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Debt Recovery and Insolvency Litigation

Introduction

With experienced practice heads and specialized teams overseeing Debt Recovery and Insolvency Litigation practice, we are pioneers in the field handling litigation, resolution, liquidation, and enforcement action on end-to-end basis for individuals and corporates before Tribunals and Courts of competent jurisdiction.

Our expertise includes tendering legal opinions and transaction advisory involving complex matrix of SARFAESI, 2002, Insolvency and Bankruptcy Code, 2016, Companies Act, 2013, including special enactments like Prevention of Money Laundering Act, 2002, and Negotiable Instruments Act, 1881.

Overview

  1. Insolvency & Bankruptcy Law pertains to reorganization and insolvency resolution of companies, partnership firms, and individuals in a time bound manner for maximization of value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interests of all the stakeholders.
  2. Debt Recovery Law pertains to debt recovery actions, including enforcement of security, stemming from defaults committed by corporate and individuals in repayment of borrowings before specialized Tribunals and Civil Courts.

Insolvency & Bankruptcy Law:

  1. Requires navigation through, and compliance of complex procedures within the IBC, 2016, Regulations thereof and intertwining of central and special enactments on account of the legislation being relatively new.
  2. Adherence to strict timelines, formats and stipulations backed by legal expertise is essential to avoid adverse consequences in several scenarios including the stages of issuance of Demand Notices on behalf of Financial/Operational Creditors, drafting and filing of Petitions before the National Company Law Tribunal and appellate forums, filing proof of claim during Corporate Insolvency Resolution Process, Liquidation Process etc.
  3. Niche practice area involving technicalities, legal jargons, and regular updation in the knowledge of precedents and jurisprudence for effective representation before Tribunals and Courts.
  4. Expert opinions on complex commercial and legal issues that are imperative in providing the appropriate assistance for effective deliberations in meeting of the Committee of Creditors, Stakeholders’ Consultation Committees, Joint Lenders’ Meetings, and in multi-party Negotiations.

Debt Recovery:

  1. Requires adherence to procedural requirements and legal stipulations with respect to invoking personal/corporate guarantee, security enforcement action, filing of necessary applications before the Debt Recovery Tribunal and appellate forums.
  2. Legal assistance is imperative to initiate recovery action based on incidence of stamp duty and determination of proper jurisdiction to pursue best possible course of action for recovery of debts and enforcement of security.

Cases Handled

Regular representation before Tribunals and Court for a diverse range of individual and corporate clients including Public and Private sector Banks, NBFCS, Insolvency Professionals, Resolution Applicants, Home-buyers, Operational Creditors and Corporate Debtors.

Experience in handling transactions relating to numerous arenas and sectors including Aviation, Real Estate, Hospitality, Infrastructure and Development, Import-Export, Steel Manufacturing and Trading, Pharmaceuticals, Power Generation, Mining and Dredging.

Unique Aspects & Specialties Offered

  • Drafting, filing and timely listing of Applications in a time-bound manner.
  • Pan India presence with a network of local associates in major cities facilitating effective client liaison and service.
  • Dedicated Client Service Team and a Customized Portal providing clients with ready access to case information for convenience, in addition to timely E-mail updates of court-proceedings;

Services Offered:

Insolvency & Bankruptcy Law

  • Issuance of Demand Notice under IBC, 2016.
  • Drafting and filing of Petitions and interim applications seeking reliefs against Corporate Debtors, Corporate/Personal Guarantors etc.
  • Representation before National Company Law Tribunal and appellate forums.
  • Legal assistance in stages of initiation of insolvency proceedings, retainership during insolvency resolution process and liquidation proceedings.
  • Advisory on debt restructuring and resolution strategies.
  • Representing clients in lenders’ meetings and multi-party negotiations.

Debt Recovery

  • Issuance of Notice under SARFAESI, 2002.
  • Drafting and filing of Petitions and interim applications seeking reliefs against Principal Borrowers, Corporate/Personal Guarantors before the Debt Recovery Tribunal and appellate forums.
  • Enforcement of security interest and guarantees, including extended assistance for taking physical possession of assets.
  • Negotiating Settlement/Consent Terms between parties.
  • Asset-tracing and Recovery Strategizing.

Expertise and Experience

Our team possesses extensive expertise and experience in the practice area of Debt Recovery and insolvency practice. We have successfully represented a wide range of clients in various fields.

Noteworthy cases and timely results demonstrate our credibility, knowledge and client-centric approach in this practice area. We have set landmark precedents while representing clients before Tribunals and Courts in high-stake matters involving renowned entities and groups such as Jet Airways, Sterling Group, Vindhyavasini Group, and Future Group.

Our practice heads and team are certified professionals who have received nationwide recognition for their valuable contribution in the field.

Our Approach

We follow a client-centric approach in handling matters and provide comprehensive and personalized legal solutions to our clients based on end-goal of the client. We believe that every client is unique and every matter is different hence, we prioritize understanding our client’s goals, assessing the circumstances peculiar to the matter, and devising tailored strategies to achieve favourable outcomes. We are committed to delivering results in a timely manner.

FAQs

What is the Insolvency and Bankruptcy Code (IBC)?

The Insolvency and Bankruptcy Code (IBC) is a legislation that was enforced in 2016 to deal with insolvency and bankruptcy of corporates and individuals. The intention of the legislature in the IBC is rehabilitative in nature, where the prime goal is revival of stressed companies/corporates with a view to turn around the same in a time bound manner so as to ensure effective resolution for the benefit of the stakeholders of the entity. The IBC jurisprudence condemns using provisions of the IBC for recovery/settlement.

Who can initiate insolvency proceedings under the IBC?

A Financial creditor or an Operational creditor or a Corporate Debtor itself can initiate proceedings under the IBC.

What is the role of the Insolvency and Bankruptcy Board of India (IBBI)?

The Insolvency and Bankruptcy Board of India (IBBI) is the regulator governing and overseeing implementation of the IBC. It monitors and regulates insolvency professionals, insolvency professional agencies, and information utilities registered with it.

Who is the Adjudicating Authority under the IBC?

An Application for initiation of insolvency resolution process shall be filed with the National Company Law Tribunal (NCLT) having jurisdiction. An appeal against the order of the NCLT shall be preferred with the National Company Law Appellate Tribunal (NCLAT). Further, a person aggrieved by an Order of the NCLAT shall approach the Supreme Court of India.

What is the role of the Insolvency Professional (IP)?

An Insolvency Professional is a person responsible for overseeing the affairs of the Corporate Debtor during the insolvency resolution process. He/she also handles the liquidation process in the event liquidation orders are passed. An insolvency professional maybe suggested by the party filing the Application or maybe appointed by the Adjudicating Authority from IBBI’s panel of insolvency professionals. Insolvency professionals act in the following capacities under the IBC: Interim Resolution Professional, Resolution Professional and Liquidator.

What are the different stages of the insolvency resolution process under the IBC?

The insolvency resolution process under the IBC consists of several stages as follows:
·       Filing of an Application with NCLT
·       Admission of the Application and Moratorium
·       Appointment of IRP
·       Constitution of Committee of Creditors (CoC)
·       Approval of Resolution Plan by the CoC
·       Approval of Resolution Plan by the NCLT
·       Implementation of Resolution Plan
·       Liquidation Process if no resolution plan received
Dissolution

What is a resolution plan?

A resolution plan is a proposal submitted by a potential resolution applicant with a view to revive the Corporate Debtor. It shall provide for compromise/repayment of creditors including workmen and statutory dues, restructuring of debt, etc. The proposed Resolution Plan shall be approved by the CoC and thereafter by the NCLT.

What happens if a resolution plan is not approved?

If no Resolution Plan is approved or if the proposed Resolution Plan is rejected by the CoC in its commercial wisdom the assets of the Corporate Debtor are liquidated and proceeds thereof are distributed as per the waterfall mechanism prescribed u/s 53 of the IBC.

Can I continue to operate my business during the insolvency process?

During the insolvency process, the powers of the board are suspended and are vested in the IRP or the resolution professional. However, major decisions regarding the sale of assets or any restructuring must be approved by the CoC.

How long does the insolvency process typically take to complete?

The insolvency process under the IBC is a time-bound process. For corporate debtors, the process must generally be completed within 330 days, including any extensions granted by the NCLT

What are the different types of insolvency proceedings under the IBC?

The IBC provides for two types of insolvency proceedings:
    a) Corporate Insolvency Resolution Process (CIRP): This applies to corporate entities, including companies, limited liability partnerships, and other entities regulated under specific laws.
    b) Individual Insolvency Resolution Process (IIRP): This applies to individuals, including personal guarantors and partnership firms.

How are the claims of different creditors prioritized during the insolvency process?

Section 53 of the IBC, provides for a specific order of priority for the distribution of proceeds among different classes of creditors during the insolvency process. The priority of claims is as follows:
    a) Insolvency Resolution Process costs and liquidation costs.
    b) Secured creditors (creditors with collateral or security).
    c) Workmen’s dues for the past two years.
    d) Unpaid employee salaries and dues for the past one year.
    e) Financial debts owed to unsecured creditors.
    f) Any remaining debts and dues.

What is the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act?

The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI Act) is a legislation that seeks to protect the interest of lenders being classified banks and financial institutions by allowing the entities to enforce their security, take possession of hypothecated/mortgaged assets.

What are the key features of the RDDBFI Act?

The key features of the RDDBFI Act include the establishment of DRTs and DRATs, provision for filing original applications, powers to issue recovery certificates, and provisions for appeals and enforcement of decrees.

What are the key features of the SARFAESI Act?

The key features of the SARFAESI Act include the provision for banks and financial institutions to issue notices to borrowers, the right to take possession without court interference, and sell secured assets, establishment of asset reconstruction companies (ARCs), and provisions for appeals and enforcement of security interests.

Which authorities are responsible for implementing the RDDBFI Act?

The Debt Recovery Tribunals (DRTs) and Debt Recovery Appellate Tribunals (DRATs) are responsible for implementing the RDDBFI Act and adjudicating on debt recovery matters.

Can the assets seized under the SARFAESI Act be sold directly by the banks?

Yes, once the banks/financial institutes have taken possession, they can proceed to sell the same to recover its dues subject to compliance with the provisions of the SARFAESI Act.

Can the RDDBFI Act and SARFAESI Act be used simultaneously for debt recovery?

Yes, banks and financial institutions can choose to utilize both Acts concurrently for debt recovery, depending on the nature and circumstances of the debt and the assets involved.

Practice Heads

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