#CIRP

The NCLAT held that a fraud-initiation claim under Section 65 IBC must be raised before the Adjudicating Authority and cannot be raised for the first time on appeal, forcing parties to raise such allegations at the CIRP stage to avoid belated challenges.

Bombay High Court held auction purchasers under IBC are liable for property tax only from the sale certificate date, not prior periods. This protects purchasers from pre-CIRP municipal dues and ensures municipal corporations cannot demand historical tax from new owners.

NCLAT rules that a financial creditor can revive Corporate Insolvency Resolution Process (CIRP) if the corporate debtor breaches court-recorded settlement terms, treating non-compliance as a material default. This reinforces strict adherence to settlement agreements under the Insolvency and Bankruptcy Code, impacting creditors' rights to reinitiate insolvency proceedings.

NCLAT has ruled that control exercised indirectly through subsidiary entities qualifies as 'related party' under the IBC, triggering strict scrutiny of claims and denying secured creditor status for immovable asset claims. This clarifies the scope of related party exposure in CIRP and caps recoveries to principal paid under FEMA, significantly impacting restructuring strategies for corporate groups with layered ownership.

NCLAT clarifies that Resolution Professionals under the IBC can request documentation to verify claims but lack adjudicatory powers. The ruling denies NOIDA’s claims for farmer compensation and time extension charges due to insufficient substantiation, reinforcing the limited scope of RP authority during CIRP.

NCLAT rules that assets under unlawful possession of a corporate debtor, even after a Supreme Court-affirmed eviction decree, cannot form part of the Corporate Insolvency Resolution Process (CIRP). The ruling reinforces that legal ownership, not physical possession, determines asset inclusion under the IBC, impacting insolvency proceedings where disputed assets are involved.

The Allahabad High Court has ruled that Section 14 of the IBC prohibits all coercive recovery actions against a corporate debtor during CIRP, including the attachment of sugar stock by state authorities. This reinforces that statutory moratoriums override even revenue recovery mechanisms, protecting corporate assets from piecemeal seizure by any creditor, including government agencies.

NCLAT grants exclusion of 87 days from the CIRP timeline due to delays in transitioning Resolution Professionals, emphasizing that liquidation should be a last resort. The ruling reinforces the need to preserve corporate debtors as going concerns, offering relief to stakeholders facing procedural delays under the IBC.

The NCLAT has clarified that operational creditors, even with admitted claims under the IBC, cannot invoke RERA’s statutory trust provisions to extract funds from the project’s 70% escrow account during corporate insolvency. This upholds the hierarchy of the IBC framework, ensuring resolution plans - not piecemeal claims - govern asset distribution, protecting homebuyers and the integrity of the insolvency process.

NCLAT rules that a mortgage executed seven years after loan disbursement but within the one-year look-back period under Section 43 IBC constitutes a preferential transaction, regardless of prior contractual intent. The ruling clarifies that timing of security perfection-not just loan origination-determines vulnerability to avoidance, impacting lenders and resolution professionals in CIRP.

The NCLAT has ruled that once a statutory auditor resigns, the resolution professional cannot compel them to furnish documents they no longer hold or control, even under Section 19 of the IBC. This clarifies the limits of an auditor’s post-resignation obligations and protects them from being treated as de facto management agents in insolvency proceedings.

The NCLAT has ruled that corporate insolvency resolution proceedings can proceed concurrently against both the principal borrower and its corporate guarantor, even when liquidation has been ordered against the guarantor. This clarifies that Section 12A of the IBC cannot be invoked to halt liquidation after resolution failure, reinforcing creditor rights and closing a key loophole in multi-debtor insolvency cases.

The Supreme Court has ruled that corporate guarantees qualify as financial debt under Section 5(8) of the IBC irrespective of non-disclosure in financial statements or stamping irregularities, affirming that procedural defects cannot override substantive creditor rights. This strengthens the position of financial creditors in CIRP and curbs reliance on technicalities to defeat claims.

The NCLAT has ruled that once a homebuyer’s claim is admitted and incorporated into an approved Resolution Plan, the Successful Resolution Applicant must complete document verification before allocating or transferring possession of the unit. This prevents prejudicial third-party encumbrances and upholds the statutory priority of homebuyers under IBC, ensuring resolution outcomes align with the law’s consumer protection intent.

NCLAT rules that labour proceedings disputing wage quantum, even if liability is partially admitted, qualify as a pre-existing dispute under IBC Section 9, preventing Corporate Insolvency Resolution Process initiation. This reinforces the bar on operational creditors using CIRP to bypass ongoing labour adjudication, impacting trade unions and government-owned corporate debtors.