Lenders Law

IBBI Valuation Framework – Current vs Proposed The Insolvency and Bankruptcy Board of India (IBBI) has released a Discussion Paper on Strengthening the Valuation Process under the IBC . The IBBI's proposed overhaul of valuation standards under the Insolvency and Bankruptcy Code seeks to eliminate inconsistencies, enhance transparency, and reduce subjectivity in valuation outcomes. Key reforms include introducing a unified valuation standard, redefining the appointment structure of valuers, and expanding valuation scope to intangible and synergy values. These reforms aim to strengthen market confidence, improve CoC decision-making, and bring valuation practices closer to global norms. However, proportionality remains essential—larger insolvencies require deeper analytical structures, while MSMEs should not be burdened with disproportionate compliance costs. Stakeholder feedback remains critical to fine-tuning these reforms. This blog analyses the changes suggested in the...

  The Insolvency and Bankruptcy Code, 2016 (“ IBC ”) created the framework of Information Utilities (IUs) to serve as authenticated repositories of financial information. A record of default from an IU is treated as conclusive evidence under Section 215 of the Code. A recurring issue for creditors is: Should the default be filed with an IU before sending a demand notice, or only before filing an insolvency application? Statutory Position Section 215(2) IBC provides that financial creditors shall submit information of default to an IU. Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016  (" Application to AA Rules ") requires that an application be accompanied by a record of default from an IU “wherever available”. Further, Regulation 20(1A) of the IBBI (Information Utilities) Regulations, 2017 , as inserted by Notification No. IBBI/2022-23/GN/REG085 dated 14 June 2022, expressly provides that:  “Before filing an applicatio...

  The creditors might have given loan to a company based on the credentials of the group, and the management might have siphoned the funds into related entities, causing insolvency of the borrower company. In such a situation, the creditors of the borrower insolvent company will suffer huge financial loss. Further, in some cases, there may be practical difficulties in carrying out the insolvency proceedings of one or more entity within a group due to intermingling of assets of the group entities. There is, therefore, a need to carve an exception to the concept of separate legal entity, and pierce the corporate veil by bringing the assets of the solvent entities within the purview of the insolvency proceedings of its associate or subsidiary.   In India, the concept of group insolvency gained prominence in the case of Videocon Industries Limited [1] , wherein the Hon’ble National Company Law Tribunal, Mumbai Bench held that in the corporate insolvency resolution process of Video...