A commercial primer on 2019 amendments to IBC

By Shweta Bharti and Katyani Mahendru, Hammurabi & Solomon
0
1701

The Insolvency and Bankruptcy Code (Amendment) Act, 2019, seeks to reduce delays in the resolution process because there has been extensive litigation on various aspects of the IBC. A resolution plan can provide for comprehensive corporate restructuring schemes such as mergers, demergers and amalgamations under section 5(26).

The inclusion of mergers, amalgamations and arrangements as part of resolution plans follows a landmark NCLT judgment in the case of Edelweiss Asset Reconstruction Company (2019), in which the resolution plan was approved with a proposal for amalgamation of related parties that followed the timeframes prescribed under the code.

amendments
Shweta Bharti
Senior partner
Hammurabi & Solomon

Merger, demerger, restructuring and amalgamation could give a significant advantage to both stressed business entities as parties to a resolution process owing to the characteristics of a transfer of assets and liabilities by operation of law pursuant to an order under the IBC. This would provide greater security to acquirers both as to the quality of assets as well as limitations on liabilities. The 2019 Amendments will also increase the number of M&A transactions considering that mergers and amalgamations are market driven and hence are impacted by economic drivers and market sentiment as well as by regulatory regimes. The 2019 amendment will lead to easier M&A transactions because of the predictability of (i) outcome on quality of assets, (ii) limitation of liabilities and (iii) timeframe.

The deadline for completion of the corporate insolvency resolution process (CIRP) is 330 days, including litigation and other judicial processes. The use of inclusive language regarding timeframes for the completion of CIRP within 330 days makes the milestone mandatory, notwithstanding any outstanding litigation and judicial processes. These have been causing delays resulting in all milestones under the code being missed.

You must be a subscribersubscribersubscribersubscriber to read this content, please subscribesubscribesubscribesubscribe today.

你需要登录去解锁本文内容。欢迎注册账号。如果想阅读月刊所有文章,欢迎成为我们的订阅会员成为我们的订阅会员

Shweta Bharti is a senior partner and Katyani Mahendru is an associate at Hammurabi & Solomon.

Hammurabi & Solomon

405A & 405B, 4th Floor
Rectangle One, Gate No. 3
Plot No. D-4, Saket District Centre
New Delhi – 110017, India

Delhi | Gurugram | Mumbai | Bengaluru | Patna | Ranchi

Contact details
Tel +91 11 4155 1825
Email: mailadm@hammurabisolomon.com
Website: www.hammurabisolomon.com