Insolvency Brief Case – August 2024

Insolvency Brief Case – August 2024
 
Hello! Welcome back to our updates from the insolvency law landscape in India. 

In the News
 
On 12.08.2024, IBBI, vide circular no. IBBI/RV/75/2024, mandated the generation of a Valuation Report Identification Number (VRIN) for each valuation conducted by Registered Valuers under the IBC, 2016. Registered Valuers and Valuer Entities must generate a VRIN through an online module hosted on the IBBI website and include it on the front page of all valuation reports. This ensures the authenticity of the reports, with a facility available on the IBBI website for stakeholders to verify them using VRIN. The circular applies to valuation reports dated on or after its issuance, and Insolvency Professionals must not accept reports without a VRIN.
 
IBBI, on 28.06.2024 issued circular no. IBBI/LIQ/74/2024 directing Insolvency Professionals to file forms for monitoring voluntary liquidation processes on IBBI’s electronic platform. Insolvency Professionals must submit the required forms with relevant information, e-signed or with DSC, by the stipulated deadlines, especially for cases commencing after 28 June 2024 and ongoing cases by 30th September 2024. Specific forms like VL1, VL2, VL3, and VL4 must be filed depending on the status of the voluntary liquidation process. Non-compliance or submission of inaccurate information may result in accountability under applicable provisions.
 
From the Docket
 
The Supreme Court in BRS Ventures Investments v. SREI Infrastructure Finance held that a holding company is not the owner of its subsidiary’s assets and thus, subsidiary assets cannot be included in the holding company’s resolution plan. It was further held that CIRP of a corporate guarantor will not prevent a creditor from initiating another CIRP against the corporate debtor for the balance debt. It was also clarified that CIRP of the corporate guarantor will not result in the discharge of the corporate debtor towards the remaining debt.
 
In Swan Energy v. Chandan Prakash Jain, NCLAT held that a resolution applicant, who did not take part in the CIRP process from the beginning and was not included in the list of prospective resolution applicants, cannot be suddenly substituted as a resolution applicant to implement the plan of the Corporate Debtor.
 
The NCLAT in Jet Aircraft Maintenance Engineers Welfare Association v. Ashish Chhawchharia held that the Resolution Professional is not personally liable for the lump sum payments made to the 103 employees who were part of the Asset Preservation Team responsible for preserving and managing the operations of Jet Airways. This judgment is significant in that it will give the Resolution Professionals the requisite assurance that actions taken in good faith will be protected.
 
The NCLAT in Sanskriti Allottee Welfare Association v. Gaurav Katiyar held that electricity, being an essential service, must continue during the CIRP period.
 
In IIFL Home Finance Ltd. v. Shiv Nandan Sharma, the NCLAT again upheld that financial institutions providing loans to homebuyers do not qualify as ‘Financial Creditors’ under IBC.
 
The NCLT, in Sanjeev Mahajan v. Indian Bank, held that the Adjudicating Authority cannot consider a Settlement Proposal, even of a higher value than the Resolution Plan, after the approval of the Resolution Plan by the Committee of Creditors.

Thank you for reading! We will be back again next month with more updates on insolvency law.