Insolvency and Bankruptcy Hotline
August 25, 2022
Resolution Plans under Insolvency Code: Hooked, booked and cooked!

This article was originally published by IBC Laws on May 05, 2022.


INTRODUCTION

The COVID-19-induced economic recession has disrupted Indian businesses forcing many of them to shut down their operations. In times of economic uncertainties posed by the pandemic, one of the revival mechanisms for Indian companies is under the Insolvency and Bankruptcy Code, 2016 (“IBC”). However, pandemic-related disruptions have also had an impact on pending insolvency resolution processes under the IBC. Successful resolution applicants are facing immense difficulties to abide by the scheme proposed by them in their own resolution plans, owing to a multitude of reasons such as financial hardships, substantial changes in the position of the corporate debtor, gross amendments in the valuation of the business. In light of these factors and the changed economic scenario, the resolution applicants are forced to either reconsider their plan, or in certain situations withdraw the resolution plan altogether. This factual scenario led the adjudicating authority to consider a novel issue pertaining to the finality of a resolution plan which has been approved by the Committee of Creditors (“CoC”) but is pending approval of the National Company Law Tribunal (“NCLT”). While determining the situation the Hon’ble Supreme Court in the matter of Ebix Singapore Pvt. Ltd. v. Committee of Creditors of Educomp Solutions Ltd. and Anr., observed that the NCLT cannot allow modifications and/or withdrawals of CoC-approved resolution plans once the plan has been submitted to the NCLT. This determination by the Apex Court affirming the finality of the resolution plan even when it is pending approval of the adjudicating authority, is bound to have far reaching implications on the insolvency regime in India.

For complete article, please click here.


Arjun Gupta & Sahil Kanuga

You can direct your queries or comments to the authors


Disclaimer

The contents of this hotline should not be construed as legal opinion. View detailed disclaimer.

This Hotline provides general information existing at the time of preparation. The Hotline is intended as a news update and Nishith Desai Associates neither assumes nor accepts any responsibility for any loss arising to any person acting or refraining from acting as a result of any material contained in this Hotline. It is recommended that professional advice be taken based on the specific facts and circumstances. This Hotline does not substitute the need to refer to the original pronouncements.

This is not a Spam mail. You have received this mail because you have either requested for it or someone must have suggested your name. Since India has no anti-spamming law, we refer to the US directive, which states that a mail cannot be considered Spam if it contains the sender's contact information, which this mail does. In case this mail doesn't concern you, please unsubscribe from mailing list.


Insolvency and Bankruptcy Hotline

August 25, 2022

Resolution Plans under Insolvency Code: Hooked, booked and cooked!


This article was originally published by IBC Laws on May 05, 2022.


INTRODUCTION

The COVID-19-induced economic recession has disrupted Indian businesses forcing many of them to shut down their operations. In times of economic uncertainties posed by the pandemic, one of the revival mechanisms for Indian companies is under the Insolvency and Bankruptcy Code, 2016 (“IBC”). However, pandemic-related disruptions have also had an impact on pending insolvency resolution processes under the IBC. Successful resolution applicants are facing immense difficulties to abide by the scheme proposed by them in their own resolution plans, owing to a multitude of reasons such as financial hardships, substantial changes in the position of the corporate debtor, gross amendments in the valuation of the business. In light of these factors and the changed economic scenario, the resolution applicants are forced to either reconsider their plan, or in certain situations withdraw the resolution plan altogether. This factual scenario led the adjudicating authority to consider a novel issue pertaining to the finality of a resolution plan which has been approved by the Committee of Creditors (“CoC”) but is pending approval of the National Company Law Tribunal (“NCLT”). While determining the situation the Hon’ble Supreme Court in the matter of Ebix Singapore Pvt. Ltd. v. Committee of Creditors of Educomp Solutions Ltd. and Anr., observed that the NCLT cannot allow modifications and/or withdrawals of CoC-approved resolution plans once the plan has been submitted to the NCLT. This determination by the Apex Court affirming the finality of the resolution plan even when it is pending approval of the adjudicating authority, is bound to have far reaching implications on the insolvency regime in India.

For complete article, please click here.


Arjun Gupta & Sahil Kanuga

You can direct your queries or comments to the authors


Disclaimer

The contents of this hotline should not be construed as legal opinion. View detailed disclaimer.

This Hotline provides general information existing at the time of preparation. The Hotline is intended as a news update and Nishith Desai Associates neither assumes nor accepts any responsibility for any loss arising to any person acting or refraining from acting as a result of any material contained in this Hotline. It is recommended that professional advice be taken based on the specific facts and circumstances. This Hotline does not substitute the need to refer to the original pronouncements.

This is not a Spam mail. You have received this mail because you have either requested for it or someone must have suggested your name. Since India has no anti-spamming law, we refer to the US directive, which states that a mail cannot be considered Spam if it contains the sender's contact information, which this mail does. In case this mail doesn't concern you, please unsubscribe from mailing list.