1. IBC Section 29A needs more clarity, says SBI’s Rajnish Kumar
State Bank of India (SBI) chairman Rajnish Kumar said Section 29A of Insolvency and Bankruptcy Code (IBC) , which disallows defaulting promoters and related persons from bidding for assets, is being “stretched too far”. Speaking at an event in Mumbai, he said most of the litigation at present are due to Section 29A. “But this section, in my view is being stretched too far and there is a need that more clarity is brought about,” he said.
According to him, while the intent of IBC Section 29A is very clear that the defaulting promoters should not be in the driver’s seat once again, it has become the most contentious issue.
Know More : View Circular Companies/ k26KgtfptaJImEdVZCx13L/SBI- chairman-says-interpretation- of-Section-29A-of-IBC-stret. html
2. NCLAT upholds insolvency proceedings against Alok Industries subsidiary
The Mumbai Bench of NCLT had admitted insolvency proceedings against Alok Infrastructure, a subsidiary of Alok Industries, while Corporate Insolvency Resolution Process (CIRP) against Alok Industries is still underway. In an appeal filed against the said order, the NCLAT has upheld the admission order passed by the NCLT.
CIRP was initiated against Alok Infrastructure in October 2018, while its parent company Alok Industries has been under CIRP since July 2017. Alok Industries happens to be one of the dozen companies referred for insolvency by the Reserve Bank of India in June 2017. Alok Industries by itself has had an eventful CIRP . While it was due to be liquidated for not having secured 75% votes, the IBC Ordinance 2018 lowered the voting threshold to 66%, and after being given a second chance, the resolution plan was approved.
The admission proceedings against Alok Infrastructure were challenged on the grounds that since CIRP for its parent company has not yet been completed, admission against the subsidiary is not allowed under the IBC. In the proceedings before the NCLT, Alok Infrastructure relied on Section 60(5) of the IBC according to which, “ any claim made by or against the corporate debtor or corporate person, including claims by or against any of its subsidiaries situated in India ” will vest with the NCLT. While proceedings against the parent are pending before the Ahmedabad Bench, admission against the subsidiary was passed by the Mumbai Bench.
Know More : View Circular nclat-upholds-insolve