IBC - Is Dissenting Financial Creditor Entitled To Minimum Value Of Security Interest? Supreme Court Refers To Larger Bench, Doubts Precedent
1 year, 2 months ago

IBC - Is Dissenting Financial Creditor Entitled To Minimum Value Of Security Interest? Supreme Court Refers To Larger Bench, Doubts Precedent

Live Law  

The Supreme Court has referred to larger bench the issue whether a dissenting financial creditor is to be paid the minimum value of its security interest as per the Insolvency and the Bankruptcy Code 2016.A bench comprising Justices Sanjiv Khanna and SVN Bhatti, in the case DBS Bank Ltd Singapore v. Ruchi Soya Industries Ltd and another, referred the following question : Whether. The Supreme Court has referred to larger bench the issue whether a dissenting financial creditor is to be paid the minimum value of its security interest as per the Insolvency and the Bankruptcy Code 2016. A bench comprising Justices Sanjiv Khanna and SVN Bhatti, in the case DBS Bank Ltd Singapore v. Ruchi Soya Industries Ltd and another, referred the following question : Whether Section 30 of the Insolvency and Bankruptcy Code, 20161, as amended in 2019, entitles the dissenting financial creditor to be paid the minimum value of its security interest? The bench differed from the view expressed by a coordinate bench in the 2021 judgment in the case India Resurgence ARC Private Limited v. Amit Metaliks Limited & Another which held that a dissenting secured creditor cannot challenge an approved resolution plan contending that higher amount should have been paid to it based on the security interest held by it over the corporate debtor.

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History of this topic

Order Approving Resolution Plan Passed Beyond 330 Days Cannot Be Questioned When Application Seeking Approval Was Filed Within CIRP Period: NCLAT
2 weeks, 5 days ago

Order Approving Resolution Plan Passed Beyond 330 Days Cannot Be Questioned When Application Seeking Approval Was Filed Within CIRP Period: NCLAT

Live Law  

The National Company Law Appellate Tribunal New Delhi bench of Justice Ashok Bhushan and Mr. Barun Mitra has held that when an order approving the Resolution Plan is passed by the Adjudicating Authority after expiry of 330 days but the application seeking approval was filed within the stipulated time period, it cannot be said the plan was approved after the …

Quandary Of Dissenting Financial Creditors Having Security Interest: Perhaps Supreme Court's Larger Bench To Guide Dissenting Financial Creditors
1 year, 1 month ago

Quandary Of Dissenting Financial Creditors Having Security Interest: Perhaps Supreme Court's Larger Bench To Guide Dissenting Financial Creditors

Live Law  

The recent judgment by a Two-Judge Bench of the Supreme Court, delivered by Justice Sanjeev Khanna and Justice S.V.N. Therefore, while the DBS Bank judgment cites relevant decisions such as Committee of Creditors of Essar Steel India Limited, Swiss Ribbons, and Vallal RCK, which emphasize the importance of respecting the commercial wisdom of the CoC, it also noted that, while …

No Provision In IBC For Upfront Payment To Dissenting Financial Creditors On Resolution: NCLAT Delhi
1 year, 3 months ago

No Provision In IBC For Upfront Payment To Dissenting Financial Creditors On Resolution: NCLAT Delhi

Live Law  

The National Company Law Appellate Tribunal, New Delhi Bench, comprising of Justice Ashok Bhushan and Shri Barun Mitra, has held that there is no provision under IBC which requires the Successful Resolution Applicant to make upfront payment to Financial Creditors who dissented to the resolution plan. The resolution plan proposed to make upfront payment to assenting Financial Creditors within 90 …

SC Upholds Validity of Key Provisions of Insolvency and Bankruptcy Code
1 year, 4 months ago

SC Upholds Validity of Key Provisions of Insolvency and Bankruptcy Code

News 18  

The Supreme Court on Thursday upheld certain key provisions of the Insolvency and Bankruptcy Code amid the claim of several petitioners that that they are violative of fundamental rights like the right to equality of those against whom insolvency proceedings are initiated. A bench comprising Chief Justice D Y Chandrachud and justices J B Pardiwala and Manoj Misra decided as …

Dissenting Financial Creditor Entitled To Liquidation Value Commensurate Only With Security Interest: NCLT Delhi
1 year, 7 months ago

Dissenting Financial Creditor Entitled To Liquidation Value Commensurate Only With Security Interest: NCLT Delhi

Live Law  

The National Company Law Tribunal, Principal Bench, comprising of Chief Justice Ramalingam Sudhakar and Shri Avinash K Srivastava, while adjudicating a petition filed in the matter ofM/s. Ltd.,has held that a co-joint reading of Sections 52, 53 and 30 of IBC reveals that a Dissenting Financial Creditor is at best entitled to the liquidation value commensurate with its security interest. …

Dissenting Secured Creditor Can't Be Treated Higher Than Other Creditors U/S 53 Just Because They Enjoy Security Interest: NCLT Kolkata
2 years ago

Dissenting Secured Creditor Can't Be Treated Higher Than Other Creditors U/S 53 Just Because They Enjoy Security Interest: NCLT Kolkata

Live Law  

The National Company Law Tribunal, Kolkata Bench, comprising of Shri Rohit Kapoor and Shri. Balraj Joshi, while adjudicating an Application under Section 60 of Insolvency and Bankruptcy Code, 2016 in ICICI Bank Limited Vs Mr. Pratim Bayal & Anr has reiterated that just because a creditor enjoys security interest, it cannot be treated higher than other creditors who have financed …

Secured Creditors Vis-À-Vis Debt Recovery: A Positive Step
2 years, 1 month ago

Secured Creditors Vis-À-Vis Debt Recovery: A Positive Step

Live Law  

The creation of statutory charges and the subsequent recovery process initiated by the tax department has often clashed with the recovery mechanisms used by secured creditors like banks under the Securitization andReconstruction of Financial Assets and Enforcement of Security Interest Act,2002 and Recovery of Debts Due toBanks and Financial Institutions Act, 1993. Additionally, the tax department also challenged one of …

IBC - Approval Of A Resolution In Respect Of One Borrower Cannot Discharge A Co-Borrower : Supreme Court
2 years, 5 months ago

IBC - Approval Of A Resolution In Respect Of One Borrower Cannot Discharge A Co-Borrower : Supreme Court

Live Law  

The Supreme Court observed that approval of a resolution in respect of one borrower cannot discharge a co-borrower.If there are two borrowers or if two corporate bodies fall within the ambit of corporate debtors, there is no reason why proceedings under Section 7 of the IBC cannot be initiated against both the Corporate Debtors, the bench of Justices Indira Banerjee …

Resolution Plan Which Ignores Statutory Dues Payable To State Government/Legal Authority Liable To Be Rejected : Supreme Court
2 years, 6 months ago

Resolution Plan Which Ignores Statutory Dues Payable To State Government/Legal Authority Liable To Be Rejected : Supreme Court

Live Law  

The Supreme Court held that a Resolution Plan which ignores the statutory demands payable to any State Government or a legal authority, altogether, is liable to be rejected.The court also held that the Section 48 of the Gujarat Value Added Tax Act is not contrary to or inconsistent with Section 53 or any other provisions of the IBC. Mr. Arnav …

Decree Holders As Creditors Under The IBC - Need For Clarity
3 years ago

Decree Holders As Creditors Under The IBC - Need For Clarity

Live Law  

The Insolvency and Bankruptcy Code, 2016, right from its enactment has been the subject of legal debate. Section 3 of the Code, defines a "creditor" as "any person to whom a debt is owed and includes a financial creditor, an operational creditor, a secured creditor, an unsecured creditor and a decree-holder;" Whereas the Code provides for and envisages the manner …

Secured Creditor Can't Challenge Resolution Plan Insisting That Higher Amount Should Be Paid Based On Security Interest : Supreme Court
3 years, 9 months ago

Secured Creditor Can't Challenge Resolution Plan Insisting That Higher Amount Should Be Paid Based On Security Interest : Supreme Court

Live Law  

The Supreme Court has held that a dissenting secured creditor cannot challenge a resolution plan approved under the Insolvency and Bankruptcy Code with an argument that higher amount should have been paid to it on the basis of the security interest held by it over the corporate debtor.A division bench comprising Justices Vineet Saran and Dinesh Maheshwari observed that it …

Creditor Will Not Become 'Financial Creditor' Under IBC If A Corporate Debtor Has Only Given Security By Pledging Shares, Without Undertaking To Discharge Borrower's Liability: Supreme Court
4 years, 1 month ago

Creditor Will Not Become 'Financial Creditor' Under IBC If A Corporate Debtor Has Only Given Security By Pledging Shares, Without Undertaking To Discharge Borrower's Liability: Supreme Court

Live Law  

The Supreme Court has held that if a corporate debtor has only offered security by pledging shares, without undertaking to discharge the borrower's liability, then the creditor in such a case will not become 'financial creditor' as defined under the Insolvency and Bankruptcy Code.The Court held that such a creditor could be a secured creditor but will not be a …

Liquidation Value vis a vis Dissenting Financial Creditors: Aftermath Of Maharashtra Seamless And Orchid Pharma
4 years, 11 months ago

Liquidation Value vis a vis Dissenting Financial Creditors: Aftermath Of Maharashtra Seamless And Orchid Pharma

Live Law  

The Insolvency Bankruptcy Code, 2016 has gone through a myriad of changes since its inception and introduction. The resolution professional shall examine each resolution plan received by him to confirm that each resolution plan— provides for the payment of insolvency resolution process costs in a manner specified by the Board in priority to the payment of other debts of the …

SC Sets Aside NCLAT Order Which Held That Dissenting Financial Creditor Should Not Be Discriminated [Read Judgment]
5 years, 4 months ago

SC Sets Aside NCLAT Order Which Held That Dissenting Financial Creditor Should Not Be Discriminated [Read Judgment]

Live Law  

The Supreme Court on Friday set aside an order passed by the National Company Law Appellate Tribunal which held that a dissenting financial creditor cannot be discriminated.A bench comprising Justices Arun Mishra and Ravindra Bhat allowed the appeal filed by Rahul Jain, the resolution applicant in the insolvency of Rave Scans Private Ltd.The appellant was aggrieved with the NCLAT's direction. …

NCLAT Says Dissenting Financial Creditors Cannot Be Discriminated Against [Read Judgment]
5 years, 5 months ago

NCLAT Says Dissenting Financial Creditors Cannot Be Discriminated Against [Read Judgment]

Live Law  

Ringing a bell of caution for all future resolution plans under the IB Code, the Hon'ble NCLAT has reiterated that resolution plans must not discriminate between similarly situated creditors, and must conform to the requirements of the amended Regulation 38 of the Insolvency and Bankruptcy Board of India Regulations, 2016. The Appellant, who had dissented with the approved Resolution Plan, …

IBC Code: NCLT Has No Jurisdiction To Enquire Into Justness Of Rejection Of The Resolution Plan: SC [Read Judgment]
6 years, 1 month ago

IBC Code: NCLT Has No Jurisdiction To Enquire Into Justness Of Rejection Of The Resolution Plan: SC [Read Judgment]

Live Law  

The Supreme Court has observed that National Company Law Tribunal has no jurisdiction and authority to analyse or evaluate the commercial decision of the Committee of Creditors to enquire into the justness of the rejection of the resolution plan by the dissenting financial creditors. The bench was considering appeals against an NCLAT Rulings which held that the requirement of approval …

S.7 IBC Application Cannot Be Rejected On Account Of "Usurious Penal Interest" Governed By Usurious Loans Act: NCLAT [Read Judgment]
6 years, 3 months ago

S.7 IBC Application Cannot Be Rejected On Account Of "Usurious Penal Interest" Governed By Usurious Loans Act: NCLAT [Read Judgment]

Live Law  

The National Company Law Appellate Tribunal has held that an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 cannot be rejected on the ground of "usurious and extortionate penal interest", which is governed by Usurious Loans Act, 1918.A bench comprising Justice SJ Mukhopadhaya and Justice Bansi Lal Bhat, in Sh. Naveen Luthra v. The National Company Law …

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