Weekly Digest Of IBC Cases: 22nd July 2024 To 28th July 2024

Supreme Court

IBC | CIRP Of Holding Company Cannot Include Subsidiary's Assets: Supreme Court

Case no. – Civil Appeal No. 4565 of 2021

Case Title – BRS Ventures Investments Ltd. v. SREI Infrastructure Finance Ltd. & Anr.

The Supreme Court on Monday (July 23) held that a holding company is not the owner of its subsidiary's assets and thus, subsidiary assets cannot be included in the holding company's resolution plan.

A bench of Justice Abhay Oka and Justice Pankaj Mithal dismissed an appeal filed by a Successful Resolution Applicant of a Corporate Guarantor against NCLT's decision to admit Financial Creditor's application for recovery of balance amount from the Corporate Debtor.

The Corporate Debtor in this case was a subsidiary of the Corporate Guarantor.

“A holding company and its subsidiary are always distinct legal entities. The holding company would own shares of the subsidiary company. That does not make the holding company the owner of the subsidiary's assets...Therefore, the assets of the subsidiary company of the corporate debtor cannot be part of the resolution plan of the corporate debtor”, the court held.

Insolvency Resolution Of Corporate Guarantor Won't Bar Creditor From Filing CIRP Against Corporate Debtor For Balance Debt : Supreme Court

Case Title: BRS Ventures Investments Ltd. Versus SREI Infrastructure Finance Ltd. & Anr.

Citation : 2024 LiveLaw (SC) 508

In a notable decision relating to the Insolvency & Bankruptcy Code of 2016, the Supreme Court held when that the insolvency resolution of a corporate guarantor will not prevent the creditor from initiating another insolvency process against the corporate debtor for the balance debt.

The Court clarified that the insolvency resolution of the corporate guarantor will not result in the discharge of the corporate debtor towards the remaining debt.

NCLAT

Resolution Applicant Whose Name Was Not Included In 'Prospective Resolution Applicants' List Cannot Be Substituted At Later Stage: NCLAT, Delhi

Case Title: Swan Energy Ltd. vs Chandan Prakash Jain and Ors.

Case No.: Company Appeal (AT) (Insolvency) No. 313 of 2024

The National Company Law Appellate Tribunal (NCLAT), Delhi bench of Justice Ashok Bhushan (Chairperson) and Mr Barun Mitra (Technical Member) held that a resolution applicant, who did not take part in the CIRP process from the beginning and was not included in the list of prospective resolution applicants, cannot be suddenly substituted as a resolution applicant to implement the plan of the Corporate Debtor.

NCLAT Delhi - RP Not Liable For Payments Made To 103 Employees Responsible For Preserving And Managing Operations Of Jet Airways

Case Title: Jet Aircraft Maintenance Engineers Welfare Association Versus Mr. Ashish Chhawchharia

Case No.: Company Appeal (AT) (Insolvency) No.1705 of 2023 & I.A. No. 6137 of 2023

The National Company Law Appellate Tribunal (Appellete Tribunal) Delhi, comprising Mr. Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member), held that the Resolution Professional is not personally liable for the lump sum payments made to the 103 employees who were part of the Asset Preservation Team (APT) responsible for preserving and managing the operations of Jet Airways.

The Appellate Tribunal dismissed the appeal of the Jet Aircraft Maintenance Engineers Welfare Association, which sought payment for all workmen and employees of Jet Airways, against whom the Corporate Insolvency Resolution Process (CIRP) proceedings were initiated on June 20, 2019.

Electricity Being Essential Service Needs To Be Continued During CIRP Period, NCLAT Delhi Upholds RP's Decision To Increase Maintenance Charges

Case Title: Sanskriti Allottee Welfare Association (Reg.) & others Versus Gaurav Katiyar & anr

Case No.: Company Appeal (AT) (Insolvency) No. 878 of 2023

While upholding the Resolution Professional (RP) decision to increase the maintenance charges for homebuyers of the Corporate Debtor to cover electricity bills and dues, the National Company Law Appellate Tribunal (Appellant Tribunal) Delhi, comprising Justice Ashok Bhushan (Chairperson), Mr. Barun Mitra (Technical Member), and Mr. Arun Baroka (Technical Member), held that electricity, being an essential service, must continue during the Corporate Insolvency Resolution Process (CIRP) period.

With approval from the Committee of Creditors (CoC), the RP raised the electricity rate from ₹7 per unit to ₹8.91 per unit for homebuyers who received possession of their flats in the Sanskriti Project of the Corporate Debtor.

NCLT

Insolvency Professional Entities Qualified To Be Appointed As Resolution Professionals: NCLT Mumbai

Case Title: Piramal Capital and Housing Finance Limited vs Notion Real Estate Pvt. Ltd.

Case No.: IA(I.B.C)/3433(MB)2024 IN C.P. (IB)/915(MB)2023

The National Company Law Tribunal, Mumbai bench of Shri Sanjiv Dutt (Technical Member) and Shri K.R. Saji Kumar (Judicial Member), held that Insolvency Professional Entities (IPEs) are qualified to be appointed as Resolution Professionals (RPs) under the Insolvency and Bankruptcy Code, 2016.

The NCLT held that the Insolvency and Bankruptcy Board of India (IBBI) has the authority to regulate and recognize IPEs as resolution professionals, despite the IBC not explicitly mentioning them as professional service providers.