MCA Notification: Moratorium Under IBC Inapplicable To Agreements Under Convention & Protocol Relating To Aircraft, Aircraft Engines, Airframes And Helicopters
The Ministry of Corporate Affairs (“MCA”), Government of India, has issued a notification dated 03.10.2023 published in the Gazette of India (Extraordinary), intimating that Section 14(1) of the Insolvency and Bankruptcy Code, 2016 (“IBC”) would be inapplicable to transactions, arrangements or agreements, under the Convention and the Protocol relating to aircraft, aircraft...
The Ministry of Corporate Affairs (“MCA”), Government of India, has issued a notification dated 03.10.2023 published in the Gazette of India (Extraordinary), intimating that Section 14(1) of the Insolvency and Bankruptcy Code, 2016 (“IBC”) would be inapplicable to transactions, arrangements or agreements, under the Convention and the Protocol relating to aircraft, aircraft engines, airframes and helicopters.
Brief Background
On 16.11.2001, the Convention on International Interests in Mobile Equipment (“Convention”) and the Protocol to the Convention on International Interests in Mobile Equipment on Matters specific to Aircraft Equipment (“Protocol”) were adopted under the joint auspices of International Civil Aviation Organization and the International Institute for the Unification of Private Law concluded at Cape Town.
India is a signatory to the Convention and the Protocol and has acceded to the same by depositing the instruments of accession on 31.03.2008 with the International Institute for the Unification of Private Law.
Notification issued by MCA
Section 14(1) of IBC imposes a moratorium with respect to the entity (Corporate Debtor) which has been admitted into Corporate Insolvency Resolution Process (CIRP) under the IBC. Imposition of moratorium ensures value maximization of the Corporate Debtor during the CIRP, by prohibiting any form of recovery, institution of suits, continuation of proceedings, transfer/alienation of assets, enforcement of security interest, recovery of property et al against the Corporate Debtor.
In view of the Convention and Protocol, the Central Government, in exercise of the powers under Section 14(3)(a) of IBC, has notified that moratorium under Section 14(1) of IBC shall not apply to transactions, arrangements or agreements, under the Convention and the Protocol, relating to aircraft, aircraft engines, airframes and helicopters.
“Now, therefore, in exercise of the powers conferred by clause (a) of sub-section (3) of section 14 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), the Central Government hereby notifies that the provisions of sub-section (1) of section 14 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), shall not apply to transactions, arrangements or agreements, under the Convention and the Protocol, relating to aircraft, aircraft engines, airframes and helicopters.”
Ref: F. No. Insol-30/9/2020-Insolvency-MCA