Sarthak Ohri's Blog

Authors: 1.   Dr. S K Gupta CEO(IPA-ICAI)                    2. Sarthak Ohri Introduction  Insolvency laws around the globe are focused on Re-organization of the debtor’s business and provide a well-laid mechanism for doing so. However, there exists another phase of insolvency which is a step beyond resolution and is termed as ‘Liquidation/ Bankruptcy’. While the most common form of the process is usually either of the two, there exists another approach which lies between a resolution and liquidation. An attempt to preserve the value, rescue the business yet resulting in the assets changing hands.  Sale as a going concern during liquidation is the hybrid approach which strikes a balance between liquidation and re-organization which has been discussed in the UNCITRAL Legislative Guide on Insolvency Law[1]. It related this concept to the economic theory of preserving the value by keeping the essential components of a bu...

Date: October 26, 2019.   Introduction It has been only three years since the Insolvency and Bankruptcy Code, 2016 (“IBC”) got enacted and since then the interests of many stakeholders have been met yet many still feel deprived. How could legislation whose one of the primary objective is to balance the interests of all the stakeholders unbalance the interests? Or is it the stakeholders themselves shaking the weigh-scale to create an unbalanced situation?  In July 2019 the Appellate Authority for companies undergoing Corporate Insolvency Resolution Process (“CIRP”) i.e, National Company Law Appellate Tribunal (“NCLAT”) modified the order passed by the Adjudicating Authority in the case of “Standard Chartered Bank Vs. Satish Kumar Gupta, R.P. of Essar Steel Ltd. & Ors.” (“Essar Steel case”). The NCLAT modified the repayment plan in an attempt to treat identically the Financial Creditors (“FC”) and the Operational Creditors (“OC”) for the purpose of distribution of proce...

  Author: Sarthak Ohri Date: September 5, 2019. Since the inception of Insolvency and Bankruptcy Code, 2016 (“IBC’) there have been many cases referred under this code for the resolution of stressed companies. The code requires the resolution professional to keep the entity running as a going concern during the proceedings under this code. But the matter of concern in every case is that the terms ‘Going Concern’ has not been defined anywhere in any law or judgement. Due to the lack of a rigid definition or a guiding principle to this term, the fate of a stressed company is prone to litigation. The Principle of going concern is open to interpretation to adjudicating authorities, resolution professional, Creditors and even the corporate debtor who would move an application to the appellate authority for further interpretation in the event of liquidation being ordered. Section 20(1) of IBC talks about  management of operations of the corporate debtor as going concern. It reads as...