Revival of insolvency proceedings: Analysis and way forward
By Aman Gupta and Mayank Kumar
Revival of the Corporate Insolvency Resolution Process (‘CIRP’) proceedings refers to the restoration of the already withdrawn CIRP by a creditor which generally happens upon the breach of the settlement agreement pursuant to which the application for CIRP also gets withdrawn. In such circumstances, rather than filing for a fresh application for initiation of CIRP, the creditor may seek reviving of the earlier application. The article in this issue of Corporate Amicus observes that the Insolvency and Bankruptcy Code 2016 and any rules or regulation framed therein do not contain any provision for seeking revival of the CIRP proceedings once it is withdrawn. Analysing various case law, the article seeks to answer the questions as to whether the liberty of the NCLT is necessary for revival of the CIRP proceedings, and as to whether the nature of the debt changes the moment the parties enter into a settlement agreement.
Notifications and Circulars
- Companies (Accounts) Second Amendment Rules, 2023 notified
- Food safety – Last date for filing annual returns extended
- Insolvency – Moratorium not applicable for contracts under Oilfields (Regulation and Development) Act, 1948
- Insolvency Professionals to Act as Interim Resolution Professionals, Liquidators, Resolution Professionals and Bankruptcy Trustees (Recommendation) Guidelines, 2023
- Expanding the scope of Trade Receivables Discounting System
Ratio decidendi
- NCLAT has no power to review its own judgment, but it can recall a judgment in exercise of its inherent jurisdiction – NCLAT 5-Member Bench
- Arbitration clause in an agreement perishes with its novation – Delhi High Court
- Third-party funder who paid for proceedings of a case under a specific arrangement is not liable for an arbitral award against the person funded – Delhi High Court
News Nuggets
- Insolvency – Issuance of notice to creditors at pre-admission stage of an application under IBC Section 10 is not mandatory
- Insolvency – Allegation of fraud in appointment of Resolution Professional cannot be a ground for rejection of resolution plan under Section 30(2)(e) of IBC
- Insolvency – Delay in filing appeal under IBC Section 42 is condonable vide powers conferred under Section 5 of Limitation Act, 1963
- Arbitration – Where there is no novation and the parties have only extended the period of an agreement through written communication, the arbitration clause in such agreement shall continue to be operative
- Arbitration – Mere reference to arbitration, in an agreement, as possible option for resolution of dispute cannot be construed as a valid arbitration agreement
- Arbitration request cannot be made by a constituent of a Joint Venture who is not party to the agreement
- Competition/anti-trust law – ICAI covered under definition of ‘enterprise’ – CCI is not a grievance redressal forum against regulatory decisions taken by ICAI/other regulators
