Insolvency & BankruptcyInsolvency Ordinance Faces Challenge

December 11, 20170
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.

Leave a Reply

Your email address will not be published. Required fields are marked *

Current day month ye@r *

© 2020-21 AMLEGALS Law Firm in Ahmedabad, Mumbai, Kolkata, New Delhi, Bengaluru for IBC, GST, Arbitration, Contract, Due Diligence, Corporate Laws, IPR, White Collar Crime, Litigation & Startup Advisory, Legal Advisory.


Disclaimer & Confirmation As per the rules of the Bar Council of India, law firms are not permitted to solicit work and advertise. By clicking on the “I AGREE” button below, user acknowledges the following:
    • there has been no advertisements, personal communication, solicitation, invitation or inducement of any sort whatsoever from us or any of our members to solicit any work through this website;
    • user wishes to gain more information about AMLEGALS and its attorneys for his/her own information and use;
  • the information about us is provided to the user on his/her specific request and any information obtained or materials downloaded from this website is completely at their own volition and any transmission, receipt or use of this site does not create any lawyer-client relationship; and that
  • We are not responsible for any reliance that a user places on such information and shall not be liable for any loss or damage caused due to any inaccuracy in or exclusion of any information, or its interpretation thereof.
However, the user is advised to confirm the veracity of the same from independent and expert sources.