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IBC Brief – June 2022

Hi! Welcome back to our updates on the Insolvency and Bankruptcy Code featuring developments during June 2022. The IBBI has amended the CIRP Regulations to expedite the corporate insolvency resolution process by requiring operational creditors to submit extracts of Form GSTR-1, Form GSTR-3B, e-way invoices along with their application under Section 9 of the Code. The amendment […]

Hi! Welcome back to our updates on the Insolvency and Bankruptcy Code featuring developments during June 2022.

The IBBI has amended the CIRP Regulations to expedite the corporate insolvency resolution process by requiring operational creditors to submit extracts of Form GSTR-1, Form GSTR-3B, e-way invoices along with their application under Section 9 of the Code. The amendment also requires the operational creditors to assist the interim resolution professional or resolution professional by furnishing any information they may have regarding the Corporate Debtor’s assets and liabilities. It further requires the resolution plan to mention the manner in which the proceedings for avoidance transactions would be pursued after the approval of the resolution plan and the manner in which the proceeds, would be distributed.

IBBI published a circular on June 15, 2022, which provided that IBBI would forward the application for initiating insolvency received by it in terms of rules 4, 6, or 7 of the Insolvency and Bankruptcy (Application to Adjudication Authority) Rules, 2016, to the Information Utility. On receipt of the said application, the Information Utility is required to share such application with other creditors to notify them of the application for initiating insolvency. Further, the Information Utility is also under an obligation to issue notice to the applicant, requiring it to file ‘information of default’ in the specified format under the Insolvency and Bankruptcy Board of India (Information Utility) Regulations, 2017.

The insolvency resolution of real estate companies has been riddled with complexities since the inception of the Code. In this piece, our colleague Aman Chaudhary outlines some suggestions for reform in this sector.

From the docket

In Puneet Kaur v. K.V. Developers, the NCLAT directed the Resolution Professional to include belated claims of homebuyers in the information memorandum, if they appear in the records of the Corporate Debtor so that a potential resolution applicant could formulate plans accommodating those claims even if the same were not admitted.

In Partha Paul v. Kotak Mahindra Bank, the NCLAT came down heavily on the propensity to indulge in forum shopping in IBC matters and reiterated that that the provisions of the IBC are not intended to be employed as a means of money recovery.

The Supreme Court in  Kotak Mahindra Bank v. A Balakrishnan held that a claim arising out of a recovery certificate issued by Debt Recovery Tribunal would come under the purview of financial debt as defined in Section 5(8) of the Code and such financial creditor would be eligible to file application under section 7 of the Code within a period of three years from the date of issuance of the recovery certificate. 

In N.C. Goel v. Piyush Infrastructure India, the National Company Law Tribunal, Allahabad bench held that post-dated cheques issued by the Corporate Debtor cannot be taken to be an unqualified admission of debt.

Thank you for reading. We will be back again in your inbox next month with more updates!

– Mani Gupta & Saumya Upadhyay