The complete article can be accessed at SCC Online (2018) 8 SCC J-5 and titled as ‘Issues Under the Insolvency and Bankruptcy Code Post Admission of Insolvency Application’.
The enactment of the Insolvency and Bankruptcy Code 2016 (hereinafter ‘IB Code’) has been touted to remedy a major concern facing the Indian industry, and businesses, which is the absence of a quick and an efficacious insolvency process. As succinctly encapsulated in a PRS note, the insolvency process under the IB Code is a time bound process, where the resolution process is carried on by a licensed insolvency professional.[1] The Preamble to the IB Code states that the Code naturally states the object of the IB Code to “consolidate and amend the laws relating to re- organisation and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximisation of value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interests of all the stakeholders including alteration in the order of priority of payment of Government dues.”[2]
The fact that the Indian state is seeking to improve the worldwide perception about India as a business friendly location,[3] as a corollary, is acknowledged in the statement of objects of the IB Code that stipulates its aim to “improve Ease of Doing Business, and facilitate more investments.” The previous regime under Sick Industries Companies (Special Provisions) Act 1985 (hereinafter referred to as ‘SICA’) has been heavily criticized for further bogging down the ability of the stakeholders to revive the debt- ridden asset owing to the “protective wall” [4] that SICA created wherein once SICA is invoked, no body could recover money. Therefore, the enactment of IB Code was heralded to bring about major changes.
The article deals with several issues raised and discussed in the manner stated here-in-below:
A. Committee of Creditors, Formation and Functioning
1. Committee of Creditors
2. Formation of CoC under the IB Code and Role of an IRP
B. Issues Post the Imposition of Moratorium
1. Withdrawal of Application post admission
i-a. Declining Request for Dismissing Application on the Basis of Settlement.
i-b. Circumventing Rule 8 of the Adjudicatory Authority Rules 2016.
2. Conflict with SEBI, Arbitration, Company Law, Competition Law Tribunals and Other Statutory Authorities
ii-a. Arbitration
ii-b. SARFAESI
ii-c. Other Judicial Authorities
3. Guarantors
4. Resolution Stage and Decisions of the Insolvency Resolution Professional
iv-a. Insolvency Applications from Multiple Creditors: IRP to consider all the claims
iv-b. Functions of an IRP and the Extent of its Powers
iv-c. IRP under Regulations can sell the assets and ambit of the term ‘going concern’ as used in “Resolution Plan”.
5. Insertion of Section 29A of the IB Code
[1] Accessible at http://www.prsindia.org/billtrack/the-insolvency-and-bankruptcy-bill-2015-4100.
[2] IB Code, Preamble, para 2.
[3] “Ease of doing business: Narendra Modi government worked hard to move up on World Bank index, here is what else is needed”,
[4] Speech by Sh. Arun Jaitley, Finance Minister, piloting the Code in the Parliament, quoted in Innoventive Industries Ltd. v. ICICI Bank and Ors., AIR 2017 SC 4084, para 16. (Manupatra Version)
Obiter Dictum 