Insolvency Ordinance Faces Challenge
The Insolvency Ordinance, has been challenged in the form of Writ Petition before the Punjab and Haryana High Court, by RMS Pvt. Ltd.
RMS Pvt. Ltd. had defaulted on approximately Rs. 100 Crores worth of loan. The resolution plan for repayment of dues to the lenders, had been submitted by the Promoter, right before the Ordinance came out.
The passing of such Ordinance made the promoter of RMS Pvt. Ltd ineligible to participate in the Resolution process. Hence, the Company challenged the Ordinance on the following two grounds:
1.Retro-activity of the Promoter
2.Failure to distinguish between a genuine promoter and a wilful defaulter.
Impact Of Ordinance:
The Ordinance was introduced with an aim to keep out, wilful defaulters and people associated with non-performing assets or those who are habitually non-compliant, who pose a risk to the successful resolution of the insolvency of a company.
It barred the above categories of promoters from participating in the Resolution process as well as from bidding their assets until their dues were cleared.
The Punjab and Haryana High Court has issued a Notice to the Government. The matter has been posted for hearing in January,2018.
This is the onset of new disputes on the basis of the Ordinance. We at AMLEGALS have anticipated this fact in our November IBC intelligence series under Change & Impact of Ordinance.