13 April 2021
Greetings from Acuity Law LLP!
We are pleased to share our knowledge alert for the month of March 2021 relating to latest developments in Indian insolvency law. A snapshot of the March 2021 Newsletter is enclosed below.
ORDER PASSED BY THE SUPREME COURT OF INDIA (“SC”)
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SC clarifies that moratorium order passed under Insolvency and Bankruptcy Code, 2016 (“IBC”) bars parallel proceedings against corporate debtor under Negotiable Instruments Act
In P. Mohanraj & Ors v. Shah Brothers Ispat Pvt. Ltd., the SC held that criminal proceedings cannot be initiated against a corporate debtor under the cheque dishonour law if the National Company Law Tribunal (“NCLT”) has passed an order of moratorium under the IBC. However, it was clarified that such proceedings can continue against erstwhile directors / persons in charge of and responsible for the conduct of the business of the corporate debtor.
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Supreme Court extends the applicability of ineligibility provision under the IBC to a scheme of compromise and arrangement
In Arun Kumar v. Jindal Steel Power Ltd. and Anr., the SC held that a person ineligible to submit a resolution plan under the IBC will be ineligible to propose a scheme of compromise and arrangement under the Companies Act, 2013 if such scheme traces its origin to the liquidation proceedings initiated under the IBC.
UPDATE ON SUSPENSION OF IBC BY THE MINISTRY OF CORPORATE AFFAIRS (“MCA”)
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Year-long suspension of IBC comes to an end
On 05 June 2020, the MCA announced a six-month suspension of insolvency proceedings initiation against corporates for debt defaults from March 2020. This suspension was later extended till 25 March 2021. This year-long suspension of the IBC has now come to an end on 25 March 2021 and a flood of new insolvency filings are expected to hit the NCLTs.
