A digest of insolvency developments in early February 2023: the Supreme Court on the Srei insolvency, the NCLAT on breach of consent terms, the IBBI’s appeal in GTL Infrastructure, and Economic Survey data on outcomes under the IBC.
Supreme Court
- Srei insolvency to continue. The Supreme Court dismissed the promoter entity’s appeals seeking a stay of the insolvency proceedings initiated by the RBI under Section 227 of the IBC against Srei Infrastructure Finance and Srei Equipment Finance, upholding the NCLAT’s order. Economic Times
- The IBC and ease of doing business. Speaking at the inaugural conference of the Insolvency Law Academy, Justice Sanjay Kishan Kaul credited the IBC with contributing to India’s improved ease of doing business ranking. The Hindu
NCLAT
- Breach of consent terms does not change the nature of a financial debt. In Priyal Kantilal Patel v. IREP Credit Capital Pvt. Ltd., the NCLAT upheld the admission of a fresh Section 7 petition filed after the corporate debtor breached consent terms recorded in an earlier petition. LiveLaw
- IBBI appeals in GTL Infrastructure. In a rare step, the IBBI challenged an NCLT order declining to admit GTL Infrastructure into CIRP, a consequence of tribunals applying Vidarbha Industries to reject applications despite proof of default. Economic Times
NCLT
- Future Retail. The resolution professional decided to move the NCLT under Section 19(2) of the IBC, alleging non-cooperation by the company’s promoters and statutory auditors. Mint
- McNally Bharat Engineering. The Kolkata Bench extended the CIRP period to 22 April 2023 at the resolution professional’s request. The Times of India
- In-camera hearing of a management dispute. The Delhi Bench agreed to continue hearing a company management dispute in camera, given the personal nature of some of the allegations. Bar & Bench
Policy and Data
- Economic Survey 2022–23. Of the 5,893 CIRPs commenced by the end of September 2022, 67% had been closed; of those, about 46% ended in liquidation orders, 21% were closed on appeal, review or settlement, 19% were withdrawn, and 14% resulted in approved resolution plans.
- Avoidance transactions. IBBI data indicate that only about ₹64 crore has been recovered through avoidance applications, against nearly ₹2.3 lakh crore of transactions flagged as suspect. Mint
- Relief for liquidators in the Union Budget. Liquidators will no longer face prosecution for failing to comply with certain provisions of the Income-tax Act, a change expected to ease liquidations under the IBC. Mint
- A sectoral approach to insolvency. A commentary considers whether a sector-agnostic Code should give way to sector-specific resolution frameworks. Mint
This bulletin is an initiative for knowledge sharing. It summarises reported judgments and developments and does not contain personal views or opinions on them.
