October 2019

THE LATEST AMENDMENTS TO THE INSOLVENCY AND BANKRUPTCY CODE, 2016

Peshwan Jehangir|Jaideep Singh Khattar
Advocates

ONE STEP FORWARD AND TWO STEPS BACKWARD?

 

INTRODUCTION

The Insolvency and Bankruptcy Code has been one of the present government’s landmark legislations and continues to be pursued as a mechanism to improve India’s standing in the rankings for ‘ease of doing business’. The government has been keenly following the judicial developments and has also been very proactive in amending the law in an attempt to iron out any difficulties.

Recently, by a Gazette Notification dated 16th August, 2019 bearing No. S.O. 2953(E), the provisions of the Insolvency and Bankruptcy Code (Amendment) Act, 2019 (Amendment Act) were brought into force. This Amendment Act, in principle, is touted to be an outcome of the decision passed on 4th July, 2019 by the National Company Law Appellate Tribunal (NCLAT) in the case of Standard Chartered Bank vs. Satish Kumar Gupta, R.P. of Essar Steel Ltd.1 and amends the Insolvency and Bankruptcy Code, 2016 (IBC) on certain vital issues.

 

THE ESSAR STEEL CASE

The Essar Steel case related to the insolvency and bankruptcy proceedings of Essar Steel India Limited (ESIL) which were initiated on the basis of an application filed by the State Bank of India and Standard Chartered Bank under the provisions of section 7 of the IBC before the National Company Law Tribunal (NCLT), Ahmedabad. These proceedings were amongst the first few insolvency proceedings initiated pursuant to the RBI press release2  directing banks to take action against 12 large companies that had defaulted on their repayment obligations. The matter has had a chequered history and has been heavily contested by various parties.

Initially, the litigation before the NCLT was related to two resolution applicants, ArcelorMittal India Pvt. Ltd. (AMIPL) and Numetal Limited (Numetal) submitting their respective resolution plans.

The Resolution Professional, however, found both AMIPL and Numetal ineligible to be resolution applicants in view of the amendments brought about by the Insolvency and

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