perpetrators i.e., the management of…
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August 18, 2022

Withdrawal & settlement under liquidation

While the corporate insolvency resolution process (CIRP) is underway, sometimes it is common for the creditor and the entity under CIRP (Corporate Debtor) to enter discussions where the parties may come to a mutual understanding to settle the debt. In such cases, a creditor may withdraw the application made against the Corporate Debtor for admission…
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January 2, 2023

NCLT clarifies: Interim moratorium not applicable to future liabilities

Introduction In India, prior to the Insolvency and Bankruptcy Code, 2016 (Code), insolvency proceedings against individuals used to be governed by the Presidency Towns Insolvency Act, 1909 and the Provincial Insolvency Act, 1920. While, the Presidency Towns Insolvency Act, 1909 was applicable to the erstwhile presidency towns such as Calcutta, Bombay and Madras, the Provincial…
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December 20, 2022

No insolvency when arbitration award is in execution

The Insolvency and Bankruptcy Code, 2016 (Code) was introduced as a one stop solution for resolving insolvencies, which previously was a long-drawn process that did not offer an economically viable arrangement. In Swiss Ribbons Pvt. Ltd. v. Union of India, the Supreme Court of India, while upholding the constitutional legitimacy of the Code, emphasized that…
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October 26, 2021

Note on Amendments to CIRP and Liquidation process

The Insolvency and Bankruptcy Board of India (IBBI) published discussion papers soliciting comments on issues relating to the corporate insolvency resolution process (CIRP Discussion Paper) and liquidation process (Liquidation Discussion Paper) on 27 August 2021. The IBBI on 30 September 2021 introduced amendments to the IBBI (Resolution Process for Corporate Persons) Regulations, 2016 (CIRP Regulations)…
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October 27, 2021

Enforcement of Arbitral Awards and Decrees passed in the United States of America under Indian law

This article deals with our thoughts on some of the significant issues that may be faced if an arbitration award or decree passed by an arbitral tribunal or court within the territory of the United States of America (“U.S.”) is required to be enforced in India. Enforcing a U.S. arbitral award or decree can turn…
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November 23, 2021

The Ambiguity on Jurisdiction of NCLT and DRT Under IBC

The problem of Non-performing Assets (NPAs) in the Indian banking system is one of its foremost predicaments. In order to allow lending institutions to recover such NPAs in an expeditious manner, the Indian Government established Debt Recovery Tribunals (DRT) under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (RDDBFI Act), and…
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January 17, 2022

Proposed amendments to IBC

Ministry of Corporate Affairs proposes changes to the Insolvency and Bankruptcy Code for time bound resolution of stressed assets. Ministry of Corporate Affairs (“MCA”) has, vide a notification dated 23 December 2021, proposed amendments to the Insolvency and Bankruptcy Code, 2016 (“Code”) to facilitate a swift admission process, streamline provisions concerning avoidable transactions and wrongful…
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