Vol 17th: Feb. 01, 2018- Feb.

28, 2018

Vol 17th: Feb. 01,2018- Feb. 28, 2018

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 Vol 17th: Feb. 01, 2018- Feb. 28, 2018

MONTHLY BENCH-WISE HOLIDAY LIST

Date Occasion/Festival Bench

January 01 to 05, 2018 Local Holidays Principal Bench, Ahmedabad Bench,
Allahabad Bench, Chandigarh Bench
January 01 & 02, 2018 Local Holiday Bengaluru Bench
January 11 & 12, 2018 Local Holiday Hyderabad Bench
January 15 & 16, 2018 Local Holiday Allahabad Bench
January 15, 2018 Sankranti/ Pongal Hyderabad Bench
January 22, 2018 Sri Panchami/ Basant Kolkata Bench
Panchami
January 23 to 25, 2018 Local Holidays Kolkata Bench
January 26, 2018 Republic Day All Benches
January 29 to 31, 2018 Local Holiday Chennai Bench

INDEX GUIDE

TOPIC PAGE NO.

Final Orders 4

General Awareness 5-8

Our Contacts 9

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 Vol 17th: Feb. 01, 2018- Feb. 28, 2018

From the Editor’s Desk

Dear Insolvency Professionals,

Journey of Insolvency & Bankruptcy Code, 2016

The Journey of Insolvency & Bankruptcy Code, 2016 has become akin to running a ‘steeplechase’.
There are hurdles one after the other, which the runner overcomes, but suddenly there comes a jump into
water body and splashing of water onto itself. However, ultimately race is won.

A total of 540 CIRP applications have been filed upto Sec. 2017 out of which 43% have been benefited
by OCs, 37% by FCs & 20% by CDs. It is apparent that OCs have been more active than FCs. The
reason is that Bankers & Financial Institutions have not come forward voluntarily to approach NCLTs
because of stringent provisioning norms. We gather FCs are resorting to one time settlements as
percentage of haircuts there is comparatively much lower. Presently, only RBI driven cases are being to
NCLT by the Banks.

Task of the Resolution Professionals is getting tougher & tougher, and fees payable to them is getting
lighter & lighter. Numerous, committees or associations of IPs have been formed across India and
frequent meetings are being held to discuss issues or problems faced by resolution professionals, but
hardly any attempt is seen towards benchmarking the fee structure. Very smartly, bankers have been
calling EOIs from IPs, CAs, CSs & CMAs have left their practices to find greener pastures in the
Insolvency Profession. Hurdles are acceptable because the profession is at infancy stage but low fee
structure may not sustain us for a long time. Let there be brain storming on this aspect before we are
compelled to shut our shops.

Stay Alert!
Anju Agarwal
Partner
ASC Insolvency Services LLP

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 Vol 17th: Feb. 01, 2018- Feb. 28, 2018

FEW FINAL ORDERS FOR THE MONTH OF JANUARY, 2017

Sr. Date Name of Case Section/ Amount of Status of Reason for rejection
No. Bench Default (Rs.) Application
1 19.01.2018 M/s. Bank of Section 7/ 2 cr. Admitted All requirements were
Baroda Vs. Principal fulfilled.
Metaphor Exports Bench
Pvt Ltd

2 11.01.2018 M/s. Export - Section 7/ USD 3654.37 Admitted All requirements were
Import Bank of Principal Million fulfilled.
India Vs. CHL Bench
Limited

3 08.01.2018 M/s. Innovsource Section 9/ 3.96 cr. Admitted All requirements were
Pvt. Ltd Vs. Getit Principal fulfilled.
Grocery Pvt. Ltd Bench

4 08.01.2018 M/s. State Bank Section 7/ 494.10 cr Admitted All requirements were
of India Vs. Principal fulfilled.
Bhushan Energy Bench
Limited

5 15.01.2018 M/s. Brys Section 9/ 8.50 cr Rejected There exists a dispute

International Pvt. Delhi with respect to financial
Ltd. Vs. Dignify Bench transactions between
Buildtech Pvt. the parties.
Ltd.

6 15.01.2018 M/s. Blue View Section 9/ 30 lakhs Accepted All requirements were
Properties Delhi fulfilled.
Pvt.Ltd. Bench

07. 25.01.2018 M/s.Columbia Section 9/ 8.82 crs Admitted All requirements were
Petro Chem Pvt. Delhi fulfilled.
ltd. Bench

08. 24.01.2018 M/s. B R Section 9/ 5.23 crs Rejected The dispute in respect of
Construction V. G Allahabad the claims made by the
R Infraprojects Bench operational creditor
Ltd. against corporate debtor
is not a patently feeble
legal argument and it is
not an illusory dispute.
09. 18.01.2018 M/s. Deep Section 9/ 1.42 crs Admitted All requirements were
Constructions Allahabad fulfilled.
CO. V. Balaji Bench
Heavy Lifters Pvt
Ltd.

10. 18.01.2018 M/s. Deep Section 9/ 5.82 crs Admitted All requirements were
Constructions Co. Allahabad fulfilled.
V. A & I Bench
Hospitality Pvt
Ltd.

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 Vol 17th: Feb. 01, 2018- Feb. 28, 2018

New insolvency rule: Liquidation value of company to be kept

confidential
The liquidation value of a company undergoing insolvency proceedings will be kept confidential. The
Insolvency and Bankruptcy Board of India (IBBI) has amended the regulations to provide for this
confidentiality. "As per the Amendments, it is not necessary to disclose 'liquidation value' in the information
memorandum".

The amended regulations provide that the resolution professional will disclose the liquidation value to every
member of the committee of creditors after resolution plans have been received.

Each member of the committee of creditors will maintain the confidentiality of the liquidation value and "not
use such value to cause an undue gain or undue loss to itself or any other person" the new regulations say.
"Bidders were using the liquidation amount as a benchmark and not treating the business as a going concern,"

Most of the bids were coming close to the resolution value, forcing banks to take large haircuts. Lack of
benchmark is expected to force bidders to make their own assessment while submitting a resolution plan. For
the first time, IBBI has also clearly defined "dissenting creditor" to bring more clarity to the insolvency and
bankruptcy process.

The regulations state a resolution plan needs to identify specific sources of funds to be used for paying the
liquidation value due to dissenting creditors.

For this purpose, "dissenting creditor" has been defined as a financial creditor who voted against the
resolution plan or abstained from voting for the plan, approved by the Committee of Creditors.

It was not clear earlier if those abstaining from voting would be included in the category of the dissenting
creditors. Such creditors need to be given priority in repayment to the extent of the liquidation value.

Parliament passes amendments to Insolvency and Bankruptcy

Code: Key Elements to the Amendment
The amendment has inserted two new sections in the insolvency code — Section 29A, which provides for
persons ineligible to be a Resolution Applicant; A person will be ineligible to submit a plan if:

(i) he is a willful defaulter,

(ii) his account has been identified as a non-performing asset for more than a year and he has not repaid
the amount before submitting a plan,
(iii) he has been convicted of an offence punishable with two or more years of imprisonment,
(iv) he has been disqualified as a director under the Companies Act, 2013,
(v) he has been prohibited from trading in securities by SEBI,
(vi) he is the promoter or in the management of a company which has indulged in undervalued,
preferential, or fraudulent transactions,
(vii) he has given guarantee on a liability of the defaulting company undergoing resolution or liquidation
and has not honoured the guarantee,
(viii) he has indulged in these specified activities abroad, or

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 Vol 17th: Feb. 01, 2018- Feb. 28, 2018

(ix) he is connected to any person mentioned above (including promoters, management, or any person
related to them) and;

Section 235A, which provides for punishment for contravention of the provisions where no specific penalty
or punishment is provided. It further states that If any person contravenes any of the provisions of this
Code or the rules or regulations made thereunder for which no penalty or punishment is provided in this
Code, such person shall be punishable with fine which shall not be less than one lakh rupees but which may
extend to two crore rupees.

SBI to invoke guarantees despite IBC proceedings

State Bank of India, India's largest lender, has decided to invoke personal and corporate guarantees of
defaulting firms even when they face bankruptcy proceedings but the move could face legal challenges from
promoters unwilling to part with their assets.

Two senior officials of the bank said that letters have been issued to all officers in charge of credit that they
must immediately invoke the personal and corporate guarantees. "As many as 200 such notices for
invoking guarantees would be issued by the bank,"

NCLT: Insolvency & Bankruptcy Code objective not to

emphasise on liquidation
National Company Law Tribunal (NCLT) president M M Kumar said on 3rd January, 2018 that the
objective of the Insolvency and Bankruptcy Code (IBC) is to find an appropriate solution for stressed assets
and liquidation would be the last resort.

Stating that there are jobs and livelihood at stake, Mr. Kumar said the idea is not to lay stress on liquidation
of the companies facing insolvency proceedings.
On efforts of the NCLT and Insolvency and Bankruptcy Board of India (IBBI) for putting in place
mechanisms for proper resolution in a short time span, he said the role of resolution professionals in
finding suitable and amicable solutions for stressed companies is commendable.

"The sole objective of the Insolvency and Bankruptcy Code 2016 is to find solutions for stressed assets
arisen out of non-performing assets with best of intent as so many things are involved in the process and
liquidation perforce would be the last way out which the tribunal would avoid optimally," he said.
He, however, said bringing about changes in the code is not the mandate of the NCLT as its job is to enforce
the code.
"Bringing about changes in the Code is entirely something which stays in the domain of Parliament,"
Kumar said at an event held by PHD Chamber of Commerce and Industry.

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 Vol 17th: Feb. 01, 2018- Feb. 28, 2018

RBI calls for a need to have online trading platform of bad

loans
Reserve Bank of India (RBI) deputy governor, Viral Acharya called for a need to set up online platform for
trading and bidding platform of bad loans which will bring transparency pricing in assets on sale. Setting
up an online trading platform will help India achieve a thriving market for sale of NPAs (non-performing
assets).
As of now, the price that ARCs bid for the stressed loans and the bid that is finally accepted by the bank is
not made public. If these are disclosed, it could bring transparency, lead to informed decision for future
sales of stressed assets and also bring more vibrancy in the distressed asset market.
Indian Banks' Association (IBA), Association of Asset Reconstruction Companies and credit rating agencies
can come together to set up such a platform which could be equivalent of Loan Syndication and Trading
Association (LSTA) in the United States.
Further, such a platform could enable three things-disclosure on credit events, digitization of loans and
legal documents and standardization along the way.
He indicated that it is in the interest of banks to create primary market liquidity in selling loans and in the
interest of ARCs that a secondary markets for these assets is developed and that loan sales could occur for
risk transfers perhaps even prior to default because recovery adds stress for players who want to come in
even before an Insolvency and Bankruptcy Code filing takes place and one don't have to have a measure of
recovery only at the outcome of IBC and can have measure of recovery even at stress because that will get
reflected in the loan sales.
_________________________________________________________________________

IBBI issues strict disclosure norms for Insolvency Professionals

In a bid to prevent connivance between the promoters of companies and insolvency professionals (IPs), the
Insolvency and Bankruptcy Board of India (IBBI) has come out with a set of tough guidelines that will
attract punitive action if disobeyed.
The IBBI has come out with strict disclosure norms for the IPs, both on their relationship with the
corporate debtor and also on the fees and invoices charged for the bankruptcy proceedings. The circular
says that within three days of his appointment the insolvency professional will also have to disclose his
relationship with other professionals engaged by him, financial creditors, interim finance providers and
prospective resolution applicants to the Insolvency Professional (IP) of which he is a member.
The new circular issued on January 16, is also set to curb the sudden spike in the share prices of companies
where bankruptcy proceedings are announced.
Any wrong or delayed disclosure shall attract action against the IP and the other professional as per the
provisions of law, the circular said. The IP shall ensure timely and correct disclosures by him and the other
professionals appointed by him.
The IP will have to disclose if he or any of his family members, including his spouse, spouse's family, sibling
or his family have any relation to the company. He also has to disclose if he has received 5% or more of their
gross revenue from the company or any related entity. When legal professionals, valuers and other
professionals such as M&A experts are appointed, he has to disclose if he has any relationship with them.
The IP has to disclose whether he or his family members (which includes his spouse's family and also
siblings' family) are a shareholder, director, key managerial personnel or partner of the company in any
way. When the Committee of Creditors (CoC) is appointed within three days, he also has to disclose
whether he or his extended family has any relationship with the creditor.

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 Vol 17th: Feb. 01, 2018- Feb. 28, 2018

The IP shall disseminate the disclosures on its website within three working days of its receipt. The
disclosures in respect of the ongoing processes shall be made to the respective IP by January 31, 2018.
Management consultants who team up with the IPs will no longer be able to run up bills and invoices for
bankruptcy proceedings. All payments will now have to be raised by the IP and paid into his bank account
only.
IBBI has restricted the fees charged by the IPs to discharge their functions as a resolution professional.
IBBI has said in its circular that only the money paid to the IP will be considered as bankruptcy case
charges.
In many cases after the IP is appointed, management consultants like Deloitte, E&Y, Grant Thornton and
Alvarez & Marsal are helping banks and other creditors to sew a resolution plan or find a new bidder for the
stressed companies. The fees charged by these consultants will no longer be considered as fees for
bankruptcy. Only the fees paid to the IP will qualify as fees for bankruptcy.
"Insolvency professional shall render services for a fee which is a reasonable reflection of his work, raise
bills and invoices in his name towards such fees, and such fees shall be paid to his bank account. Any
payment of fees for the services of an insolvency professional to any person other than the insolvency
professional shall not form part of the insolvency resolution process cost," the IBBI circular said.
Some of the big companies such as Essar Steel, Bhushan Steel and Amtek Auto are being tried in the
National Company Law Tribunal under the Insolvency Bankruptcy Code.

Registered Insolvency Professionals

Till date there are 1514 IP’s registered under Regulation 7 read with regulation 5 of Insolvency and
Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016.
_______________________________________________________________________________________

Public Announcements
Sr. Announced under Total Announcements Announcements last Month
No.
1 Corporate Insolvency Resolution Process 530 44
2 Voluntary Liquidation Process 117 14
3 Liquidation Process 40 12

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 Vol 17th: Feb. 01, 2018- Feb. 28, 2018

We may be contacted at the following offices:

CORPORATE OFFICE REGISTERED OFFICE GURGAON
C-100, Sector-2, 73, National Park 605, Suncity Business Tower
Noida- 201301 Lajpat Nagar IV, Golf Course Road, Sector-54,
Uttar Pradesh New Delhi - 110024 Gurgaon,
M: +91- 120- INDIA Haryana - 122002
4354696/4354697 P: +91-11-41729056-57, P: +91-124-4245110/116/117
41729656/57 +91-124-4245111

MUMBAI ASSAM SINGAPORE

Office No. 311, 3rd FLOOR, A- House No. 76, 1 North Bridge Road
WING, SAGARTECH PLAZA-A Near Godrej Interio, #10-09
PREMISES CO-OP SOCIETY Forest Gate, P.O. Narangi, High Street Centre
LIMITED, ANDHERI-KURLA ROAD, Guwahati – 781026 Singapore-(179094)
SAKINAKA, ANDHERI (EAST), P: +91-0361-2552302
MUMBAI –400072. M: +91-9864857565

P: 022-65515507108, M: +91-
9022131399.

For enquiries related to:

• Insolvency Process,
• Bankruptcy Process,
• Filing petition with NCLT/DRT,
• Appointment of Insolvency Professionals,
• Assets Management of the Company,
• Fresh Start Process,
• Hearing of Cases or any other enquiries

Please write us at: anju@insolvencyservices.in, mahima@insolvencyservices.in

Disclaimer:
This e-bulletin is for private circulation only. Views expressed herein are of the editorial team. ASC or any of its
employees do not accept any liability whatsoever direct or indirect that may arise from the use of the information
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accept any liability for the accuracy of its contents.

© ASC Group 2015. All rights reserved.

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