31 May

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Supreme Court’s ruling on loan moratorium: brief overview

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Amid the unprecedented disruptions caused on account of Coronavirus Pandemic, Reserve Bank of India (RBI) with the objective of moderating the stressed financial conditions had on 27.03.2020 vide its circular DOR. No. BP.BC.47/21.04.048/201920, allowed a moratorium as temporary relief, on payment of instalments of term loans due between 01.03.2020 and 31.05.2020, later extending the period till 31.08.2020 vide its circular DOR. No. DOR.No.BP.BC.71/21.04.048/2019-20 dated 23.05.2020 (hereinafter collectively referred to as the “Regulatory Packages”). In relation to the said Regulatory Packages, the interpretation of certain aspects as well as the subsequent steps taken by the Regulator & the Central Government came up...

31 May

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A brief overview: Resolution Framework – 2.0: Resolution of Covid-19 related stress of Micro, Small and Medium Enterprises (MSMEs)

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Upon perusal of Reserve Bank of India’s (‘RBI’) circular bearing no. DOR.STR.REC.12/21.04.048/2021-22 dated 05.05.2021 titled “Resolution Framework 2.0 – Resolution of Covid-19 related stress of Micro, Small and Medium Enterprises (MSMEs)1 (“Resolution Framework”) it can be ascertained that the said Resolution Framework has been brought out to provide restructuring options for the borrowers who are finding it difficult to repay loans on time due to uncertainties created by the resurgence of the Covid-19 pandemic in India in the recent weeks. By virtue of the said Resolution Framework the lending institutions i.e. all commercial banks (including Small Finance Banks, Local Area Banks...

26 June

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Position of Guarantors post the Insolvency And Bankruptcy Code (Amendment) Ordinance, 2020

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On account of COVID 19 pandemic which has impacted the business, financial markets and economy all over the world, including India, and has thereby created uncertainty and stress for businesses for reasons beyond the control, the Ministry of Law and Justice, Government of India has promulgated the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2020 (“said Ordinance”) to mitigate disruptions in business operations caused due to the pandemic following the nationwide lockdown which has added to the disruptions of businesses. The said Ordinance was also promulgated due to inadequate number of resolution applicants to rescue the corporate debtor on account of...

26 June

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Alternative remedies available to creditors for recovery of their debts post Insolvency And Bankruptcy Code (Amendment) Ordinance, 2020

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Since the corporate insolvency resolution process has been suspended for a period of 6 months for any default arising on or after 25.03.2020 in terms of the said Ordinance, the creditors may take recourse to the following remedies as alternatively available for recovering their outstanding debts: The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI Act, 2002”): The secured creditor as defined under Section 2 (zd) of the SARFAESI Act, 2002 in whose favour security interest is created as defined under Section 2 (zf) of the SARFAESI Act, 2002 may initiate enforcement measures for recovery of...

26 June

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Key Highlights of Insolvency And Bankruptcy Code (Amendment) Ordinance, 2020

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Introduction On account of COVID 19 pandemic which has impacted the business, financial markets and economy all over the world, including India, and has thereby created uncertainty and stress for businesses for reasons beyond the control, the Ministry of Law and Justice, Government of India has promulgated the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2020 (“said Ordinance”) to mitigate disruptions in business operations caused due to the pandemic following the nationwide lockdown which has added to the disruptions of businesses. The said Ordinance was also promulgated due to inadequate number of resolution applicants to rescue the corporate debtor on account of...

26 June

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Delhi High Court refuses unilateral appointment of single Arbitrator (20.01.2020)

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The issue that arose for consideration before the Hon’ble High Court of Delhi in matter titled “Proddatur Cable TV DIGI Services Vs. SITI Cable Network Limited’’ decided on 20.01.2020, MANU/DE/0178/2020, was the eligibility of the "Company" referred to in the Arbitration Clause between the parties, to unilaterally appoint a Sole Arbitrator to adjudicate the disputes between the parties. The Hon’ble High Court of Delhi concluded that the Arbitration Clause empowering the 'Company' to appoint the Sole Arbitrator in the instant case for consideration would be vitiated in the light of the law laid down by the Supreme Court in the case of Perkins...

26 June

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Key highlights of the Judicial Pronouncements on moratorium granted by Reserve Bank of India via Regulatory Package

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Brief analysis of Judicial Pronouncements on moratorium granted by Regulatory Package in regard to the repayments and classifications as NPAs are as below Anant Raj Limited Versus Yes Bank Limited 2020 SCC Online Del 543: The Hon’ble High Court of Delhi held that the RBI moratorium is applicable even to loans which were on default as on 01.03.2020. The Hon’ble Court observed that the RBI intended for the extension of benefit even to accounts that were included in SMA-1 and SMA-2 categories as on 01.03.2020. That is to say, even an account that is SMA-II as on the date of the effect...

26 June

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Regulatory package issued by the Reserve Bank Of India to combat COVID-19

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Reserve Bank of India (RBI) on March 27, 2020 announced a Regulatory Package on COVID-19 to tackle the impact of deadly Coronavirus on Indian Economy. From Repo Rate & CRR Cuts to 3-months moratorium on term loans, RBI Governor Shaktikanta Das announced several measures which directly impacted the financial sector. Reserve Bank of India vide RBI/2019-20/186,DOR.No.BP.BC.47/21.04.048/2019-20 dated 27.03. 2020 (hereinafter referred as “Regulatory Package”), permitted all Commercial Banks (including Small Finance Banks, Local Area Banks and Regional Rural Banks), All Primary (Urban) Co-operative Banks/State Co-operative Banks/ District Central Co-operative Banks, all All-India Financial Institutions and all Non-Banking Financial Companies (including Housing...