Mar 14 2019
Vidhi organized a conference on Insolvency and Bankruptcy Code, 2016: A roadmap for the Next Two Years in collaboration with the Insolvency and Bankruptcy Board of India on December 18. Vidhi organized a conference on Insolvency and Bankruptcy Code, 2016: A roadmap for the Next Two Years in collaboration with the Insolvency and Bankruptcy Board of India on December 18
May 18 2019
On Friday, the Insolvency and Bankruptcy Board of India (IBBI), the regulator established under the Insolvency and Bankruptcy Code, 2016 (IBC) amended the Regulations on the Insolvency Resolution Process. This amendment does away with the requirement to guarantee a minimum amount of payout to operational creditors and dissenting financial creditors, in a plan to resolve the insolvency of the company (resolution plan). It is significant that operational creditors are those creditors of the company that supply goods and services to it, and have no vote in choosing the resolution plan for a company whereas dissenting financial creditors are those creditors who have voted ‘no’ to choosing that particular resolution plan. Despite this, both operational creditors and dissenting financial creditors are bound by an approved resolution plan. Thus, if an approved resolution plan says that an operational creditor who was previously owed INR 100, would be paid out INR 10, the operational creditor would be bound by it and would not be able to ask for a larger payout. The ability to bind all creditors to an approved resolution plan is a central requirement for a resolution plan to work, or it would be near impossible to resolve the insolvency of a company that has a viable business for fear of ‘holdouts’. This fear of ‘holdouts’ would also make a resolution very costly since holdout creditors would have to be offered sweeteners for their assent. In the Indian context where non-performing assets on bank balance sheets are rising, there is an even greater need for the law to enable faster and cheaper resolution of insolvency and the IBC, rightly does not allow for holdouts to occur by binding all stakeholders to the majority decision. That said, when a creditors’ right to be paid are being displaced by a majority, it is important to ensure that there are some safeguards. If not, we risk a resolution plan that would be unfairly in favour of the assenting financial creditors, who would safeguard their own interests at the expense of these creditors. Given that typically only 66% of the financial creditors are actually required to vote in favour of a resolution plan for it to be approved (the earlier requirement was 75%, but this was also changed this year following recommendations of an expert Insolvency Law Committee), the need to safeguard rights of the dissenting financial creditors and operational creditors becomes more pressing. The previous requirement to guarantee these creditors a minimum payout, was therefore geared towards ensuring that the resolution process does, in fact, maximize value for all creditors and some creditors do not benefit at the expense of others. Similar requirements exist in jurisdictions such as the United States. By removing these guaranteed payouts, this minimum protection for these creditors has also been done away. The IBBI has, ostensibly, taken this move following an order of the National Company Law Appellate Tribunal that stated that mandating such minimum payments would not be within the power of the IBBI. However, with respect, it is arguable that the NCLAT itself may not have the power to pass such an order, especially without giving IBBI a right of hearing and that the NCLAT’s judgement on substance, does not fully appreciate the purpose of these provisions and the IBBI’s powers in this respect. Regardless of the correctness of the NCLAT’s order, what must be considered is that it is now harder than ever to safeguard the interests of these creditors. The next steps, both for IBBI, NCLT & NCLAT, should therefore be to recognize the importance of including such safeguards and to explore alternative mechanisms to protect the rights of these creditors consistent with their powers. Perhaps, inspiration can be taken from countries like UK, where the majority’s vote (in a scheme of arrangement) can be reconsidered where it is considered to be irrational or oppressive towards creditors, though the efficacy of analyzing each decision on these grounds, in the Indian context, is debatable. Alternatively, the IBC could be amended to simply to give the IBBI more powers to mandate such payments. In any event, the recent amendment now raises new concerns for the insolvency eco-system.
May 18 2019
So below, I’m going to outline exactly what you need to do to get started and set up your own personal blog. Before we dive in though, I really want to talk about WHY you should build a blog.
May 18 2019
My name is Scott Chow, and I am going to show you how to start blogging. I have been building blogs and websites since 2002. In that time I have launched several of my own blogs, and helped hundreds of others do the same.