A three-judge Bench of the Supreme Court (SC), by a common judgement in Asset Reconstruction Company (India) Limited vs. Bishal Jaiswal (15 April 2020, Civil Appeal No 323 of 2021) and related matters, has held that the for the purposes of Insolvency and Bankruptcy Code, 2016 (IBC), balance sheet entries could constitute an acknowledgment of debt under Section 18 of the Limitation Act, 1963 (Limitation Act).
The Hon’ble President of India promulgated an ordinance being the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2021 dated 4 April 2021 (Ordinance) which inter-alia added Part III-A to the Insolvency and Bankruptcy Code, 2016 (IBC), introducing a framework for prepackaged insolvency resolution (Prepack) for corporate debtors qualifying as micro, small and medium enterprises (MSMEs). The Ordinance comes in the backdrop of the Covid-19 pandemic on MSMEs given that the pandemic exposed many of such businesses to severe financial distress.
Rahul Chakraborti is a Partner in the Banking & Finance and Restructuring & Insolvency practice groups in Khaitan & Co. Mumbai with 17 years of experience in banking, structured finance, private credit, debt restructuring, securitization and insolvency.
Smita Jha is a Partner in the Banking and Finance practice group in the Bengaluru office. She specialises in Banking and Finance, FinTech and Project Finance.
Rolwine Alva is a Partner in the Banking and Finance and Restructuring and Insolvency practice group in the Mumbai office.
The Government of Maharashtra (GoM) has by the Maharashtra Stamp (Amendment and Validation) Ordinance 2021 (Ordinance) amended Section 5 (Instruments Relating to Distinct Matters), Article 6 (Agreement Relating to Deposit of Title Deeds, Pawn, Pledge or Hypothecation) and Article 40 (Mortgage Deed) of Schedule I of the Maharashtra Stamp Act, 1958 (Maharashtra Stamp Act).
The Securities and Exchange Board of India (SEBI) vide various circulars in October and November 2020 had substantially streamlined the process of issuance and listing of debt securities. SEBI through its circular dated 03 November 2020 had specified comprehensive guidelines for creation of security and due diligence to be carried out by the debenture trustee (s) in relation to issuance of listed debt securities (Circular).
The increased defaults by a few financial institutions and the complications faced by debenture trustees in expeditious enforcement of collateral for debt securities has prompted the securities market regulator, Securities Exchange Board of India (SEBI) to review its regulatory framework for listed / “to be” listed debt securities and public issue of debt securities and debenture trustees to plug certain loopholes.
