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IBC | Legislative Alert | Ordinance, 2018 to amend IBC approved by the President | Key changes The President today (6 June 2018) gave assent to promulgate the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018 (Ordinance). Following are the key points to be noted as per the press release issued by the Government (Ministry of Corporate Affairs): 1. Home buyers as financial creditors.  The Ordinance provides significant relief to home buyers by recognizing their status as financial creditors. This would give them due to representation in the Committee of Creditors and make them an integral part of the decision making the process. It will also enable home buyers to invoke Section 7 of the Insolvency and Bankruptcy Code, 2016 (Code) against errant developers. 2. Boost to MSME Sector.   The Ordinance empowers the Government to provide Micro, Small and Medium Sector Enterprises (MSME), with a special dispensation under the Code. The immediate benefit it provides is that it

IBC | Case Law Alert | Right of operational creditors / suspended board/resolution applicants to attend COC meetings In an important ruling in the matter of ANG Industries Limited v/s Shah Brothers Ispat Private Limited & Ashok Leyland Limited, the National Company Law Appellate Tribunal (NCLAT) vide an order dated 24 May 2018 (available here), has analysed the following critical issues: (i) Whether the resolution professional is required to give notice to ‘Operational Creditors’ or their representatives to attend the meeting of Committee of Creditors (COC); and (ii) What is the legislative intent behind allowing the ‘suspended board of directors’, the ‘partners of the corporate debtor’, the ‘operational creditors or their representatives’ or the ‘resolution applicant(s)’ to attend the meeting of the COC, even though they do not have the right to vote? Observations of the NCLAT The NCLAT while relying upon the findings of Joint Parliamentary Committee and its earlier ru

IBC | Legislative Alert | Provisions in relation to financial service providers under the Code notified The Central Government has notified the provisions (notification available here) in relation to financial service providers under the Insolvency and Bankruptcy Code, 2016 (“Code”), with effect from 1 May 2018. Section 227 of the Code deals with the power of the Central Government to notify financial service providers and provides that the Central Government may in consultation with the appropriate financial sector regulators, notify financial service providers or categories of financial service providers for the purpose of their insolvency and liquidation proceedings, which may be conducted under the Code, in such manner as may be prescribed. In addition to the aforementioned, the Central Government has also notified the following provisions with effect from 1 May 2018, in relation to: (i) release of annual reports by the Insolvency and Bankruptcy Board of India (“IBBI”) deta

BC | Legislative Alert | Maintenance of public shareholding in listed companies for whom resolution plan is approved | SCRR amended Vide an amendment carried out to the Securities Contracts (Regulation) Rules, 1957 (“SCRR”) by the Securities Contracts (Regulation) (Amendment) Rules, 2018, dated July 24, 2018 ( available here ), the rule has been introduced regarding maintaining minimum public shareholding (“MPS Requirement”) in a listed company for whom a resolution plan has been approved under section 31 of the Insolvency and Bankruptcy Code, 2016 (“Code”). As per the amendment: 1. In cases of public shareholding falling below 25%. Where the public shareholding in a listed company falls below 25%, as a result of implementation of the resolution plan approved under section 31 of the Code, such company shall bring the public shareholding to 25% within a maximum period of 3 years from the date of such fall, in the manner specified by the Securities and Exchange Board of India (“S

IBC | Case Law Alert | Liquidation Order, not a bar to pass appropriate orders u/s 230 of the Companies Act, 2013 The National Company Law Appellate Tribunal (“NCLAT”) has in the matter of Arun Kumar Jagatramka vs Gujarat NRE Coke Ltd., order dated 10 July 2018 ( available here ), held that a liquidation order passed by the National Company Law Tribunal (“NCLT”) under the Insolvency and Bankruptcy Code, 2016 (“Code”) will not come in the way of the NCLT to pass appropriate order in accordance with law on the petition filed under Section 230 of the Companies Act, 2013 (power to compromise or make arrangements with creditors and members) which should not be in conflicted with the provisions of the Code. Factual Matrix: 1. A liquidation order dated 11 January 2018 (“Liquidation Order”) was passed by the NCLT Kolkata against Gujarat NRE Coke Limited (“Corporate Debtor”) in absence of approval of resolution plan and in want of time beyond 270 days, under Section 33 of the Code. 2.

The Indian Insolvency and Bankruptcy Regime The Government has been looking to take adequate action to improve the “ease of doing business ranking”, in addition to making attempts to address the alarming rise of stressed assets in India. Resolving Insolvency being one of the criteria for World Bank’s ease of doing business (in which India ranks 136 among 185 countries), there was a need to address the issues surrounding insolvent and bankrupt Tandoor Manufacturer entities. With the aim to address such issues, the Insolvency and Bankruptcy Code, 2016 (“IBC”) was introduced and enforced in December 2016. The IBC is intended to assist domestic and foreign lending by providing a uniform, comprehensive and efficient insolvency legislation, with an emphasis on revival as the first avenue for debt recovery.