This issue of LexCognito, which in Latin means 'awareness about law', seeks to provide you an insight into significant legal and regulatory developments that have taken place very recently in India.

Date: 31 October 2018
India's Insolvency Law - Withdrawal of Insolvency Petition
When the Insolvency and Bankruptcy Code ("Code") was enacted and came into force in the year 2016, the Code did not envisage withdrawal of an insolvency application once such an application for initiating the corporate insolvency resolution process ("CIRP") of the corporate debtor is admitted. At that time, the application for initiating CIRP could be withdrawn only before its admission under Rule 8 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. However, new Section 12A, allowing withdrawal of the admitted applications having initiated CIRP of the corporate debtor with the approval of 90% of the voting share of the committee of creditors ("CoC"), was inserted in the Code by the Insolvency and Bankruptcy Code (Second Amendment) Act, 2018 effective from 6 June 2018. 
Although Section 12A doesn't stipulate any time period as to when an application for withdrawal of any insolvency petition can be made after its admission, Regulation 30A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 stipulates that such an application for withdrawal shall be made to the resolution professional before the invitation for expression of interest is issued. The said invitation is made for inviting expression of interest from the resolution applicants intending to submit resolution plan for the resolution of the insolvency of the corporate debtor. Thereafter, the CoC considers the application for withdrawal and if the same is approved by the CoC with 90% voting shares, the resolution professional is required to submit the same with the National Company Law Tribunal for its approval. 

In many cases, the Adjudicating Authorities (NCLT/NCLAT) have allowed withdrawal of the insolvency resolution application owing to the settlement reached between the corporate debtor and creditors. However, it would be interesting to examine whether an application for withdrawal which is made after the issuance of the invitation for expression of interest can be accepted, particularly where no resolution applicant has come forward with an intention to submit any resolution plan for resolution of the insolvency of the corporate debtor. In such case, not allowing such settlement would lead to liquidation of the corporate debtor.
Further, even in cases where any resolution applicant has submitted the resolution plan, it would be interesting to examine whether any application for withdrawal can be approved by the CoC and then be considered by the Adjudicating Authorities for approval in case the settlement terms are more favorable for all the stakeholders of the corporate debtor than the resolution plan submitted by the resolution applicant. If not approved, whether decision of CoC can be challenged/questioned which has been given the power to approve or disapprove the resolution plan/withdrawal.

In the recent development in Essar Steel case, the promoters/shareholders of the corporate debtor had submitted a withdrawal plan before the CoC when the entire process of inviting bids, their evaluation and selection was made by the CoC and the successful bidder was accordingly announced. Although CoC of Essar have rejected the proposal submitted by the promoters of the corporate debtor, it is likely that the promoters may approach the Adjudicating Authorities against the decision taken by of the CoC. It will be interesting to see the fate of the last minute proposal made in order to take the corporate debtor out of the insolvency. 
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Chambers of Rajan & Indraneel 
T: +91 11 41000224, 41030225| Fax:+91 11 29239074 
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N 103 Greater Kailash - I, New Delhi - 110048, India.
About us
Chambers of Rajan & Indraneel is a premier full service law firm headquartered at New Delhi, India. The Firm represents amalgamation of vast experiences and practices of two eminent lawyers. Indranil Ghosh is highly reputed as a disputes lawyer. He was a senior partner and head of litigation practice in one of the oldest Indian law firm Fox Mandal for several decades before setting up his own practice. Rajan D Gupta is a rank holder Chartered Accountant turned Corporate Lawyer. He is also a licensed Insolvency Resolution Professional. He has been associated with internationally renowned big law firms in past and has held senior level positions in firms like PwC, Fox Mandal, Khaitan & Co. and SRGR Law, etc. before starting the Firm.

We have a team of experienced Lawyers, Chartered Accountants, Company Secretaries and Insolvency Resolution Professionals with access to network of high quality experienced lawyers in all major commercial cities of India.

The Firm offers a wide range of expert legal services in the areas of corporate and commercial laws and specializes in representing major foreign and domestic corporations with diverse business interests in India. The Firm is professionally equipped to handle large sized and complex corporate transactions like Mergers & Acquisitions, Corporate Restructuring, Joint Ventures, Inbound & Outbound Investments, Private Equity and Venture Capital Investment Transactions, Real Estate Transactions, Infrastructure Projects, Project Finance, Power Projects, Non-Conventional Energy Projects, Highways & Road Projects and Corporate Taxation as well as GST, etc. The Firm also offers proven capabilities in litigation and dispute resolution practice areas, especially in handling international and domestic arbitrations as well as litigation in Supreme Court, various High Courts of India and various judicial and quasi-judicial tribunals/forums including at National Client Law Tribunal, Appellate Tribunals, Tax Tribunals, Competition Commission, Electricity Tribunal, Telecom Disputes Tribunal, Designated Authorities and other adjudicatory bodies.

We have set up a Japan Business Desk (JBD) in order to serve our Japanese clients in a better way. The endeavour of the JBD is to act as a bridge between our professionals and clients from Japan so as to ensure that there are no barriers as to linguistic and cultural differences. This will indeed facilitate Japanese corporates doing business in India. 
This newsletter contains general information available in public domain at the time of its preparation. It is intended as a general news update and is not intended to be comprehensive nor to provide specific business, financial, investment, legal, tax or other professional advice or opinion or services. This newsletter is not a substitute for such professional advice or services, and it should not be acted on or relied upon or used as a basis for any decision or action that may affect you or your business. Before making any decision or taking any action that may affect you or your business, you should consult a qualified professional adviser and refer to the source pronouncement/documents on which this business alert is based. It is also expressly clarified that this newsletter is neither a solicitation nor an invitation of any sort whatsoever or a source of advertising from our firm or any of its partners or lawyers or other professionals to create any adviser-client relationship. Whilst every effort has been made to ensure the accuracy of the information contained in this news alert, this cannot be guaranteed, and neither our firm nor any related person/entity shall have any liability to any person or entity that relies on the information contained in this publication. Any such reliance is solely at the user's risk.
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