#Insolvency Law

The Supreme Court ruled that contractual rights over nominee directors, budget approvals, and project revenues constitute 'participation in policy-making' under IBC Section 5(24)(m)(i), a lower threshold than Section 29A control, rendering debenture holders and trustees related parties ineligible for the CoC. A post-CIRP assignment to bypass this bar was held mala fide.

The NCLAT upheld jurisdiction under Section 60(5) IBC to direct buyer's directors to pay Rs. 3 crore in unpaid BPA consideration, piercing the corporate veil to impose personal liability on them as controlling minds. This empowers liquidators to pursue directors personally for unpaid acquisition dues, affirming corporate structure cannot shield controlling persons from contractual obligations in insolvency.

The court held that a terminated development agreement is not an 'asset' under Section 14(1)(d), and the Adjudicating Authority's jurisdiction under Section 60(5)(c) is confined to disputes arising directly from insolvency. This permits arbitration proceedings initiated by the corporate debtor to continue during CIRP.

The Supreme Court held that CoC approval of a resolution plan under IBC creates a binding obligation that cannot be withdrawn, even if the corporate debtor's financial position improves. The Court directed the NCLT to expeditiously decide on plan confirmation and competing OTS applications, reinforcing finality of CoC approval and protecting successful resolution applicants.

The Supreme Court held that an Information Utility’s record creates a presumption of default under IBC Section 7, making quantum disputes and profitability irrelevant for admission. This eases CIRP initiation for creditors while raising burden on debtors.

Section 32A IBC grants statutory immunity to a successor corporate debtor after an approved resolution plan, as held by the Orissa HC. This bars prosecution, requires trial court to vacate cognizance, and shields acquirers from legacy liability.

NCLAT held that circumstantial evidence of removed hypothecated machinery suffices to prove fraudulent trading under Sec 66 IBC, upholding ₹17.23 crore liability against suspended directors, noting a single asset swap can trigger Sec 66 liability in context.

The NCLAT held that a without-prejudice deposit cannot substitute the mandatory adjudication of debt, default, and maintainability under Section 7 IBC. Setting aside an NCLT order that closed proceedings upon deposit, the tribunal ruled such deposits do not dispense with the creditor's right to a full determination of statutory prerequisites for CIRP initiation.

The NCLAT Principal Bench ruled that Section 60(2) IBC mandates personal guarantor insolvency proceedings to be heard by the same NCLT bench adjudicating the corporate debtor's CIRP. The tribunal upheld the New Delhi Principal Bench's refusal to transfer a guarantor's case to Chandigarh, confirming that jurisdiction vests exclusively with the bench seized of the main corporate insolvency process.

The NCLAT ruled that Section 32A immunity applies to purchasers acquiring a corporate debtor as a going concern during liquidation, extending clean slate protection to the period between the liquidation order and the sale certificate. This shields buyers from pre-existing liabilities and aligns liquidation sales with resolution plan safeguards.

NCLAT rules that a personal guarantor filing a Section 94 application after a SARFAESI possession notice has been issued, and enjoying a two-year interim moratorium, constitutes abuse of process to frustrate secured creditor recovery. The ruling clarifies that the IBC moratorium for guarantors does not override SARFAESI enforcement once possession proceedings have commenced.

The NCLAT upheld Section 7 admission, holding that continuing failure to deliver possession generates a fresh cause of action daily under Section 22 Limitation Act. Pendency of High Court winding-up proceedings does not bar NCLT from admitting a corporate debtor. Homebuyers' claims thus survive limitation through continuing default, and IBC initiation isn't stalled by parallel liquidation petitions.

The tribunal held that where the sole financial creditor is paid in full and the operational creditor accepts enhanced settlement, leaving only CIRP costs unresolved, withdrawal under Section 12A is permissible despite procedural non-compliance with Regulation 30A. The ruling prioritizes commercial resolution over technical defaults, allowing corporate debtors to exit insolvency once all substantive claims are satisfied.

The NCLAT ruled that the Adjudicating Authority possesses residuary jurisdiction under Section 60(5)(c) of the IBC to issue consequential directions necessary for implementing a going concern sale during liquidation. The tribunal extended the 'clean slate' doctrine - typically applied in resolution plans - to liquidation proceedings, ensuring that a successful auction purchaser receives the corporate debtor's assets free from encumbrances. This decision clarifies the AA's powers to facilitate liquidation sales and protects buyers from legacy claims, impacting liquidators, successful bidders, and secured creditors.

Delhi High Court holds that pre-CIRP customs duties not filed during insolvency are extinguished once the IBC resolution plan is approved, quashing the customs order.