Madras High Court: Clean State Theory Not Applicable To Undisclosed Creditors Left Out Due To Negligences Of IRP Or RP

The Madras High Court bench of Justice N. Seshasayee held that the Clean State Theory shall not apply to undisclosed creditors to protect them from the deliberate non-disclosure or silence of the suspended board of directors or negligence of Interim Resolution Professional ('IRP') or Resolution Professional ('RP') towards disclosing their...

Madras High Court: MSME Corporate Debtor Can't Misuse Clean Slate Theory To Withhold Information When Its Management Had A Duty To Disclose

The Madras High Court bench of Justice N. Seshasayee held that an MSME Corporate Debtor cannot exploit the Clean Slate Theory by withholding information, especially when its management, which remained in control, had a duty to disclose such information. Background Facts: National Sewing Thread Co. Ltd. (Petitioner), a public limited company registered under the MSME Act, 2006,...

Madras High Court: Clean State Theory Only Protects Third-Party Successful Resolution Applicant And Not Suspended Board Of Corporate Debtor From Future Claims

The Madras High Court bench of Justice N. Seshasayee held that the Clean State Theory only protects the third party – Successful Resolution Applicant ('SRA') and not the suspended board of the Corporate Debtor from uncertainties of future claims. The High Court remarked: “It should not be forgotten that CST is a judicial coinage to protect the third...

Resolution Applicant Not Bound To Pay Past Dues When No Claim Is Made, Even If Electricity Dues Are Statutory In Character: Meghalaya High Court

The Meghalaya High Court has held that a State authority cannot compel a successful resolution applicant under Insolvency and Bankruptcy Code, 2016 (I&B Code) to pay past electricity dues, if the State authority has not made any claim in respect of its dues under approved resolution plan.The Petitioner-Company, Reliance Infratel was admitted to insolvency and a resolution plan was...

Madras High Court: Adjudicating Authority Must Exercise Jurisdiction Akin To Revisional Jurisdiction To Assess The Correctness Of COC's Actions

The Madras High Court bench of Justice N. Seshasayee held that though the Adjudicating Authority may not substitute the commercial wisdom of the Committee of Creditors ('CoC'), however, it must exercise jurisdiction akin to revisional jurisdiction to assess the correctness of the actions taken by the CoC. Background Facts: National Sewing Thread Co. Ltd. (Petitioner), a...

Madras High Court Urges Parliament To Assess Efficiency Of IBC And Consider Recovery Percentage From Successful Resolution Processes

The Madras High Court bench of Justice N. Seshasayee urged the Parliament to assess and evaluate the working efficiency of the Insolvency and Bankruptcy Code, 2016 ('IBC') and questioned whether the Parliament has considered the general recovery percentage achieved from a successful corporate debtor resolution process. Background Facts: National Sewing Thread Co. Ltd. (Petitioner),...

Weekly Digest Of IBC Cases: 03rd June 2024 To 09th June 2024

HIGH COURTS Official Liquidator Must Adhere To Ethical Principles And Fairness To Discharge Their Duties Under IBC: Delhi High Court Case Title: Sundaresh Bhat vs Insolvency And Bankruptcy Board of India Case No.: W.P.(C) 14389/2022 The Delhi High Court bench of Justice Subramonium Prasad held that official liquidators must adhere to ethical principles and...

NCLT Delhi Bench Appoints Resolution Professional In Self-Initiated Insolvency Application Under Section 94(1) IBC

The National Company Law Tribunal Court-V, New Delhi bench of Mahendra Khandelwal (Judicial Member) and Dr. Sanjeev Ranjan (Technical Member) has appointed a Resolution Professional in an application filed under Section 94(1) of the Insolvency and Bankruptcy Code, 2016. The Personal Guarantor approached the bench for insolvency proceedings to be initiated...

Refundable Security Deposit Carrying Interest In Development Agreement Constitutes Financial Debt U/S 5(8) Of IBC: NCLAT New Delhi

The National Company Law Appellate Tribunal, Principal Bench, New Delhi comprising Shri Justice Ashok Bhushan (Judicial Member) and Shri Barun Mitra and Shri Arun Baroka (Technical Members), has held that Refundable Security Deposit carrying interest in development agreement constitutes under Section 5(8) of IBC since the development agreement has the effect of a...

NCLAT Dismisses Appeal Raised By Byju's Investors Against Alleged Violation Of NCLT Directives

The National Company Law Appellate Tribunal ('NCLAT'), Chennai bench comprising Justice Sharad Kumar Sharma and Jatindranath Swain (Technical Member) dismissed the appeals brought by four investors since the Adjudicating Authority has not made any final decision on any significant rights against the investors and instead has merely requested them to file an affidavit to support their...

Allotment Of Shares At Lesser Price, An Oppressive Act Against Existing Members : NCLT Mumbai

The National Company Law Tribunal Mumbai Bench-I bench of Justice V.G. Bisht (Retd.)and Prabhat Kumar held that allotment of the shares at a concessional price is an oppressive act qua existing members to whom no such allotment has been made. The bench held that the allotment of the share value at a face value, which is less than its book value is not in accordance with the provision...

Preferential Transaction Under Section 43 Of IBC, Fraudulent Intent Need Not To Be Proved : NCLT Mumbai

The National Company Law Tribunal Mumbai Bench-I of Justice Shri V.G. Bisht and Prabhat Kumar has held that there is no need for any fraudulent intent for a preferential transaction under Section 43 of the Insolvency and Bankruptcy Code, 2016. The bench held that: “…….Corporate Debtor has paid the amount towards the antecedent debt during the look-back period to the...