IBC Financial News

Hinduja-led IIHL — the successful bidder for Reliance Capital under insolvency proceedings — cannot extinguish the employees stock options (ESOPs) and other incentive schemes for the Reliance General Insurance Company (RGIC) employees, a subsidiary of Reliance Capital, according to legal opinion taken by Reliance General Insurance. The legal opinion was necessitated as IIHL in its resolution plan for Reliance Capital has sought to extinguish all employees stock option plans, phantom stocks or similar incentive schemes of Reliance Capital and its subsidiaries, including RGIC, so that no additional cost is incurred after the takeover.

MUMBAI : Bankrupt airline Go First is staring at a potential liquidation or torturous recovery given the lack of buyers’ interest, fleet uncertainty and mounting costs, two people aware of the matter said. Meanwhile, its lenders plan to seek more time for a rescue since only one candidate has shown interest in the airline so far. Go First’s revival was clouded further by a 3 October government notification that said leased aircraft and engines would not come under the bankruptcy moratorium.

Insurance Co., as part of its resolution plan for the parent firm, Reliance Capital, according to law firm Khaitan & Co. A copy of the letter, which is in response to a query by the insurer, was reviewed by Mint.

IIHL — the successful bidder for Reliance Capital under insolvency proceedings — cannot extinguish the employees stock options (ESOPs) and other incentive schemes for the Reliance General Insurance Company (RGIC) employees, a subsidiary of Reliance Capital, according to legal opinion taken by Reliance General Insurance. The legal opinion was necessitated as IIHL in its resolution plan for Reliance Capital has sought to extinguish all employees stock option plans, phantom stocks or similar incentive schemes of Reliance Capital and its subsidiaries, including RGIC, so that no additional cost is incurred after the takeover.

registered offices easily from one state to another according to the choice of the new promoters if there is no pending investigation, as the government has tweaked the relevant rules. In its latest notification, the Ministry of Corporate Affairs (MCA) has made suitable changes to the rule 30 of the Companies (Incorporation) Rules, 2014, which essentially deals with the shifting of registered corporate offices. It now adds a new proviso to the rule that says: “…where the management of the company has been taken over by new management under a resolution plan approved under section 31 of the Insolvency Bankruptcy Code, 2016, and no appeal against the resolution plan is pending in any court or Tribunal and no inquiry, inspection, investigation is pending or initiated after the approval of the said resolution plan, the shifting of the registered office may be allowed.” The new rule came into force on October 21. Experts say the move comes as a relief for new promoters who want the registered offices of the insolvent firms shifted to another state or Union territory to achieve better operational synergy with their other businesses. As many as 720 companies were rescued under the insolvency law since it came into being in late 2016, according to the data compiled by the Insolvency and Bankruptcy Board of India (IBBI).

NEW DELHI : Average fees charged by resolution professionals (RPs) and other consultants involved in insolvency and bankruptcy have declined by as much 70% during the past two years due to competition among professionals and tightening of rules by regulators, market participants said. Back in 2017, when the Reserve Bank of India (RBI) published the ‘dirty dozen’ list of 12 large accounts against which the newly introduced Insolvency and Bankruptcy Code (IBC) would be used, the consultants were charging as much as ₹1-2 crore for each case.

The real estate sector on a reported basis accounted for more than 50% of the total realizations under IBC (Insolvency and Bankruptcy Code). However, subsequent to release of data by IBBI, a large key case went sub-judice following admission of an appeal before the Hon’ble NCLAT, resulting in the real estate sector accounting for 18.8% of total realizations under IBC. This compares very well to total realizations of 1.2% in the period between its inception in FY17 and September 2022 as indicated in an earlier report, finds a joint report by property consultants ANAROCK and leading law firm Khaitan & Co.

ALSO READ: Go First case: Govt may clarify on amendments in IBC on leased aircraft The recent IBC changes, dated 3 October, state that Section 14(1) - imposing a moratorium on insolvency proceedings - does not cover deals related to aircraft, engines, airframes, or helicopters. This alteration has enabled Go First's lessors to advocate for the repossession of their assets in tribunals and courts.

corporate capex clawing back to 13.5% by 2015-16. This upward trajectory was, however, short-lived, with the investment cycle resuming its downtrend as the corporate GCF-to-GDP ratio fell to 10.7% in 2021-22, which was lower than even the ratio seen in 2008-09. This has been the longest downturn in corporate capex in the last 50 years. Multiple factors have contributed to this protracted decline: Introduction of structural reforms, such as GST, IBC and Rera. Though these reforms were essential to strengthen India’s long-term growth potential, they created some uncertainty in the short run. Covid-19, Russia-Ukraine conflict and unfavourable global macroeconomic environment. Unlike corporate investment, corporate savings have remained stable.

Willis Lease Finance Corporation requested the National Company Law Tribunal, Delhi, to issue a notice in the insolvency case filed against Spicejet on Monday. The senior counsel for WLFC argued that the company was within its rights to file an insolvency petition Spicejet under Section 9 of the Insolvency and Bankruptcy Code, 2016. The counsel referred to the mail correspondence between WLFC and Spicejet to establish that the servicer was handling debt negotiations in this case.

NEW DELHI : Bankruptcy and audit regulators are tightening their supervision of the distressed asset and audit markets as two bills proposing amendments to the Insolvency and Bankruptcy Code and the Companies Act make their way through ministries. The Insolvency and Bankruptcy Board of India (IBBI) and audit regulator National Financial Reporting Authority (NFRA) are moving ahead, issuing clarifications, while the two bills come under rigorous inter-ministerial discussions, according to a person informed about the development.

New Delhi: The Supreme Court is set to rule whether the government can be considered a secured creditor when an insolvent company has not paid its dues. The judgment is expected to have a bearing across the bankruptcy resolution spectrum, since treating such dues on par with loans from secured creditors will diminish the payouts to the latter. Under India’s Insolvency and Bankruptcy Code (IBC), secured creditors such as banks and financial institutions get priority in getting repaid through the resolution process, while unpaid dues to vendors, suppliers and government dues are treated as operational credit, and they fall lower in the so-called waterfall mechanism.

allowing aircraft lessors to recover their planes during insolvency proceedings as well. The ministry said that the earlier IBC regime was impacting the agreements between Indian airlines and foreign lessors.

announced specific exemptions from the Insolvency and Bankruptcy Code (IBC) for aircraft, engines, and related parts. Notably, Section 14(1) of the IBC, which enforces a moratorium on insolvency proceedings, would no longer apply to transactions, arrangements, or agreements concerning aircraft, aircraft engines, airframes, and helicopters.

Insolvency and Bankruptcy Code, 2016. The government’s action comes after the National Company Law Tribunal ruling in Go First’s case which put a moratorium on lessors to repossess aircraft. However, government officials told ET that the notification will not impact the Go First case, as it cannot be applied retrospectively. Lessors are stuck in long court battles as they try to recover their aircraft even though the bankrupt carrier now has the protection of law not to return them despite payment defaults.

Edelweiss Alternatives has raised its third special situation fund of ₹8,000 crore from a mix of prominent global institutional investors and large Indian family offices as it sees attractive opportunities offered by robust sales of secondary loans. While many underlying assets are operating well, they require tailored solutions to reach sustainable debt levels. So, Edelweiss believes that the private credit market will boom in the coming decade, growing from its present size of $14 billion to $100 billion. Over the past year, Edelweiss Alternatives has already deployed nearly ₹3,500 crore, which is over 40% of the total raised, across eight transactions in various sectors, including roads, steel, paper, hotel leased offices, and real estate.

India should “absolutely” consider the adoption of the UNCITRAL Model Law on Cross-Border Insolvency (MLCBI) in the next version of its IBC, and mull ways to accelerate its domestic insolvency processes, a paper released by the Insolvency and Bankruptcy Board of India (IBBI) has said.

NEW DELHI : The debt resolution capacity under Insolvency and Bankruptcy Code (IBC) should be stepped up by more than three fold to handle about 1,000 cases a year, said a senior government official. Speaking at seventh foundation day of Insolvency and Bankruptcy Board of India (IBBI), the rule maker and regulator, ministry of corporate affairs secretary Manoj Govil said pace of debt resolution under IBC was steadily increasing and expectation is that number of corporate rescue will go up to 300 cases this financial year from 180 cases last financial year.

Click here! Govil said the expectation is that the number of resolutions may go up to 300 this financial year and also wondered whether that is "sufficient" to unclog the pipeline. Around 5,000 new cases are filed every year under the IBC, Govil said adding that the IBC ecosystem should have the capacity to deal with at least 1,000 resolutions. This can be done by filling up posts, improving processes and regulations, among others, he noted.

IBC) has surged from Rs 2 lakh crore to about Rs 6 lakh crore, the chief of the insolvency regulator said on Sunday, citing an IIM-Ahmedabad study. Speaking at the seventh annual day event of the Insolvency and Bankruptcy Board of India (IBBI), its chairman Ravi Mittal said the sales of these firms also jumped by 75% after resolution, stressing that the sick companies are doing very well following their resolution. “This is a very big contribution of the IBC and this has led to growth in the economy,” Mittal said. The study was commissioned by the regulator to gauge the efficacy of the IBC regime. Mittal said a record 185 cases have been resolved via the IBC in the last fiscal year.

₹1 lakh to ₹1 crore in 2020, larger cases are coming in and fewer cases are expected to be withdrawn at an early stage. However, even if one-third of new cases are withdrawn at the pre-admission stage, and a few more subsequently, still there will be around 1,500 new cases to be resolved in a year, Govil explained. He added that one could argue that in future, the number of new bankruptcy cases requiring resolution could fall as they are also a function of economic cycles.