KEY NOTE SPEAKER- IBC DESIGN - PPT. pptx

KEY NOTE SPEAKER- IBC DESIGN

1. 1 “ KEY NOTE- IBC DESIGN " RRR CHAMBERS Email ID- [email protected] WELCOME

2. 2 JOURNEY OF IBC BC DC AC RRR Chambers - [email protected]

3. BC- BEFORE COVID-19 DC- DURING COVID-19 AC- AFTER COVID-19 3 yes it is… RRR Chambers - [email protected]

4. GENESIS DEVELOPMENTS WAY FORWARD POINTS FOR PONDER 4 COVERAGE : RRR Chambers - [email protected]

5. 5 BEFORE COVID-19 RRR Chambers - [email protected]

6. B 6 INSOLVENCY LAWS INDIAN INSOLVENCY ACT, 1848 PROVINCIAL INSOLVENCY ACT, 1907 PRESIDENCY TOWNS INSOLVENCY ACT, 1909 RRR Chambers - [email protected]

7. Consolidation & amendments of Law 7 OBJECTIVES Time bond process Maximization of value of assets Entrepreneurship Availability of credit Balancing stakeholders interest IBBI Variety of debit instruments Revival Mechanism Cross border Insolvency Data base defaulters RRR Chambers - [email protected]

8. 8 SARFAESI Act-2002 Sick Industrial Companies (Special Provisions Act) RDBFI Act 1993 Companies Act 1956 and 2013 The Provincial Insolvency Act 1920 Presidency Towns Insolvency Act 1909 IBC CONNECTED ACTS RRR Chambers - [email protected]

9. IBC- DESIGN OF AUTHORITIES 9 RRR Chambers - [email protected]

10. 10 during COVID-19 RRR Chambers - [email protected]

11. 11 RRR Chambers - [email protected]

12. DURING COVID-19 12 RRR Chambers - [email protected]

13. JUDICIAL PRONOUNCEMENTs 13 S.NO NAME OF THE CASE GIST OF DECESSION 1 M/S. Innoventive Industries Ltd vs ICICI Bank   The court ruled that the previous directors, who are no longer managing, will clearly no longer hold an appeal on behalf of the corporation until an insolvency professional has been named to administer the firm 2 Macquarie Bank Limited vs Shilpi Cable Technologies Ltd.  Whether a demand notice of an unpaid operational creditor under Section 8 can be issued by a lawyer on behalf of the operational creditor 3 Mobilox Innovations Private Ltd vs Kirusa Software Private Ltd The court held  that the expression “and” occurring in Section 8(2)(a) may be read as “or” in order to further the object of the statute and/ or to avoid an anomalous situation RRR Chambers - [email protected]

14. 4 Surendra Trading Company vs Juggilal Kamlapat Jute Mills  The NCLAT to approve or deny the submission , for a period of 14 days pursuant to Section 9(5). 5 K.Kishan vs M/S Vijay Nirman Company Pvt. Ltd Article 14 of the Limitation Act , the insolvency procedure cannot be implemented 6 Transmission Corporation Of vs Equipment Conductors And Cables  Arbitral Council rejected the defendant’s claim as time was not allowed. 7 Anand Rao Korada Resolution vs M/S Varsha Fabrics (P) Ltd. The  Supreme Court dismissed the contested provisional orders of the Court of Appeal dated 14.08.2019 and 05.09.2019 passed by the Odisha High Court and held that it should not have audited the property of corporate debtors as soon as the proceedings under the International Business Center had begun and that NCLT was ordering the declaration of a moratorium. 14 CONT… RRR Chambers - [email protected]

15. Swiss Ribbons Pvt. Ltd. V. Union of India: The Constitutionality of IBC Upheld 15 Appointment of the Chairmen and members of NCLT and NCLAT was made in accordance to due process laid under Law Differentiation between Financial Creditor and Operational Creditor is constitutional Constitutional validity of Section 29Aof IBC (Persons not eligible to be resolution applicant.) The constitutional validity of insolvency bankruptcy code Provisions of the code are not contrary to the objects sought to be achieved by the legislation RRR Chambers - [email protected]

16. Lalit Kumar Jain Vs Union of India (Supreme Court of India), Transferred Case (Civil) No. 245/2020, Date of Order- 21-05-2021 Settlement of principle law relating to insolvency of personal guarantors. Discharge/Release of principle borrower from the debt owed to its creditors. Liability to creditors with insolvency proceedings does not absolve the sureties/ guarantors liabilities. Upholding the validity of impugned notification. 16 RRR Chambers - [email protected]

17. 17 Amendment in section 5(12)-Insolvency commencement date Amendment in section 5(15)-Interim finance New Notification u/s 5(15) Amendment in section 7(1)-(Initiation of corporate insolvency resolution process by financial creditor) Amendment in section 11-Persons not entitled to make application Existing Section 11-Persons not entitled to make application Existing Section 11-Persons not entitled to make application AMENDMENTS RRR Chambers - [email protected]

18. 18 Amendment in section 14(1), (2) & (3)-Moratorium (This amendment is necessitated in view of the Hon’ble Supreme Court Judgment in the matter of Embassy Property Development Pvt. Ltd. Vs. State of Karnataka, Civil Appeal No. 9170 of 2019 dated December 3, 2019.) Amendment in section 16(1)-Appointment and tenure of interim resolution professional CONT… RRR Chambers - [email protected]

19. AFTER COVID-19 19

20. UNIQUE FEATURES Source: STANDING COMMITTEE ON FINANCE (2020-2021) REPORT 2021 A comprehensive regime dealing with all aspects of insolvency and bankruptcy of all kinds separating commercial aspects of insolvency and bankruptcy proceedings from judicial aspects and empowered stakeholders and adjudicating authorities to decide the matters within domain expeditiously. Moving away from erosion of net worth to a mare objective default in payment for initiation of the insolvency process. Moving away from the ’ debtor-in-possession ’ regime to a ’ creditors-in-control ' regime where creditors decide matters with the assistance of insolvency professionals. Providing collective mechanism to resolve insolvency rather than recovery of loan by a creditor and achieving insolvency resolution in a time bound manner and empowers the stakeholders to complete transactions in time. 20 RRR Chambers - [email protected]

21. REPORT CARD OF THE SYSTEM Source: STANDING COMMITTEE ON FINANCE (2020-2021) REPORT 2021 21 RRR Chambers - [email protected]

22. HAIRCUT Source: STANDING COMMITTEE ON FINANCE (2020-2021) REPORT 2021 22 RRR Chambers - [email protected]

23. achievements The Insolvency arid Bankruptcy Code, 2016 was enacted on Friday 28,2016 with the twin objectives of time bound insolvency resolution and value maximization of assets and aims to promote entrepreneurship and availability of credit. The enactment of the Code has been considerable landmark legislation and the biggest economic reform next to GST. A comparison of the World Bank Ease of Doing Business Report 2017 and 2020 clearly indicates a shift in India's 'doing business‘ rankings pre and post IBC enactment. The information furnished by the Ministry of Corporate Affairs reveal that while India's resolving insolvency rank improved from 136 in 2017 to 52 in 2020, the average time taken for resolution was reduced from 4.3 years in 2017 to 1.6 years in 2020; lndia's rank in ease of doing business improved from 155 In 2017 to 63 in 2020, getting credit rank improved from 62 in 2017 to 25 in 2020 and starting a business rank improved from 151 in 2017 to 136 in 2020. 23 RRR Chambers - [email protected]

24. DEVIATIONS The basic design of the statute and given a different orientation to the code not originally envisioned. While taking into consideration the impact of the pandemic on the implementation of the code It was found that the haircuts and delay have substantially deviated from the core principles of the IBC The process has become a recovery mechanism With any legislative enactment and implementation needs to constantly evolve to meet the challenges in the ever changing ecosystem , The actual operationalisation of amendments made so far may have altered and even digressed from : 24 RRR Chambers - [email protected]

25. WAY FORWARD 25 RRR Chambers - [email protected]

26. POINTS TO PONDER IS OBTAINING CONSENT BY THE FC’s FROM THE RP A GOVERNANCE ISSUE? CAN THE CORPORATE INSOLVENCY RESOLUTION PROCESS BE SHIFTED TO TECHNICALLY INTEGRATED MODES? CAN THE SECTION 12A OF IBC, CODE BE AMENDED OR MODIFIED? HOW TO REDUCE THE REGULATORY TIME LAG & HOW TO MAKE A SINGLE POINT OF CONTACT FOR ACHIEVING CONCURRENCE OF ALL REGULATORS? METHODS WITH WHICH REDUCTION IN FRICTION AMONG VARIOUS PROFESSIONALS AND ENTITIES DURING THE PROCESS OF IBC? IS THE THRESHOLD LIMIT FOR DEFAULT TO BE INCREASED MORE OR ANY OTHER ADDITIONAL CONDITIONS OR CRITERIA TO BE ATTACHED FOR ADMITTING THE CASE? IS THE PERSONAL GUARANTOR BE ABLE TO FILED INDEPENDENTLY WITHOUT LINKING IT WITH THE CIRP/LIQUIDATION CASE OF CORPORATE DEBTOR? IS THERE ANY NEED FOR GRIEVIENCE MECHANISM BE INTRODUCED FOR RESOLUTION PROFESSIONAL AND OTHER STAKEHOLDERS? IS CONSTITUTION OF SEPARATE INSTITUTE FOR DISCIPLINARY MATTERS FOR INSOLVENCY PROFESSIONALS WILL GIVE SOLUTION OF INDEPENDENCE AND AVOIDING MULTIPLE LITIGATIONS? MODE THROUGH WHICH THE STRUCTURE OF IBC CAN BE LEVELLED ON PAR WITH GLOBAL STRATEGIES? 26 RRR Chambers - [email protected]

27. RRR Chambers - [email protected]