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Treatment and Priority of EPFO dues under Insolvency and Bankruptcy Code, 2016 (“IBC”)

The provisions Insolvency and Bankruptcy Code, 2016 specifically provides for treatment for all sums due to any workman or employee from the provident fund, the pension fund and the gratuity fund. Further, in the present scenario there is much debate on the admissibility of the claim of EPFO under Sections 7Q and 14B for which … Continue reading “Treatment and Priority of EPFO dues under Insolvency and Bankruptcy Code, 2016 (“IBC”)”

Promoters toiling with Insolvency and Bankruptcy Code

Main reasons for the delay is the spate of litigations by the promoters. Once the CIRP order is passed, the promoters get into the action with the sole objective of getting back the company at a cheaper price.

Interim Finance – A Source of Operational Funding under IBC

interim finance can be raised by the resolution professional appointed by the National Company Law Tribunal (NCLT). The resolution professional is authorized to raise interim finance after obtaining approval from the Committee of Creditors (CoC).

Operational Debt Includes Advance Payment Made to a Corporate Debtor for the supply of Goods or Services: SC

A debt arising from an advance payment given to a corporate debtor for the supply of goods or services would be deemed an operational debt.

Rights of Homebuyers under the Insolvency and Bankruptcy Code

Homebuyers could only engage in the IBC procedure as a class of financial creditor. Individual homebuyer rights were absorbed by homebuyer rights as a class.

NOIDA: A FINANCIAL CREDITOR OR AN OPERATIONAL CREDITOR

Both operational creditors and financial creditors own certain advantages over each other. But Financial creditors are given some priorities over other creditors such as they are members of the creditor’s committee and have voting power etc and operational is not a member of the creditor’s committee.

The Insolvency and Bankruptcy Code, 2016 is not Interest Recovery Code

NCLT held that the “interest” component alone cannot be claimed or pursued, in absence of the debt, to trigger a CIRP against the corporate Debtor. Further, the application pursued realization of the interest amount alone is against the intent of the IBC, 2016.

Power and Duties of Company Liquidator

The Liquidator has a fiduciary responsibility with the Company and its creditors. The major goal of choosing a Liquidator is to resurrect a failing firm and operate professionally.

Outstanding payments to allottees in Real Estate Projects are Financial Debts

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.

Supreme Court on constitutional validity of the Insolvency and Bankruptcy Code, 2016

IBC is economic legislation and that when it comes to economic legislation, flexibility should be given to the legislature because no economic law can be fool proof at its inception.

THE INSOLVENCY AND BANKRUPTCY CODE, 2016: AN OVERVIEW

IBC was introduced to reorganise, restructure or to consolidate the existing framework into a single law for the purpose of Insolvency and Bankruptcy.

Formation and composition of the committee of creditors under IBC, 2016

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.

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