THE LATEST AMENDMENTS TO THE INSOLVENCY AND BANKRUPTCY CODE, 2016
Peshwan Jehangir|Jaideep Singh Khattar Advocates
ONE STEP FORWARD
AND TWO STEPS BACKWARD?
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
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