Member TOS Page
Terms of Services
S. No. |
Name |
Amount |
Status |
Date of Admission/Rejection |
1. |
Janta Bank |
3.60 crores |
Financial Creditor |
20.9.2023 |
2. |
Parivaar Bank |
3.00 crores |
Financial Creditor |
20.9.2023 |
3. |
Rashi Singhania(wife of Paras Singhania) |
50 Lakhs |
Financial Creditor |
20.9.2023 |
4. |
Best Tradex |
1.60 crores |
Operational Creditor |
20.9.2023 |
5. |
Electrolux Supplies Inc |
45 lacs
|
Rejected as filed late |
18.12.2023 |
6. |
70 workmen |
1.60 crores |
Operational creditors |
20.9.2023 |
7. |
15 Employees |
1.50 crores |
Operational creditors |
20.9.2023 |
8. |
GST dues |
70 lacs |
Operational creditors |
20.9.2023 |
9. |
Income Tax dues |
30 lacs |
Operational creditors |
20.9.2023 |
10. |
Provident Fund Dues |
20 lacs |
Operational creditors |
20.9.2023 |
11. |
Revive Finance(filed on 4th September, 2023) |
1.50 crores |
Financial Creditor |
10.12.2023 |
12. |
Raman Nair (Loan to company without interest) |
1 crore |
Financial Creditor |
20.9.2023 |
13. |
Electricity dues |
25 lacs |
Operational Creditor |
20.9.2023 |
14. |
Big Lease -Landlord forarrears of Rent onlease of Principal Office |
10 lacs |
Financial Creditor |
20.9.2023 |
Financial Creditors – Rs. 9.70 crores
Operational Creditors – Rs. 6.15 crores
Total Rs. 15.85 crores
Date |
Particulars |
Debit |
Credit |
Balance |
1.4.2021 |
Opening Balance (Payable by Raman Nair) |
|
|
20,00,000 |
15.5.2021 |
Expense Adjustment/Received by CD |
|
5,00,000 |
15,00,000 |
17.8.2021 |
Paid by CD |
7,00,000 |
|
22,00,000 |
20.12.2021 |
Paid by CD |
2,00,000 |
|
24,00,000 |
12.4.2022 |
Expense Adjustment/Received by CD |
|
3,00,000 |
21,00,000 |
18.9.2022 |
Paid by CD |
1,00,000 |
|
22,00,000 |
2.1.2023 |
Expense Adjustment/Received by CD |
|
5,00,000 |
17,00,000 |
28.8.2023 |
Paid by CD |
6,00,000 |
|
23,00,000 |
RP has filed an application with the Adjudicating Authority (IA 25 of 2024) on 20th January 2024 claiming Rs 31 lacs (amount outstanding as on 30.8.2021 plus amounts paid by CD to Raman Nair on 20.12.2021, 18.9.2022 and 2.1.2023) as preferential transactions u/s 43 of the Code and prayed for recovery of these amounts. Raman Nair has filed a reply stating that these transactions are not preferential on the following grounds:
RP, in rejoinder, claims that payment transaction is not to be mixed with expense adjustment or amount received from Raman Nair. For amounts paid by Raman Nair, he should file a claim and there is no provision of set off in CIRP. The application in filing preferential transaction application was delayed due to non-cooperation of suspended directors in providing information to forensic auditor who had sent 2 emails to them. The final report was placed before committee of creditors who had directed RP to file application.
Suspended directors have filed a common reply stating that by no stretch of imaginations, write offs can be treated as fraudulent transaction as there is no outflow. RP has the freedom to revise the accounts and reverse the transactions in books. The amounts relate to 2016 and 2017 and is beyond the purview of scope of RP. Further, the investments were made in good faith to expand the business of CD but could not fructify. Moreover, RP has filed a single IA u/s 43 and 66, which is not permitted.
RP, argues that suspended directors had the knowledge of the fact that CD is going under insolvency and they should have taken steps to recover the amounts. The amounts written off in the books of CD are still being shown in the books of account of Hi-life Technologies Pvt Ltd and Super Motors Private Limited and produced financial statement of both the companies filed with Registrar of companies for FY 2022-23.
CSM 2 Case Study on PPIRP
ABC Ltd., a medium-sized manufacturing company based in India, has been struggling with financial difficulties exacerbated by the economic downturn caused by the COVID-19 pandemic. With mounting debt and dwindling revenues, ABC Ltd. finds itself in a situation where it needs to explore insolvency resolution options to salvage its operations and protect the interests of its stakeholders.
ABC Ltd. is classified as a medium enterprise under the Micro, Small and Medium Enterprises Development Act, 2006 though registration is pending. ABC Ltd. has committed a default of Rs 54 lacs to My Bank. The company has not undergone any insolvency resolution process in the past three years. Financial creditors representing at least 66% of the financial debt due to them have proposed the appointment of an insolvency professional for conducting the PPIRP.
A majority of the directors of ABC Ltd. have made a declaration stating the intent to initiate the PPIRP and affirming that it is not for fraudulent purposes. A special resolution has been passed by the members of ABC Ltd. approving the initiation of the PPIRP. There is an application under section 43 against one of the directors of ABC Limited for his involvement in Bright Star Limited, a company under CIRP. ABC Limited has prepared a draft Base Resolution Plan. ABC Limited files an application to the Adjudicating Authority for initiating pre-packaged insolvency resolution process. Base Resolution Plan prepared by ABC Ltd contains lower payment to financial creditors with a proposal to pay in full to the operational creditors.
CSM 3- Case Study on Voluntary Liquidation
Sunmark Enterprises Limited, a medium-sized manufacturing company, has been experiencing financial difficulties for the past several years due to a decrease in demand for its products and heightened competition in the market. Following a comprehensive evaluation of its financial standing and future outlook, the Board of Directors opts to commence voluntary liquidation pursuant to Section 59 of the Insolvency and Bankruptcy Code (IBC) to ensure a systematic conclusion of the company’s operations.
Following the shareholders’ approval by a special resolution, creditors of the company also consent to the voluntary liquidation with a two-thirds majority on 1st February 2024. Despite incurring losses in the previous year and anticipating further losses, the liquidator expresses intent to continue business operations during the liquidation period. Seeking professional guidance, the liquidator faces several challenges and scenarios:
In navigating these complexities, the liquidator must adhere to legal requirements and seek appropriate guidance to ensure fair and efficient resolution throughout the voluntary liquidation process. He seeks your answwer to following questions: –
CSM 4 – Part III Case Study
Raj Shekhar’s bankruptcy process commenced on 1st April 2024 after the unsuccessful resolution of his insolvency proceedings initiated on 1st August 2023. The Bankruptcy Trustee issued a public notice on 4th April 2024, with the deadline for claim filing set for 25th April 2024.
He possesses the following assets under his and his family’s ownership:
His liabilities include:
Case Study on Business and General Laws
Avanti Roadways Pvt. Ltd., incorporated under the Companies Act, 2013, operates from its registered office situated at Plot No.1, First Floor, East Chamber, Gwalior, Madhya Pradesh. The company is structured with an authorized capital of INR 5,00,000, which is fully issued, subscribed, and paid-up. The core activities of the company are focused on constructing residential and commercial buildings and educational institutions.
The Registrar of Companies in Gwalior, citing non-compliance with the statutory requirement to file Annual Returns and Financial Statements for the fiscal years 2014-15 through 2017-18, initiated proceedings under Section 248(1) of the Companies Act, 2013, read with Rule 7 and Rule 9 of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016. Consequently, a notice of intent to remove the company’s name from the register was issued. In response to this notification, the company filed an appeal with the National Company Law Tribunal (NCLT) in Gwalior under Section 252 of the Companies Act, 2013, asserting that it continued to engage actively in business operations throughout the period in question. The company admitted oversight in the non-filing of the required documents, attributing it to lapses by the management.
During the period under review, the company was involved in several significant projects, including constructing a multi-functional educational complex under a government contract, which involved intricate compliance with environmental regulations and state educational mandates. This project, along with other private commercial ventures, significantly contributed to its revenue streams, though it complicated the operational and regulatory reporting requirements.
As part of its defense, Avanti Roadways Pvt. Ltd. demonstrated through detailed documentation—including contracts, invoices, and bank statements—that it was operational and financially active during the years for which filings were not completed. Following the notice from the Registrar, the company undertook substantial revisions to its management structures, enhancing its regulatory compliance processes to include automated systems for tracking and reporting essential corporate activities and statutory filings.
The appeal by Avanti Roadways Pvt. Ltd. is pending before the NCLT, where the company seeks not only to contest the Registrar’s decision but also to establish a precedent for considering operational continuity and factual business engagement in decisions related to statutory compliance enforcement.
Background: Rajesh Kumar, an Insolvency Professional (IP) registered with the Insolvency and Bankruptcy Board of India (IBBI), faced disciplinary action following a Show Cause Notice (SCN) by the IBBI. This action originated from procedural issues during the Corporate Insolvency Resolution Process (CIRP) of M/s Indore Developers Private Limited, where he was appointed as the Resolution Professional (RP).
Legal Framework: This case is governed by the Insolvency and Bankruptcy Code, 2016 (IBC), specifically focusing on the duties and responsibilities of an insolvency professional overseeing the CIRP. Kumar was accused of providing unequal treatment to certain decree-holding homebuyers in the resolution plan, potentially breaching several sections of the IBC and related regulations.
Investigation and Proceedings: Following a complaint from a homebuyer, the IBBI launched an investigation into Kumar’s conduct during the CIRP. After receiving the investigation report, the IBBI issued a SCN, which was later handled by its Disciplinary Committee (DC) for resolution. Kumar defended his conduct through various submissions and a personal hearing, arguing that his decisions were aligned with legal precedents and the decisions of the Committee of Creditors (CoC).
Findings and Contraventions: The DC identified discrepancies in Kumar’s management of the claims of decree-holding homebuyers. Despite legal opinions indicating that these claims should be treated as those of financial creditors, they were categorized differently in the resolution plan submitted to the CoC. This action raised concerns about Kumar’s adherence to the statutory requirements and the broader principles of fairness and transparency in the CIRP. Kumar also admitted the claim of the aforesaid decree holders as “Creditors in class” based on the said legal opinions. However, it is observed that despite having admitted the claims of these decree holders as “Creditors in class”, he has treated the claim of the said decree holders as “Other Creditors” in the resolution plan placed before the CoC, instead of “Creditors in Class”.
Legal Issues and Analysis: The main legal issue involved the interpretation and application of sections 30(2)(e) and (f) of the IBC concerning the treatment of creditors in a resolution plan. Kumar’s handling of these claims brought up questions regarding the compliance with these statutory provisions and the fundamental principles of equitable treatment of creditors.
Arguments by Kumar: Kumar submitted that he had admitted the claim of the decree holders under the category of creditors in a class based on the legal opinion. However, the resolution applicant has provided a specific treatment to all such creditors which was then approved by the CoC and the AA. As elaborated above, (a) this was in line with the applicable law at the relevant time; (b) the resolution applicant has the discretion to provide the treatment for the stakeholders including the decree holders; (c} the resolution plan has been approved by the committee of creditors in its commercial wisdom which is paramount; (d) the resolution plan has been approved by the AA. He submitted that he has not ‘deprived the decree holders from their legal rights and claims as homebuyers’, he has conducted the CIRP in terms of the Code and the treatment to be provided to the stakeholders is beyond his ambit.
The DC upholds his contravention of section 30(2)(e), 30(2)(f), 208(2) (a) & (e) of the Code, regulation 39(2) of the CIRP Regulations, regulations 7(2) (a) & (h) of the IP Regulations read with clauses 1, 3 and 14 of the Code of Conduct.