Khurana & Khurana advises various Indian and international clients on a variety of contentious and non-contentious commercial matters. Such matters pertain to NCLT, IBC Code, and other Commercial laws.
The National Company Law Tribunal is a quasi-judicial authority created under the Companies Act, 2013 to handle corporate civil disputes arising under the Act. This introduction of the National Company Law Tribunal has dissolved the Company Law Board. Powers and procedures that are vested in National Company Law Tribunal (NCLT) are that of the Court of Law and consequently, it has made an effort to provide a clear picture of laws relating to the laws under the Insolvency and Bankruptcy Code.
The Insolvency and Bankruptcy Laws have had a much-needed overhaul with the coming into force of the recent Insolvency & Bankruptcy Code in 2016. We, at Khurana & Khurana, indulge in providing the advisories with respect to various facets of the I&B Code such as advisory on Corporate debts, insolvency crisis, and other strategies for insolvency resolution. The fundamental principles of corporate insolvency can be categorized as follows: first, the objective is to revive the financially distressed company and enable it to engage in profitable trading, if feasible. Second, if saving the company is not possible, the aim is to maximize the overall returns for the creditors. Third, a fair and just system is established for prioritizing claims and distributing assets among the creditors, which involves reevaluating their rights. Fourth, the process aims to identify the causes of the company’s failure and hold those responsible for mismanagement accountable. Other important aspects include placing the company’s assets under external control, emphasizing collective action over individual pursuits, avoiding certain transactions and fraudulent conveyances, as well as pursuing dissolution and winding up procedures, among other measures.
The insolvency resolution process can be initiated by a financial creditor if the corporate debtor has defaulted on a debt that is due but unpaid. The process is governed by the code that outlines the procedure for initiation, either by a single financial creditor or jointly by two or more financial creditors. The financial creditor must file an application with the National Company Law Tribunal, along with evidence of the default and the proposed appointment of an interim resolution professional. This requirement ensures that applications are not filed without valid reasons, preventing unnecessary initiation of insolvency proceedings. The tribunal can verify the default within fourteen days, either through records from a regulated information utility or as specified by the Insolvency and Bankruptcy Board of India. Once the tribunal is satisfied with the default and the completeness of the application, it will admit the application, without considering any other criteria. This prevents misuse of the legal process by parties using delay tactics during the admission stage.
Liquidation refers to the process of winding up the affairs of a corporate debtor under the provisions of this Code. It can occur in various situations: (a) when the adjudicating authority determines that the resolution plan does not meet the criteria outlined in section 30(2); (b) when no resolution plan is received within the allowed timeframe for the completion of the insolvency resolution plan; (c) when the committee of creditors, with a majority of 75 percent voting shares, resolves to liquidate the corporate debtor before confirming a resolution plan; or (d) when the corporate debtor violates the terms of the resolution plan, and an affected party applies to the adjudicating authority, which determines the violation.
Once a liquidation order is issued, it imposes a moratorium on any new or ongoing legal proceedings involving the corporate debtor. However, the liquidator, with the prior permission of the adjudicating authority, may initiate legal proceedings on behalf of the corporate debtor. Additionally, the liquidation order serves as a notice of discharge for the officers, employees, and workers of the corporate debtor, except in cases where the business operations continue.
Our formidable team of professionals has a rich experience and expertise in matters pertaining to the Companies Act and Insolvency & Bankruptcy Code (IBC) before the National Company Law Tribunal (NCLT) and other aspects of Business and Corporate Laws in India including the incorporation of companies, Corporate restructuring, Applications under the Companies Act, 2013. We also render services of the drafting of all types of commercial agreements such as franchise, agency, distribution, leasing, licensing, technology transfer, manufacturing, and joint ventures.
We at Khurana and Khurana provides support to resolution applicants in acquiring financially distressed companies and assists creditors in implementing resolution plans. Our extensive experience in security enforcement and debt restructuring has made us a trusted resource for stressed asset funds, asset reconstruction companies, and creditors. Our team is well-versed in handling cross-border restructurings, both contentious and non-contentious, as well as out-of-court settlements and insolvency matters. There are also dedicated members responsible for managing the international aspect of the practice, providing advice to both domestic and foreign clients on various restructuring issues. We possess a wide range of expertise beyond corporate insolvency, including advising on domestic lending structures, offshore India-related borrowing and lending matters, and structuring investments into India.
Khurana & Khurana offers a line of services under Bankruptcy and insolvency laws: