will need to unite and agree on a realistic solution for the struggling projects. Amendments brought by the government and now upheld by the apex court will help such projects and ensure insolvency is triggered only in case homeowners with substantial minority file an application,” said Rajiv Chandak, partner, Deloitte India.
The court backed the IBC
amendment, saying it is likely to ensure the filing of the application is preceded by a consensus at least by a minuscule percentage of similarly placed creditors. “The time has come for undertaking a legal odyssey which is beset with perils for the applicants themselves, apart from others. As far as the percentage of applicants contemplated under the proviso, it is clear that it cannot be dubbed as an arbitrary or capricious figure.”
The top court also clarified that a company which is facing insolvency proceedings under the IBC
can move an insolvency petition against other companies which owe it money.
“The clarification regarding a corporate debtor having the right to proceed against its debtors is only furthering the objective of the Code to ensure the distressed debtor is run as a going concern which inter alia would also include recovery of debt to improve its own financial health,” said Misha, partner at Shardul Amarchand Mangaldas & Co.
In a decision which will give impetus to a resolution plan, the SC has also upheld the inclusion of Section 32A to the Code that ensures a resolution applicant is not saddled with the burden of the actions of the erstwhile management.
“We cannot also lose sight of the fact that the legislature has the power to impair and take away vested rights,” the SC said in its order.
The IBC had taken a big step in providing a clean slate to buyers of stressed companies by barring criminal proceedings such as attachment, seizure, or retention of property of such companies for offences committed before the initiation of insolvency proceedings.
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