Insolvency and Restructuring
September 10, 2020

INITIATION OF INSOLVENCY PROCEEDINGS AGAINST PERSONAL GUARANTORS: INDIAN COURTS FREEZE ANIL AMBANI’S ASSETS

On November 15, 2019, the Indian government notified the commencement of Part III of the Insolvency and Bankruptcy Code, 2016 (IBC), which provides for the insolvency resolution process for individuals and partnership firms.  The relevant provisions in so far as they relate to personal guarantors of corporate debtors came into force on December 1, 2019.  Pursuant to this notification, creditors are now permitted to initiate insolvency proceedings against a personal guarantor of a corporate debtor if the guarantor fails to honour its obligations despite a demand being raised. 

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Insolvency and Restructuring, Neerav Marchant
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June 24, 2020

THE AMRAPALI FRAUD – INDIA’S FOREIGN INVESTMENT AND MONEY LAUNDERING LAWS SHOULD NOT BE TAKEN LIGHTLY BY INVESTORS

Foreign investment in India is regulated by the Ministry of Finance and the Reserve Bank of India (RBI), and foreign investors have a strict onus of complying with India’s Foreign Exchange Management Act, 1999 (FEMA), and its rules and regulations. Any breach of the FEMA rules and regulations can result in penalties being levied against…

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Foreign Investment, Insolvency and Restructuring
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June 17, 2020

SUSPENSION OF INDIA’S INSOLVENCY AND BANKRUPTCY CODE – WILL IT ADD TO THE PROBLEM?

On June 5, 2020, the Indian government promulgated the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2020 (the “Ordinance”). The Ordinance has been promulgated as a part of the economic package announced by India’s Finance Minister last month. The Ordinance indefinitely bars the initiation of insolvency proceedings under the Insolvency and Bankruptcy Code, 2016 (the “Code”),…

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Insolvency and Restructuring
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November 27, 2019

INDIA’S SUPREME COURT RULES ON THE ROLE OF INSOLVENCY STAKEHOLDERS AND EQUALITY OF CREDITORS  

On November 15, 2019, the Supreme Court (the “Court”) ruled on several contentious aspects of the Insolvency and Bankruptcy Code, 2016 (the “Code”) and put an end to the long-drawn-out litigation in the insolvency resolution process of one of India’s largest steel manufacturers, Essar Steel India Limited (“ESIL”).  This update highlights the key aspects of…

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Insolvency and Restructuring
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June 12, 2019

RBI REVISES FRAMEWORK FOR RESOLUTION OF STRESSED ASSETS

On April 2, 2019, India’s Supreme Court (the “SC”) quashed the Reserve Bank of India’s (the “RBI”) consolidated framework for resolution of stressed assets (the “2018 Framework”) as being ultra vires the RBI’s powers under the Banking Regulation Act, 1949 (the “Act”).  Consequently, on June 7, 2019, the RBI revised the 2018 Framework and released…

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Insolvency and Restructuring
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May 20, 2019

INDIA’S SUPREME COURT ALLOWS REGISTERED TRADE UNIONS TO FILE APPLICATION AS OPERATIONAL CREDITORS ON BEHALF OF MEMBERS

In a recent ruling, the Supreme Court (the “SC”) resolved a long-standing dispute between JK Jute Mill Mazdoor Morcha (the “Union”) and Juggilal Kamlapat Jute Mills Company Limited (the “Debtor”) by allowing registered trade unions to initiate insolvency proceedings as operational creditors on behalf of their members under the Insolvency and Bankruptcy Code, 2016 (the “Code”). …

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Employment Law, Insolvency and Restructuring
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November 1, 2018

INDIA’S SUPREME COURT ALLOWS DISQUALIFIED RESOLUTION APPLICANTS TO CURE INELIGIBILITY

Under India’s Insolvency and Bankruptcy Code, 2016 (the “Code”), a potential bidder (who has been party to or caused the indebtedness and insolvency of a company) can be disqualified from bidding for and submitting a resolution plan to rehabilitate the company.  The primary reason for this is to prevent such a bidder from deriving the…

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Insolvency and Restructuring
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September 27, 2018

INDIA’S SUPREME COURT REFUSES TO ENTERTAIN INSOLVENCY PETITION ON ACCOUNT OF PENDING ARBITRATION

Introduction In a recent judgment in the case of K. Kishan v. Vijay Nirman Company Pvt. Ltd., India’s Supreme Court (the “Supreme Court”) has examined whether an insolvency process can be put into operation when there is a pending proceeding challenging an arbitral award. Background Vijay Nirman Company Pvt. Ltd. (the “Respondent”) entered into a…

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Insolvency and Restructuring
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August 2, 2017

INDIA’S SUPREME COURT ORDER MAY PAVE THE WAY FOR OUT-OF-COURT SETTLEMENTS

The Indian government enacted the Insolvency and Bankruptcy Code, 2016 (the “ Code”) to consolidate the law on insolvency in India, and provide an effective and timebound mechanism for recovering debts due to both, financial as well as operational creditors. The provisions of the Code are being tested in Indian courts, and an important ruling has been passed by India’s Supreme Court (the “Court”) on out-of-court settlements between parties following the commencement of insolvency proceedings.

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Insolvency and Restructuring
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July 26, 2017

INDIA’ SUPREME COURT BACKS THE NEW INSOLVENCY REGIME; UPHOLDS ACTION AGAINST ESSAR STEEL

With the aim of having a robust and efficient insolvency process and to remedy the appalling credit default situation in India, the Indian government enacted the Insolvency and Bankruptcy Code, 2016 (the “ Code”). The Code introduced sweeping reforms by consolidating the law on insolvency in India, and providing an effective and time bound mechanism for recovering debts due to both, financial as well as operational creditors.

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Insolvency and Restructuring
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June 10, 2016

INDIA’S NEW INSOLVENCY CODE – IS IT A GAME CHANGER OR A RUN-OF-THE-MILL REFORM?

Background – The need for a new law The Indian legal framework for insolvency resolution, debt recovery and restructuring of stressed assets was ineffective in ensuring satisfactory repair of credit default mainly due to the fact that insolvency and debt recovery were governed by different overlapping statutes having conflicting objectives. The laws governing debt recovery…

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Insolvency and Restructuring
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July 10, 2015

BORROWERS BEWARE – BANKS CAN NOW TAKE OVER COMPANIES TO RECOVER THEIR DEBT

Introduction To address various issues surrounding distressed assets in the banking system, on February 26, 2014, the Reserve Bank of India (the “RBI”) issued the Framework for Revitalising Distressed Assets in the Economy (the “Framework”). The Framework, inter alia, requires lenders to compulsorily form a Joint Lenders Forum (the “JLF”) if the principal or interest…

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Banking and Finance, Insolvency and Restructuring
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