Category Archives: IBC

The Insolvency and Bankruptcy Code (Amendment) Ordinance, 2020 05-06-2020 No Case be Filed Due to Covid Pandemic

The Insolvency and Bankruptcy Code (Amendment) Ordinance, 2020 05-06-2020 No Case be Filed Due to COVID Pandemic

MINISTRY OF LAW AND JUSTICE

(Legislative Department)

New Delhi, the 5th June, 2020/Jyaishtha 15,  1942  ( Saka)

THE INSOLVENCY AND BANKRUPTCY CODE (AMENDMENT) ORDINANCE,  2020

No. 9 OF 2020

Promulg ated by  the  President  in the  Seventy -first Year of the Republic of India.

An Ordinance further to amend the Insolvency and Bankruptcy  Code, 2016.

WHEREAS the entire ecosystem for implementation of the Insolvency and Bankruptcy Code, 2016 is in place;

AND WHEREAS the prov1s10ns relating to corporate insolvency resolution process and liquidation process for corporate persons under the Code are in operation;

AND WHEREAS COVID-19 pandemic has impacted business, financial markets and economy all over the world, including India, and created uncertainty and stress for business for reasons beyond their control;

AND WHEREAS   a nationwide lockdown is in force since

25th March, 2020 to combat the spread of COVID-19 which has ailedtodisruption of normal business operations;

AND WHEREAS it is difficult to find adequate number of resolution applicants to rescue the corporate person who may default in discharge of their debt obligation;

AND WHEREAS it is considered expedient to  suspend under sections 7, 9 and 10 of the Insolvency and Bankruptcy Code, 2016 to prevent corporate persons which are experiencing distress on account of unprecedented situation, being pushed into insolvency proceedings under the said Code for some time;

AND WHEREAS it is considered expedient to exclude the defaults arising on account of unprecedented situation for the purposes  of insolvency proceeding under this code;

AND WHEREAS Parliament is not in session and the President is satisfied that circumstances exist which render it necessary for him to take immediate action;

Now, THEREFORE, in exercise of the powers conferred by clause (1) of article 123 of the Constitution, the President is pleased to promulgate the following Ordinance:-

Short title and commencement.

Insertion of new section 1OA.

Suspension of initiation of corporate insolvency resolution process.

  1. (1) This  Ordinance   may  be   called  the  Insolvency and Bankruptcy  Code (Amendment)  Ordinance,

(2) It shall come into force at once.

  1. After section I0 of the principle Act, the following section shall be inserted, namely:-

“lOA. Notwithstanding anything contained in sections 7, 9 and 10, no application for initiation of corporate insolvency resolution process of a corporate debtor shall be filed, for any default arising on or after 25th March, 2020 for a period of six months or such further period, not exceeding one year from such date, as may be notified in this behalf:

Provided that no application shall ever be  filed  for initiation of corporate insolvency resolution process of a corporate debtor for the said default occurring during the said period.

Explanation-For the removal of doubts, it is hereby clarified that the provisions of this section shall not apply to any default committed under the said sections before 25th March, 2020.”

Amendment of section 66.

_ 3.  In  section  66  of  the  principal  Act,  after  sub-section (2), the following subsection shall be inserted, namely:-

“(3) Nothwithstanding anything contained in this section, no application shall be filed by a resolution professional under sub-section (2), in respect of such default against which initiation of corporate insolvency resolution process is suspended as per section 1OA.”

RAM NATH KOVIND ,

President.

  1. G. NARAYANA RAJU,

Secretary  to the  Govt. of  India.

DOWNLOAD

NCLAT directs SBI to substitute IRP Shailesh Verma who was an Ex-employee of Bank for 39 years before he retired in 2016

NCLAT directs SBI to substitute IRP Shailesh Verma who was an Ex-employee of Bank for 39 years before he retired in 2016

The National Company Law Appellate Tribunal ( NCLAT ) has upheld the order directing State Bank of India ( SBI ) to the substitution of a financial creditor’s ex-employee as the proposed interim resolution professional in a CIRP initiated by the financial creditor, on the ground of apprehension of bias. The appellant, State Bank of India has initiated insolvency proceedings against the Corporate debtor, M/s. Metenere Limited, by moving an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 before the Principal Bench of the National Company Law Tribunal (NCLT).

The National Company Law Appellate Tribunal ( NCLAT ) has upheld the order directing State Bank of India ( SBI ) to the substitution of a financial creditor’s ex-employee as the proposed interim resolution professional in a CIRP initiated by the financial creditor, on the ground of apprehension of bias. The appellant, State Bank of India has initiated insolvency proceedings against the Corporate debtor, M/s. Metenere Limited, by moving an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 before the Principal Bench of the National Company Law Tribunal (NCLT). Before the NCLT, the Corporate debtor objected to the SBI’s proposal to appoint one Shailesh Verma as an Interim Resolution Professional. It added that Verma had worked with the SBI for 39 years before he retired in 2016 and there was thus an apprehension of bias. In view of this submission, NCLT ordered SBI to substitute Verma’s name. Aggrieved by the order, SBI moved an appeal before the NCLAT. SBI contended that Mr. Verma fulfilled the requirements for appointment as Interim Resolution Professional under Insolvency and Bankruptcy Code, 2016 (IBC). It was further contended that IBC and its regulations bore no disqualification to an ex-employee of a Financial Creditor from being appointed as Interim Resolution Professional. SBI further asserted that a Resolution Professional had no adjudicatory power and only acted as a facilitator in the Corporate Insolvency Resolution Process. The three-member bench headed by Acting Chairperson, Justice Bansi Lal Bhat, while referring to the Regulation 3(1) under Insolvency and Bankruptcy Board of India Regulations, 2016 and upholding the order of NCLT observed that the sole question arising for determination in this appeal is whether an ex-employee of the ‘Financial Creditor’ having rendered services in the past, should not be permitted to act as ‘Interim Resolution Professional’ at the instance of such ‘Financial Creditor’, regard being had to the nature of duties to be performed by the ‘Interim Resolution Professional’ and the ‘Resolution Professional’. However, the bench noted the fact that Verma was neither disqualified or ineligible, the Adjudicating Authority was perfectly justified in seeking his substitution to ensure that the corporate insolvency resolution process was conducted in a fair and unbiased manner. “In the given set of circumstances, we are of the considered opinion that the apprehension of bias expressed by the ‘Corporate Debtor’ qua the appointment of Mr. Shailesh Verma as proposed Interim Resolution Professional’ at the instance of the Appellant- ‘Financial Creditor’ cannot be dismissed offhand and the Adjudicating Authority was perfectly justified in seeking substitution of Mr. Shailesh Verma to ensure that the ‘Corporate Insolvency Resolution Process’ was conducted in a fair and unbiased manner,” the bench said while confirming the order of the NCLT. “It goes without saying that the Appellant- ‘Financial Creditor’ should not have been aggrieved of the impugned order as the same did not cause any prejudice to it.”, the NCLAT remarked as it dismissed the appeal.

 

Source taxscan.in