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Jun 8, 2018

Analysis of The Insolvency And Bankruptcy Code (Amendment) Ordinance, 2018

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1. Section 3 (12) "default" means non-payment of debt when whole or any part or instalment of the amount of debt has become due and payable and is not repaid [substituted with paid] by the debtor or the corporate debtor, as the case may be;
2. In section 5 of the Principal act,-
2.1 Insertion of new clause :
“(5A) “Corporate guarantor” means a corporate person who is the surety in a contract of guarantee to a corporate debtor;”
CP Comment: Insertion of the definition of Corporate Guarantor gives a clarity and has direct relation with Section 60& amendment made under Section 14 of the Code. Under the provisions of Code, lender can invoke actions u/s 7 against the Corporate Guarantor should the borrower defaults in payment when due and there is no protection available to guarantors or surety under Section 14 which means that if the borrower defaults in repayment, lender can take actions under provisions of the Code against the Guarantor and Surety.
2.2 Insertion of “Explanation” in clause 5 (8), in sub clause (f)
‘Explanation.— For the purposes of this sub-clause,—(i) any amount raised from an allottee under a real estate project shall be deemed to be an amount having the commercial effect of a borrowing; and
(ii) the expressions, “allottee” and “real estate project” shall have the meanings respectively assigned to them in clauses (d) and (zn) of section 2 of the Real Estate (Regulation and Development) Act, 2016
CP Comment: This is much awaited decision taken in the case of curious homebuyers left in lurch for their investment in real estate projects. Amendment has added their investment under the category of financial debt which means the home buyers are now categorized as Financial Creditors. Prior to this, only interest bearing investments in real estate were categorized as financial debt after the decision of NCLAT in the case of Nikhil Mehta Vs. AMR Infrastructure. Then there was a controversy and litigation before Hon’ble Supreme Court of India by the home buyers of Jaypee Group. Consequently, now this protection not only provides the aforesaid categorization but also gives them a right of representation and being heard and to vote through their representative in the committee of creditors decisions.
2.3 (21) "operational debt" means a claim in respect of the provision of goods or services including employment or a debt in respect of the repayment [substituted with “payment”] of dues arising under any law for the time being in force and payable to the Central Government, any State Government or any local authority;
2.4 Insertion of new clause after clause (24) :

(24A) “related party”, in relation to an individual, means—

    (a) a person who is a relative of the individual or relative of the spouse of the individual;

    (b)a partner of a limited liability partnership, or a limited liability partnership or a partnership firm, in which the individual is a partner;

    (c) a person who is a trustee of a trust in which the beneficiary of the trust includes the individual, or the terms of the trust confers a power on the trustee which may be exercised for the benefit of the individual;

    (d) a private company in which the individual is a director and holds along with his relatives, more than two per cent, of its share capital

    (e) a public company in which the individual is a director and holds along with relatives,more than two per cent, of its paid-up share capital;

    (f) a body corporate whose board of directors, managing director or manager, in the ordinary course of business, acts on the advice, directions or instructions of the individual;

    (g) a limited liability partnership or a partnership firm whose partners or employees in the ordinary course of business, act on the advice, directions or instructions of the individual;

    (h) a person on whose advice, directions or instructions, the individual is accustomed to act;

    (i) a company, where the individual or the individual along with its related party, own more than fifty per cent, of the share capital of the company or controls the appointment of the board of directors of the company.

    Explanation .—For the purposes of this clause,—

      (a) “relative”, with reference to any person, means anyone who is related to another, in the following manner, namely :—

        i. members of a Hindu Undivided Family,

        ii. husband,

        iii. wife,

        iv. father,

        v. mother,

        vi. Son,

        vii. daughter,

        viii. son’s daughter and son,

        ix. daughter’s daughter and son,

        x. grandson’s daughter and son,

        xi. granddaughter’s daughter and son,

        xii.brother,

        xiii. sister,

        xiv. brother’s son and daughter,

        xv. Sister’s son and daughter

        xvi. father’s father and mother,

        xvii. mother’s father and mother,

        xviii. father’s brother and sister,

        xix. father’s brother and sister,

      (b) wherever the relation is that of a son, daughter, sister or brother, their spouses shall also be included;’.
CP Comment: Insertion of related party in terms of an individual was earlier missing in the Code. This has direct correlation with Section 29A of the Code which was inserted on 23.11.2017 through an ordinance and later was confirmed with some changes on 18.01.2018 barring promoters to bid for their own companies in the resolution process. This clarifies the relation in terms of an individual which needs to be examined to check whether a resolution applicant is hit by the provisions of Section 29A and its eligibility to bid in resolution process of any corporate debtor.
3. In section 7 of the Principal Act,
a. Section 7 (1) : A financial creditor either by itself or jointly with other financial creditors [Substituted with “other financial creditors, or any other person on behalf of the financial creditor, as may be notified by the Central Government”] may file an application for initiating corporate insolvency resolution process against a corporate debtor before the Adjudicating Authority when a default has occurred.
4. In section 8 of the principal Act,—
a. 8(2)(a)existence of a dispute, if any, and [Substituted with “If any, or”]If any, or;
…..record of the pendency of the suit or arbitration proceedings filed before the receipt of such notice or invoice in relation to such dispute;
b. 8(2)(b):the repayment [substituted with “payment”] of unpaid operational debt—
c. Explanation—For the purposes of this section, a "demand notice" means a notice served by an operational creditor to the corporate debtor demanding repayment [substituted with “payment”] of the operational debt in respect of which the default has occurred.
5. In section 9 of the Principal Act,
a. Section 9 (3)(c):a copy of the certificate from thefinancial institutions maintaining accounts of the operational creditor confirming that there is no payment of an unpaid operational debt by the corporate debtor; and [Substituted with words “by the corporate debtor, if available”]
CP Comment: The requirement of certificate u/s 9(3)(c) to be appended with application filed u/s 9 of the Code is made optional now. This comes in line with the precedent laid down by Hon’ble Supreme Court in the case of Macquarie Bank.
b. Section 9(3)(d): such other information as may be specified. [Substituted with(d) a copy of any record with information utility confirming that there is no payment of an unpaid operational debt by the corporate debtor, if available;and
c. New clause (e) inserted: any other proof confirming that there is no payment of an unpaid operational debt by the corporate debtor or such other information, as may be prescribed.”;
CP Comment: Amendment cherishes the spirit of the Code in line with the judgment of Hon’ble Supreme Court of India in the matter of Macquarie Bank Vs. Shilpi Cables with regard to the procedural requirements for triggering insolvency under provisions of the Code through which many times the very spirit of Code was being defeated.
d. 9(5)(i)(b) there is no repayment [Substituted with “payment”] of the unpaid operational debt;
e. 9(5)(ii)(b) there has been repayment [Substituted with “payment”] of the unpaid operational debt;
6. In section 10 of the Principal Act,-

a) The corporate applicant shall, along with the application furnish theinformation relating to—

    i. its books of account and such other documents relating to such period as may be specified;and

    ii. the resolution professional proposed to be appointed as an interim resolution professional.

[Substituted with: (3) The corporate applicant shall, along with the application, furnish—

    a. the information relating to its books of account and such other documents for such period as may be specified;

    b. the information relating to the resolution professional proposed to be appointed as an interim resolution professional; and

    c. the special resolution passed by shareholders of the corporate debtor or the resolution passed by at least three-fourth of the total number of partners of the corporate debtor, as the case may be, approving filing of the application”;]
CP Comment: Resolution process of certain companies, especially preferred by the management, often faced (especially JV Companies) resistance from the shareholders against the process. NCLT also felt need that if management is taking a decision to take the company to NCLT and initiate resolution process under the Code, shareholders of such company shall also be informed. Hence, this amendment – which provides that before filing an application u/s 10 of the Code, the company will have to obtain approval from its shareholders by was of special resolution.

b) Insertion in 10(4)(a) after the words “if it is complete”: “and no disciplinary proceeding is pending against the proposed resolution professional”.

c) Insertion in 10(4)(b) after the words “reject the application, if it is incomplete” :“or any disciplinary proceeding is pending against the proposed resolution professional”.
7. Section 12 (2) :The resolution professional shall file an application to the Adjudicating Authority to extend the period of the corporate insolvency resolution process beyond one hundred and eighty days, if instructed to do so by a resolution passed at a meeting of the committee of creditors by a vote of seventy-five [Substituted with Sixty Six ]per cent. of the voting shares

CP Comment: Requirement of seeking 75% vote of the committee of creditors for the following decisions has been reduced to 66% voting by committee of creditors which includes taking extension beyond 180 days during resolution process. Often, decisions of committee of creditors during the Resolution Process faced issues due to inadequate majority and need was felt that the same may be reduced. Accordingly, this amendment:

a) Seeking extension of CIRP beyond 180 days;

b) Appointment of resolution professional;

c) Replacement of resolution professional;

d) Approval of Resolution Plan;

e) Initiation of Liquidation.
8. Insertion of a new section after section 12:
“12A. The Adjudicating Authority may allow the withdrawal of application admitted under section 7 or section 9 or section 10, on an application made by the applicant with the approval of ninety per cent, voting share of the committee of creditors, in such manner as may be prescribed”.
CP Comment: Withdrawal of application post admission has now been allowed subject to filing of an application with NCLT after obtaining approval of committee of creditors holding 90% voting share. This comes in line with the instructions of Hon’ble Supreme Court in the matter of Uttara Foods.
9. Section 14(3) The provisions of sub-section (1) shall not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator.
[Substituted with “ The provisions of sub-section (1) shall not apply to] –

    a. such transaction as may be notified by the Central Government in consultation with any financial regulator;

    b. a surety in a contract of guarantee to a corporate debtor”.
CP Comment: this amendment throws clarity upon the issue ‘whether the assets of guarantor are protected under moratorium’. After this amendment, it is clear that moratorium is not available to the assets of the guarantors or surety.
10. 15(1)(c) the last date for submission of claims; [Substituted with “claims, as may be specified”]
11. 16(5) The term of the interim resolution professional shall not exceed thirty days from date of his appointment. [Substituted with “shall continue till the date of appointment of the resolution professional under section 22”]
CP Comment: amendment clarifies position of office of interim resolution professional after the expiry of 30 days time as stipulated under Section 16 of the Code. Practically, IRP used to continue with managing the affairs of the corporate debtor till the appointment of resolution professional. It is clarified now that interim resolution professional shall continue with its duties till the appointment of resolution professional in his place or his confirmation as such.
12.

In the section 17 of the Principal Act

    a. 17(2)(d) have the authority to access the books of account, records and other relevant documents of corporate debtor available with government authorities, statutory auditors, accountants and such other persons as may be specified. [Substituted with “may be specified; and”]

    b. Insertion after the clause (d) :“(e) be responsible for complying with the requirements under any law for the time being in force on behalf of the corporate debtor”.
CP Comment: Amendment clarifies that resolution professional is responsible to meet compliances for the corporate debtor.
13. In the Section 18 of the Principal Act,
a. Explanation.—For the purposes of this sub-section, [Substituted with “Section”] the term "assets" shall not include the following, namely:—
14. In the Section 21 of the Principal Act :
a. The committee of creditors shall comprise all financial creditors of the corporate debtor: Provided that a related partyto whom a corporate debtor owes a financial debt [Substituted with “financial creditor or the authorised representative of the financial creditor referred to in sub-section (6) or sub-section (6A) or sub-section (5) of section 24, if it is a related party of the corporate debtor,”] shall not have any right of representation, participation or voting in a meeting of the committee of creditors.
CP Comment: Amendment is brought in lines with the other amendments for representation of other creditors. Further, it is categorically provided that financial creditors who are related party shall not be allowed to play any role in committee of creditors. Exception is provided in explanations below to financial creditor regulated by a financial sector regulator.
b. Insertion of following proviso after the proviso in section 21 (2) :
“Provided further that the first proviso shall not apply to a financial creditor, regulated by a financial sector regulator, if it is a related party of the corporate debtor solely on account of conversion or substitution of debt into equity shares or instruments convertible into equity shares, prior to the insolvency commencement date.”
c. Section 21(3) Where [“Subject to sub-sections (6) and (6A) , where” ]the corporate debtor owes financial debts to two or more financial creditors as part of a consortium or agreement, each such financial creditor shall be part of the committee of creditors and their voting share shall be determined on the basis of the financial debts owed to them.
d. 21(6) Where the terms of the financial debt extended as part of a consortium arrangement or syndicated facility or issued as securities [omitted] provide for a single trustee or agent to act for all financial creditors, each financial creditor may—
e. Insertion of following sub sections 6(a) and 6(b) u/s 21

(6A) Where a financial debt—

    (a) is in the form of securities or deposits and the terms of the financial debt provide for appointment of a trustee or agent to act as authorised representative for all the financial creditors, such trustee or agent shall act on behalf of such financial creditors;

    (b) is owed to a class of creditors exceeding the number as may be specified, other than the creditors covered under clause (a) or sub-section (6), the interim resolution professional shall make an application to the Adjudicating Authority along with the list of all financial creditors, containing the name of an insolvency professional, other than the interim resolution professional, to act as their authorised representative who shall be appointed by the Adjudicating Authority prior to the first meeting of the committee of creditors;

    (c) is represented by a guardian, executor or administrator, such person shall act as authorised representative on behalf of such financial creditors, and such authorised representative under clause (a) or clause (b) or clause (c) shall attend the meetings of the committee of creditors, and vote on behalf of each financial creditor to the extent of his voting share.

(6B) The remuneration payable to the authorised representative—

    (a) under clauses (a) and (c) of sub-section (6A), if any, shall be as per the terms of the financial debt or the relevant documentation; and

    (b) under clause (b) of sub-section (6A) shall be as specified which shall be jointly borne by the financial creditors.”;
f. Section 21(7) The Board may specify the manner of determining the voting share in respect of financial debts issued as securities under sub-section (6) . [Substituted with “The Board may specify the manner of voting and the determining of the voting share in respect of financial debts covered under sub-sections (6) and (6A)].”
g. Section21(8) All decisions of the committee of creditors shall be taken by a vote of not less than seventy-five per cent. of voting share of the financial creditors: Provided that where a corporate debtor does not have any financial creditors, the committee of creditors shall be constituted and comprise of such persons to exercise such functions in such manner as may be specified by the Board. [Substituted by “Save as otherwise provided in this Code, all decisions of the committee of creditors shall be taken by a vote of not less than fifty-one per cent, of voting share of the financial creditors:
Provided that where a corporate debtor does not have any financial creditors, the committee of creditors shall be constituted and shall comprise of such persons to exercise such functions in such manner as may be specified”]
CP Comment: There was no clarity on the decision making voting percentage for the matters not provided specifically in the Code. This amendment provides clarity that the decisions for which no voting percentage is provided under the Code, shall be taken by simple majority vote of the committee of creditors.
15. In Section 22 of the Principal Act,
a. 22(2) The committee of creditors, may, in the first meeting, by a majority vote of not less than seventy-five [Substituted by sixty six] percent of the voting share of the financial creditors, either resolve to appoint the interim resolution professional as a resolution professional or to replace the interim resolution professional by another resolution professional.
b. Insertion of words in Section 22(3)(a) “subject to a written consent from the interim resolution professional in the specified form” after the words “Resolution Professional”
c. Insertion in Section 22(3)(b) “along with a written consent from the proposed resolution professional in the specified form” after the words “appointment of the proposed resolution professional”.
16.

Insertion of following “Proviso” in the Section 23(1) :

“Provided that the resolution professional shall, if the resolution plan under sub-section (6) of section 30 has been submitted, continue to manage the operations of the corporate debtor after the expiry of the corporate insolvency resolution process period until an order is passed by the Adjudicating Authority under section 31.”
CP Comment: clarity has been made in continuation of RP till his appointment as liquidator through this amendment.
17. In the Section 24 of the Principal Act :
a. 24(3)(a) members of Committee of creditors; [Substitutedwith “committee of creditors, including the authorised representatives referred to in sub-sections (6) and (6A) of section 21 and sub-section (5)”]
b. 24(5) Any creditor [Substituted with “Subject to sub-sections (6), (6A) and (6B) of section 21, any creditor” ]who is a member of the committee of creditors may appoint an insolvency professional other than the resolution professional to represent such creditor in a meeting of the committee of creditors.
18.

Insertion of Section 25A after section 25 in the Principal Act :

25A.(1) The authorized representative under sub-section (6) or sub¬section (6A) of section 21 or sub-section (5) of section 24 shall have the right to participate and vote in meetings of the committee of creditors on behalf of the financial creditor he represents in accordance with the prior voting instructions of such creditors obtained through physical or electronic means.

(2) It shall be the duty of the authorised representative to circulate the agenda andminutes of the meeting of the committee of creditors to the financial creditor he represents.

(3) The authorised representative shall not act against the interest of the financial creditor he represents and shall always act in accordance with their prior instructions:

Provided that if the authorised representative represents several financial creditors, then he shall cast his vote in respect of each financial creditor in accordance with instructions received from each financial creditor, to the extent of his voting share:

Provided further that if any financial creditor does not give prior instructions through physical or electronic means, the authorised representative shall abstain from voting on behalf of such creditor.

(4) The authorised representative shall file with the committee of creditors any instructions received by way of physical or electronic means, from the financial creditor he represents, for voting in accordance therewith, to ensure that the appropriate voting instructions of the financial creditor he represents is correctly recorded by the interim resolution professional or resolution professional, as the case may be.

Explanation.—For the purposes of this section, the “electronic means” shall be such as may be specified.’.
19. In the section 27 of the Principal Act
27(2) The committee of creditors may, at a meeting, by a vote of seventy five per cent. of voting shares, propose to replace the resolution professional appointed under section 22 with another resolution professional. [Substituted by “The committee of creditors may, at a meeting, by a vote of sixty- six per cent, of voting shares, resolve to replace the resolution professional appointed under section 22 with another resolution professional, subject to a written consent from the proposed resolution professional in the specified form”]
20. Section 28(3) No action under sub-section (1) shall be approved by the committee of creditors unless approved by a vote of seventy five[Substituted with sixty- six] percen tof the voting shares
21. In the Principal Section 29A :
a. 29A (c) has an account,[Substituted by “at the time of submission of the resolution plan has an account”], or an account of a corporate debtor under the management or control of such person or of whom such person is a promoter, classified as non-performing asset in accordance with the guidelines of the Reserve Bank of India issued under the Banking Regulation Act, 1949[Insertion “or the guidelines of a financial sector regulator issued under any other law for the time being in force] and at least a period of one year has lapsed from the date of such classification till the date of commencement of the corporate insolvency resolution process of the corporate debtor
b.

Insertion of proviso after the proviso in section 29A(c) :

‘Provided further that nothing in this clause shall apply to a resolution applicant where such applicant is a financial entity and is not a related party to the corporate debtor.

Explanation I.—For the purposes of this proviso, the expression “related party” shall not include a financial entity, regulated by a financial sector regulator, if it is a financial creditor of the corporate debtor and is a related party of the corporate debtor solely on account of conversion or substitution of debt into equity shares or instruments convertible into equity shares, prior to the insolvency commencement date.

Explanation II.— For the purposes of this clause, where a resolution applicant has an account, or an account of a corporate debtor under the management or control of such person or of whom such person is a promoter, classified as non-performing asset and such account was acquired pursuant to a prior resolution plan approved under this Code, then, the provisions of this clause shall not apply to such resolution applicant for a period of three years from the date of approval of such resolution plan by the Adjudicating Authority under this Code;”;
c.

For clause (d) :has been convicted for any offence punishable with imprisonment for two years or more;[Substituted by: has been convicted for any offence punishable with imprisonment—

    1. for two years or more under any Act specified under the Twelfth Schedule; or

    2. for seven years or more under any other law for the time being in force:

    Provided that this clause shall not apply to a person after the expiry of a period of two years from the date of his release from imprisonment:

    Provided further that this clause shall not apply in relation to a connected person referred to in clause (iii) of Explanation I;”;
d. Insertion of proviso after section 29A(e) :“Provided that this clause shall not apply in relation to a connected person referred to in clause (iii) of Explanation I;”;
e. Insertion of proviso in Section 29A(g): “Provided that this clause shall not apply if a preferential transaction, undervalued transaction, extortionate credit transaction or fraudulent transaction has taken place prior to the acquisition of the corporate debtor by the resolution applicant pursuant to a resolution plan approved under this Code or pursuant to a scheme or plan approved by a financial sector regulator or a court, and such resolution applicant has not otherwise contributed to the preferential transaction, undervalued transaction, extortionate credit transaction or fraudulent transaction;”;
f. 29A(h) has executed an enforceable guarantee [Substituted by a “guarantee”]infavour of a creditor in respect of a corporate debtor against which an application for insolvency resolution made by such creditor has been admitted under this Code;[ Insertion] and such guarantee has been invoked by the creditor and remains unpaid in full or part.
g. 29A(i) has been [Substituted with “is”]subject to any disability, corresponding to clauses (a) to (h), under any law in a jurisdiction outside India; or
h. In the clause (j) Explanation [Substituted with “Explanation 1”]— For the purposes of this clause, the expression "connected person" means—
i.

Provided that nothing in clause (iii) of this Explanation shall apply to— (A) a scheduled bank; or (B) an asset reconstruction company registered with the Reserve Bank of India under section 3 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; or (C) an Alternate Investment Fund registered with the Securities and Exchange Board of India.".[Substitution with ‘Provided that nothing in clause (iii) of Explanation I shall apply to a resolution applicant where such applicant is a financial entity and is not a related party of the corporate debtor:

Provided further that the expression “related party” shall not include a financial entity, regulated by a financial sector regulator, if it is a financial creditor of the corporate debtor and is a related party of the corporate debtor solely on account of conversion or substitution of debt into equity shares or instruments convertible into equity shares, prior to the insolvency commencement date;]
j.

Insertion after Explanation 1 :

‘ExplanationII.—For the purposes of this section, “financial entity” shall mean the following entities which meet such criteria or conditions as the Central Government may, in consultation with the financial sector regulator, notify in this behalf, namely:—

    (a) a scheduled bank;

    (b) any entity regulated by a foreign central bank or a securities market regulator or other financial sector regulator of a jurisdiction outside India which jurisdiction is compliant with the Financial Action Task Force Standards and is a signatory to the International Organisation of Securities Commissions Multilateral Memorandum of Understanding;

    (c) any investment vehicle, registered foreign institutional investor, registered foreign portfolio investor or a foreign venture capital investor, where the terms shall have the meaning assigned to them in regulation 2 of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2017 made under the Foreign Exchange Management Act, 1999;

    (d) an asset reconstruction company registered with the Reserve Bank of India under section 3 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002;

    (e) an Alternate Investment Fund registered with the Securities and Exchange Board of India;

    (f) such categories of persons as may be notified by the Central Government”.
 
CP Comment: The eligibility criteria u/s 29A is clarified. Financial Entity which is excluded form purview of Section 29A has been defined.
22. In Section 30 of the Principal act :
 
a. Section 30(1) A resolution applicant may submit a resolution plan [Insertion: along with an affidavit stating that he is eligible under section 29A] to the resolution professional prepared on the basis of the information memorandum.
 
CP Comment: This amendment puts the onus for self-certification in terms of eligibility u/s 29A upon the resolution applicant.
b. Insertion of following Proviso after the clause (f) ;
“Explanation.— For the purposes of clause (e), if any approval of shareholders is required under the Companies Act, 2013 or any other law for the time being in force for the implementation of actions under the resolution plan, such approval shall be deemed to have been given and it shall not be a contravention of that Act or law.”
c. Section 30(4) The committee of creditors may approve a resolution plan by a vote of not less than seventy five [substituted by “sixty six”] per cent of voting share of the financial creditors.
d. Insertion of proviso after the third proviso in section – 30
“Provided also that the eligibility criteria in section 29A as amended by the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018 shall apply to the resolution applicant who has not submitted resolution plan as on the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Ordinance.
 
CP Comment: amendment clarifies that it shall apply to the resolution applicant who has not submitted resolution plan as on the date of commencement of this Ordinance.
23. In the section 31 of the Principal Act:
 
a. Insertion of following proviso after sub section 1:
“Provided that the Adjudicating Authority shall, before passing an order for approval of resolution plan under this sub-section, satisfy that the resolution plan has provisions for its effective implementation.
 
CP Comment: Amendment provides that NCLT while approving the resolution plan will not merely look into the sanction of it by the committee of creditors but will also check its effective implementation.
b. Insertion of sub-section after the section 31(3): The resolution applicant shall, pursuant to the resolution plan approved under sub-section (1), obtain the necessary approval required under any law for the time being in force within a period of one year from the date of approval of the resolution plan by the Adjudicating Authority under sub-section (1) or within such period as provided for in such law, whichever is later.”
24. 33(2) Where the resolution professional, at any time during the corporate insolvency resolution process but before confirmation of resolution plan, intimates the Adjudicating Authority of the decision of the committee of creditors [ Insertion: approved by not less than sixty-six per cent, of the voting share”]to liquidate the corporate debtor, the Adjudicating Authority shall pass a liquidation order as referred to in sub-clauses (i), (ii) and (iii) of clause (b) of sub-section (1).
25. In the section 34 of Principal Act,
 
a. 34(1) Where the Adjudicating Authority passes an order for liquidation of the corporate debtor under section 33, the resolution professional appointed for the corporate insolvency resolution process under Chapter II shall [Substituted by “Chapter II shall, subject to submission of a written consent by the resolution professional to the Adjudicatory Authority in specified form”] act as the liquidator for the purposes of liquidation unless replaced by the Adjudicating Authority under sub-section (4).
b. 34(4)(b) the Board recommends the replacement of a resolution professional to the Adjudicating Authority for reasons to be recorded in writing [substituted by “in writing; or” shall be substituted]
c. Insertion after clause (b): the resolution professional fails to submit written consent under sub-section (7) ”;
d. 34(5) For the purposes of clause (a) [substituted by clauses (a) and (c)] of sub-section (4), the Adjudicating Authority may direct the Board to propose the name of another insolvency professional to be appointed as a liquidator.
e. 34(6) The Board shall propose the name of another insolvency professional [Insertion: along with written consent from the insolvency professional in the specified form]within ten days of the direction issued by the Adjudicating Authority under sub-section (5).
26. Section 42 : A creditor may appeal to the Adjudicating Authority against the decision of the liquidator[Insertion: accepting] or rejecting the claims within fourteen days of the receipt of such decision
27. Section 45 If the liquidator or the resolution professional, as the case may be, on an examination of the transactions of the corporate debtor referred to in sub-section (2) of section 43 [omitted] determines that certain transactions were made during the relevant period under section 46, which were undervalued, he shall make an application to the Adjudicating Authority to declare such transactions as void and reverse the effect of such transaction in accordance with this Chapter.
28. In section 60 of Principal Act,
 
a. 60(2) Without prejudice to sub-section (1) and notwithstanding anything to the contrary contained in this Code, where a corporate insolvency resolution process or liquidation proceeding of a corporate debtor is pending before a National Company Law Tribunal, an application relating to the insolvency resolution or bankruptcy of a personal guarantor of such corporate [substituted by “liquidation or bankruptcy of  a corporate guarantor or personal guarantor, as the case may be, of such corporate debtor”] debtor shall be filed before such National Company Law Tribunal.
b. 60(3) An insolvency resolution process or bankruptcy proceeding of a personal guarantor of the corporate debtor [substituted by liquidation or bankruptcy proceeding of a corporate guarantor or personal guarantor, as the case may be, of the corporate debtor]pending in any court or tribunal shall stand transferred to the Adjudicating Authority dealing with insolvency resolution process or liquidation proceeding of such corporate debtor.
29. Section 69 : On or after the insolvency commencement [substituted with “If”], now its reads as: If an officer of the corporate debtor or the corporate debtor—
30. In the section 76 of the Principal Act,
 
a. Marginal heading :Punishement for nondisclosure of dispute or repayment [Substituted by “payment” ]of debt by operational creditor.
b. Section 76(a) an operational creditor has wilfully or knowingly concealed in an application under section 9 the fact that the corporate debtor had notified him of a dispute in respect of the unpaid operational debt or the full and final repayment [substituted with “payment”]of the unpaid operational debt; or
31. In the Section 196 of the Principal Act
 
a. Insertion after Section 196(a)
“(aa) promote the development of, and regulate, the working and practices of, insolvency professionals, insolvency professional agencies and information utilities and other institutions, in furtherance of the purposes of this Code;”;
b. 196(c) levy fee or other charges for the registration [substituted with “for carrying out the purposes of this Code, including fee for registration and renewal”] of insolvency professional agencies, insolvency professionals and information utilities;
32. Section 231: No civil court shall have jurisdiction in respect of any matter in which the Adjudicating Authority [substituted with “Adjudicating Authority or the board”]is empowered by, or under, this Code to pass any order and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any order passed by such Adjudicating Authority [substituted with “Adjudicating Authority or the board”] under this Code.
33. Insertion of a new section 238A after section 238
  “238A The provisions of the Limitation Act, 1963 shall, as far as 36 of 1963. may be, apply to the proceedings or appeals before the Adjudicating Authority, the National Company Law Appellate Tribunal, the Debt Recovery Tribunal or the Debt Recovery Appellate Tribunal, as the case may be.”.
 
CP Comment: with this amendment, 15. Provisions with regard to Limitation Act, 1963 are made applicable to the proceedings under the Code.
34. Insertion of following clauses in the Section239(2)
  “(ea) other proof confirming that there is no payment of an unpaid operational debt by the corporate debtor or such other information under clause (e) of sub-section (5) of section 9;”;
  (fa) the manner of withdrawal of application under section 12A;”.
 
CP Comment: This amendment comes in line with the instructions of Hon’ble Supreme Court in the matter of Uttara Foods where directions were given to ministry of Law to frame rules for withdrawal of application after admission for resolution process.
35. In the section 240 of the Principal Act :
 
a. “(g) the other information under clause (d) of sub-section (3) of section 9; [omitted]
b. Insertion of clause “ja” after clause (j)
“(ja) the last date for submission of claims under clause (c) of sub-section (1) of section 15”;
c. Insertion of following clauses after clause (n)
“(na) the number of creditors within a class of creditors under clause (b) of sub-section (6A) of section 21;

“(nb) the remuneration payable to authorised representative under clause (ii) of the proviso to sub-section ( 6B) of section 21;”

“(nc) the manner of voting and determining the voting share in respect of financial debts under sub-section (7) of section 21;”.
36. Insertion of following Section after section 240 of the principal act;
 

‘240A.(1) Notwithstanding anything to the contrary contained in this Code, the provisions of clauses (c) and (h) of section 29A shall not apply to the resolution applicant in respect of corporate insolvency resolution process of any micro, small and medium enterprises

(2) Subject to sub-section (1), the Central Government may, in the public interest, by notification, direct that any of the provisions of this Code shall—

    (a) not apply to micro, small and medium enterprises; or

    (b) apply to micro, small and medium enterprises, with such modifications as may be specified in the notification.

(3) A draft of every notification proposed to be issued under sub¬section (2), shall be laid before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions.

(4) If both Houses agree in disapproving the issue of notification or both Houses agree in making any modification in the notification, the notification shall not be issued or shall be issued only in such modified form as may be agreed upon by both the Houses, as the case may be

(5) The period of thirty days referred to in sub-section (3) shall not include any period during which the House referred to in sub-section (4) is prorogued or adjourned for more than four consecutive days

(6) Every notification issued under this section shall be laid, as soon as may be after it is issued, before each House of Parliament

Explanation.— For the purposes of this section, the expression “micro, small and medium enterprises” means any class or classes of enterprises classified as such under sub-section (/) of section 7 of the Micro, Small and Medium Enterprises Development Act, 2006.’
 
CP Comment: Amendment provides relief for MSME defaulting companies whose promoters are exempted now to bid for their companies which were earlier barred u/s 29A.


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