CS Alka Kapoor CEO ICSI IIP ICSI Institute

CS Alka Kapoor CEO, ICSI IIP ICSI Institute of Insolvency Professionals Insolvency and Bankruptcy Code, 2016 – A Macro View

Particulars Data Constitution of BLRC 2014 Date of enactment of the Code May 28, 2016 Date of notification of CIRP Regulations, Regulations December 01, 2016 relating to IPs and IPAs December, 15, Date of Commencement of Liquidation Regulations 2016 2 No. of Amendments to the Code No. of Amendments to CIRP Regulations No. of Amendments to Liquidation Regulations No. of Circulars by IBBI 7 1 16 ICSI Institute of Insolvency Professionals IBC – THE GENESIS

Cases Referred Under IBC: An Update Data Number of Corporates undergoing Insolvency Resolution More than 1, 100 Process (Admitted cases) Number of Corporates undergoing Liquidation Process More than 175 Number of Corporates undergoing Voluntary Liquidation More than 250 Process Number of Companies resolved Around 50 ICSI Institute of Insolvency Professionals Particulars

Cases Referred Under IBC: An Update Data First Admission of Corporate Insolvency January 17, 2017 Resolution Process- by NCLT Mumbai Bench. First NCLT order approving Resolution Plan-by August 02, 2017 NCLT, Hyderabad First Liquidation order by NCLT, Mumbai Bench July 17, 2017 First Voluntary Liquidation under Section 59 of April 07 2017 the Code ICSI Institute of Insolvency Professionals Particulars

Status Names Resolved Cases Bhushan Steel Electrosteel Steels Amtek Auto Monnet Ispat & Energy Cases on verge of Liquidation Jyoti Structures Lanco Infratech Admitted and at different stages ABG Shipyard Era Infra Engineering Essar Steel Jaypee Infratech Alok Industries Bhushan Power & Steel ICSI Institute of Insolvency Professionals FIRST 12 NPA ACCOUNTS REFERRED BY RBI- STATUS

Judicial Pronouncements by Supreme Court /NCLT/NCLAT/IBBI under IBC Particulars, Data Orders by NCLAT Orders by NCLT q More than 30 relates to withdrawal of petition under Article 142. q 12 A has been introduced- providing for withdrawal of application with 90% COC approval, so that each withdrawal case is not required to go to Supreme Court q Home Buyers recognised as Financial Creditors More than 450 orders providing for Interpretation of the Code, dismissing the admission of CIRP, supporting IP, directions to Co. C , directions to suspended Directors etc. More than 3000 orders by various benches of NCLT, including directions to police authorities, municipal authorities to support, Payment of fee to resolution professional, Directions to essential supply provider, Applicability of moratorium etc. ICSI Institute of Insolvency Professionals Orders by Supreme Court More than 50

Particulars Data Orders by IBBI 28 orders on various aspects including rejecting application for registration as insolvency professional, Disciplinary grounds(Suspending/cancelling the registration number) De recognition of IPE, RTI matters etc. ICSI Institute of Insolvency Professionals Judicial Pronouncements by Supreme Court /NCLT/NCLAT/IBBI under IBC

Broad Issues Settled Through Recent Amendments In The Code Section 29 A, barring wilful defaulters(Promoters) from being a resolution applicant. Section 240 A provides exemptions to promoters of MSMEs from Section 29 A, enabling them to submit a resolution plan. Section 12 A enabling withdrawal of CIRP with the consent of 90% approval of COC. (Earlier withdrawal of applications was through Supreme Court under Article 142) q q Home Buyers got the status of Financial Creditors under the IBC. (The definition of financial debt amended and JP infratech Limited case was instrumental for this change) q. Amendment to Section 14(3) -Moratorium not applicable for surety in a contract of guarantee to a corporate debtor enabling creditors to recover the money from surety. Continued ICSI Institute of Insolvency Professionals q

Broad Issues Settled Through Recent Amendments In The Code development and regulation of IPs, IPAs, IUs etc q. Change in threshold limits for approval of COC for critical decisions under CIRP reduced to 66% from 75% q. Section 16(5) amended, term of the IRP shall continue till the date of the appointment of the RP under Section 22 (Prior to Amendment - Term of IRP not to exceed 30 days from the date of his appointment) The insolvency commencement date to be from the date of appointment of IRP, if he is not appointed on the day of admission of CIRP. q The calculation of timelines is still unclear -when the date of receipt of order by IRP is later than the date of order appointing an IRP, as there are varied judicial pronouncements. ICSI Institute of Insolvency Professionals q Section 196 (Power & Functions of Board) has been amended to incorporate the role of

Section 21(6 A) has been introduced enabling classes of creditors to appoint their authorised representatives in the COC Meetings. The CIRP regulations provides for Each Class of Creditors can appoint their authorised representatives from three choices of insolvency professionals provided by the IRP q q. Section 235 A has been introduced to levy general penalty of 1 lakh-2 Crore where no specific penalty or punishment is provided. ICSI Institute of Insolvency Professionals Broad Issues Settled Through Recent Amendments to the Code

q. The definition of dispute is inclusive and cannot be restricted to pending suits or arbitral proceedings. (Mobilox Innovations Private Limited Vs Kirusa Software Private Limited(Supreme Court)(already amended) q. The Code shall prevail over the state laws in view of Section 238 of the Code relating to non-obstante clause, in case of inconsistency (Innoventive Industries Limited Vs ICICI Bank)(Supreme Court) q. Proceeding under Section 138 of Negotiable Instruments Act, is not covered under Section 14, i. e moratorium shield (Shah Brothers Ispat Pvt. Ltd. vs. P. Mohanraj & Ors [31. 07. 2018]) (NCLAT) continued ICSI Institute of Insolvency Professionals Broad Issues Settled Through Pronouncements (Supreme Court, High Court, NCLAT & NCLT)

q. Limitation period for initiation of IBC proceedings starts from 1 st December, 2016, when ‘I&B Code’ came into force. (Mr. Brijesh Kumar Agarwal v/s Punjab National Bank & Anr. (NCLAT) q. Corporate Debtor undergoing CIRP can initiate CIRP against its debtors as FC or OC(Jai Ambe Enterprises Vs S N Plumbing Private Limited)(NCLT) Continued ICSI Institute of Insolvency Professionals Broad issues settled through Pronouncements (Supreme Court, High Court, NCLAT & NCLT)

Pronouncements of NCLT advising Insolvency Professionals assignments. [IDBI Bank Ltd v/s Lanco Infratech Ltd ] q. NCLT observed that Insolvency Professional should not outsource all his work, specially his responsibilities. [Bank of Baroda (FC) and Binani Cement Limited (CD) v/s Mr. Vijaykumar Iyer (RP)) q. NCLT warned the IRPs not to be a part of cases wherein the parties are not in a position to meet even the basic cost of public announcement, fee payable to IRP. (Energy Infraconsulting India Private Limited v/s Athena Chhattisgarh Power Limited) q. NCLT directed the IRP to continue beyond 30 days as COC had not come up with the name of Resolution Professional (Burn Standard Company Ltd. ; NCLT Kolkata) (Now the same concept has been adopted in the Code also through amendment in tenure of IRP as per Sec 16(5). ICSI Institute of Insolvency Professionals q. NCLT Hyderabad changed the IRP and refrained him from taking too many

Pronouncements of NCLT and NCLAT Supporting Insolvency Professional was directed to give assistance to IRP and directed CD to furnish the book of account, list of financial and operational creditors and assets to the IRP. [Central Bank of India and SBI v/s Ashok Magnetics ; NCLT Chennai] q. IRP was directed to ensure that the company remains ongoing and if so necessary may take assistance of (suspended) Board of Directors. Authorization of the Resolution Professional is necessary for the person authorized to sign the bank cheques. [K. Kesava v/s Ajay Gopaldas Samat (HUF) & Ors. ] q. Property was sealed by Municipal Corporation of Faridabad AA ordered Municipal Corporation Faridabad to de seal the property and surrenders its possession to RP. [Indiabulls Housing Finance Ltd. v/s M/s Forging pvt. Ltd. ; NCLT, New Delhi Principal Bench] q. NCLAT had set aside the observations made by the Adjudicating Authority against RP as those were uncalled for stating and held that “The Insolvency and Bankruptcy Code, 2016” being a new Code, every person dealing with the subject including RP’s, Liquidators, Lawyers, AA and even the members of Appellate Tribunal are trying to understand the provisions of Law. [Jitendra Kumar Jain; NCLAT, New Delhi] ICSI Institute of Insolvency Professionals q. Police

• IPAs are to enroll, educate, develop, monitor and regulate the insolvency professionals. • ICSI IIP has over 700 members. • The governing Board comprises of eminent Independent Directors. • It has various committees: Monitoring, Disciplinary, Membership, Grievance Redressel, Advisory, Appelant Panel. ICSI Institute of Insolvency Professionals Regulatory mandates for IPAs and the Journey of ICSI IIP

Regulatory mandates for IPAs and the Journey of ICSI IIP To build the capacities of IPs: - Conducts training programmes - Intensive training workshops - Certificate Programs - 50 hours pre registration training program - Webinars - First Organisation to bring out Monthly Journal - Regular knowledge updates ICSI Institute of Insolvency Professionals •

Regulatory mandates for IPAs and the Journey of ICSI IIP To build the capacities of IPs: - Publications - Case Law Compeddium - Judicial Pronouncements under the Code: An issue analysis - Practical aspects of Insolvency Code (three editions have come so far) - Interim Resolution Professional: A handbook (two editions have come so far - Voluntary Liquidation: A handbook etc. ICSI Institute of Insolvency Professionals •

Regulatory mandates for IPAs and the Journey of ICSI IIP Support by ICSI IIP in the development of the Code: - to the working groups involved in the development of delegated legislations under the Code - to Insolvency Law Committee in terms of making suggestions for various amendments in the code taking into consideration the difficulties being faced by IPs at ground level. - to IBBI in terms of inputs to the advisory committees of IBBI, International best practices on monitoring, Cost of CIRP, Fees to RP, treatment of contingent Liabilities in a Resolution Plan, Inputs on revision of Limited Insolvency Examination, Graduate Insolvency Program. - MCA/IBBI on conducting roundtables of stakeholders on matters including individual insolvency regulations, Provisions of Cross Border Insolvency under IBC, amendments to the Code. ICSI Institute of Insolvency Professionals •

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