Independence and Impartiality of Resolution Professionals Under Indian Law: Filling the Gaps or Creating Law?
by | posted in: Bankruptcy Administration and Jurisdiction, Bankruptcy Roundtable Updates, International and Comparative | 0

By Sanjay Kumar Yadav, Syamantak Sen, and Vivek Badkur (National Law Institute University, Bhopal, India)

Sanjay Kumar Yadav
Syamantak Sen
Vivek Badkur

Under Indian Insolvency Law, any person may be designated as a resolution professional (“RP”), provided he is enrolled with an insolvency professional agency and registered with the Insolvency and Bankruptcy Board of India. The role of an RP, under Indian Insolvency Law, is similar to that of a private trustee under Chapter 11 of the US Bankruptcy Code.

Any person is eligible to be appointed as an RP, provided he is independent of the corporate debtor and no further eligibility criterions have been prescribed, under Indian Insolvency Law. However in a surprising turn of events, the National Company Law Appellate Tribunal in State Bank of India v. Metenere Ltd. (May 22, 2020), directed substitution of an Interim RP, based on him being a former employee of the financial creditor.

This raises concerns as it is prevalent in India for retired bankers to be appointed RPs and may therefore alter such practice, besides potentially disqualifying all former employees from acting as RPs, where the employer is involved. In this article, we discuss whether such substitution is founded in law and its consequent impact on the Indian insolvency jurisprudence, with respect to appointment of RPs.

The full article is available here.

Pre-packaged Insolvency in India: Lessons from USA and UK
by | posted in: Bankruptcy Administration and Jurisdiction, Bankruptcy Roundtable Updates, International and Comparative, Workouts and Pre-Packs | 0

By Himani Singh (New York University School of Law)

Himani Singh

Corporate rescue is used as a pre-cursor to bankruptcy filing to provide the creditor classes of a stressed debtor with necessary means to formulate a plan of reorganization to recover their dues and make the business of the debtor sustainable again. A prepackaged bankruptcy commonly referred to as “Pre-packs”, is a form of corporate rescue which may involve any element or combination of restructuring methods to be undertaken in respect of a debtor.

Pre-packaged bankruptcy finds its roots in United States and United Kingdom; but is yet to be formally integrated in the Indian bankruptcy regime. While the latest Insolvency and Bankruptcy Code, 2016 has been helpful in improving the stressed asset statistics, the statute is still undergoing teething troubles and has scope for bringing in many improvements such as introducing Pre-packs. The concept of Pre-packs however is niche in India and its viability has been extensively debated. There have been apprehensions that the Indian market is not developed enough to allow out of court of restructuring, but some of the recent decisions by the National Company Law Tribunals have indicated a different trend.

In this backdrop, this term paper discusses the basic features of Indian insolvency structure and how Pre-packs will fare in the market given the current regulatory regime. The paper analyses the corporate insolvency resolution process in India, highlights specific challenges to introduction of Pre-packs and presents a holistic overview of the benefits as well as disadvantages that Pre-packs would bring along with them.

The full article is available here.