Lenders Law

The Supreme Court of India has, in a recent decision in Gloster Limited vs. Gloster Cables Limited & Ors. , delivered an important clarification on the limits of insolvency jurisdiction , particularly where intellectual property ownership disputes intersect with the Corporate Insolvency Resolution Process (CIRP). The ruling is significant for lenders, resolution applicants and insolvency professionals, as it reinforces that insolvency forums are not substitutes for civil courts in adjudicating complex title disputes. Background:  The dispute arose in the CIRP of Fort Gloster Industries Limited , where competing claims were raised over the ownership of the trademark “Gloster” . The successful resolution applicant asserted that the trademark was a corporate debtor asset , capable of being transferred under an approved resolution plan. Another party (who was assigned the rights over the trademark vide an assignment agreement, and was also an associate company of t...

The Insolvency and Bankruptcy Code, 2016 (“IBC”) enables operational creditors to initiate corporate insolvency resolution proceedings under Section 9 upon occurrence of a default. While the statutory framework remains unchanged, recent admission-stage practices—particularly at the Delhi Bench of the NCLT—signal a clear shift toward enhanced procedural and bona fide scrutiny . 1. Affidavit Affirming Absence of Collusion: A recurring direction from the Tribunal is the filing of a specific affidavit affirming that the Section 9 petition is not collusive . This affidavit typically requires the applicant to declare that: The petition is not filed in coordination with the corporate debtor, its promoters, directors, or related parties; The insolvency process is not being triggered to achieve an indirect or strategic objective, including management change, regulatory arbitrage, or shielding the corporate debtor from other proceedings. This concern is no longer theoretical. In  Hyt...

The Insolvency and Bankruptcy Code (IBC) places a heavy responsibility on the Resolution Professional (RP) to ensure that only eligible Resolution Applicants (RAs) —and their connected persons —participate in a Corporate Insolvency Resolution Process (CIRP). With the recent IBBI Circular No. IBBI/CIRP/88/2025 dated 18 November 2025 , the scope, depth, and documentation requirements for such due diligence have become even more critical. The RP must directed to place a detailed note on section 29A compliance before the CoC when resolution plans are considered and ensure that deliberations and observations of the CoC are properly recorded in the minutes. This post distils the framework I personally follow as a legal practitioner, incorporating including digital tools like Tofler , ZaubaCorp , public-domain searches, SEBI jurisprudence on “persons acting in concert,” and a printable checklist. Understanding Section 29A and Who It Covers: Section 29A extends ineligibility not only t...

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 Hon'ble Supreme Court’s ruling in  EPC Constructions India Ltd. v. Matix Fertilizers and Chemicals Ltd.   (2025) clarifies that preference shares—however structured—remains part of a company's share capital, and cannot be regarded as "debt". Even if classified as “financial liability” under Ind AS 32, legal character under the Companies Act still governs enforceability. A cautionary tale for investors and creditors relying on redeemable or “put option” structures to secure repayment.  The Case in Brief In EPC Constructions (supra), the appellant had over ₹400 crores in receivables for project work. The appellant/ former operational creditor agreed to convert its dues into 8% Cumulative Redeemable Preference Shares (CRPS)—redeemable in three years. When the respondent/ debtor failed to redeem, the appellant (then in liquidation), through its liquidator, filed a Section 7 petition under the Insolvency and Bankruptcy Code (IBC), claiming default on redemption. Both ...

Section 128 of the Indian Contract Act, 1872 stipulates: “ The liability of the surety is co-extensive with that of the principal debtor, unless it is otherwise provided by the contract . Laxmi Pat Surana v. Union Bank of India (2021, SC) – A guarantor’s liability arises the moment the principal borrower commits default. SBI v. Athena Energy Ventures (2020, NCLAT) – A creditor can proceed simultaneously against the corporate debtor and guarantor. Thus, it was understood that once the principal borrower has defaulted, and an IBC petition is being filed for the principal borrower, relevant steps may also be taken against the guarantor for initiation of the guarantor's insolvency proceedings simultaneously.  The Turning Point — SBI v. Deepak Kumar Singhania (2025, NCLAT) In February 2025, the NCLAT in State Bank of India v. Deepak Kumar Singhania changed the ground reality. What Happened SBI had lent to LML Ltd. , which defaulted and went into liquidation. ...

The Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process of Personal Guarantors to Corporate Debtors) Rules, 2019 (“PG Rules, 2019”) provide a framework for initiating insolvency proceedings against personal guarantors of corporate debtors. One of the critical procedural requirements under Rule 7(1) is the issuance of Form B notice by the financial creditor or operational creditor to the guarantor. This notice serves as a demand for repayment and must be accompanied by supporting documents to substantiate the default. 1. Purpose of Form B Notice Form B notice is a formal communication to the personal guarantor , informing them of the default by the corporate debtor and demanding repayment of the guaranteed debt. Proper documentation ensures the guarantor is aware of the exact amount of liability , and reduces chances of disputes in later proceedings. Annexing relevant documents also strengthens the application when filed wi...

  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...

When an operational creditor issues a demand notice under Section 8 of the Insolvency and Bankruptcy Code, 2016 , the corporate debtor has 10 days to: Repay the amount due, or Bring to notice the existence of a dispute . Sometimes, the real issue arises when a reply is sent — but instead of being a genuine dispute, it is a tactic to stall or avoid insolvency proceedings, or instead of a full reply, the corporate debtor sends an “interim reply” within those 10 days — saying something like “ We are in the process of preparing a detailed response to the Demand Notice. Meanwhile, we request you to kindly treat this communication as our interim/ holding response” .  Now, the question which arises here is: does this obligate the creditor to wait further before filing an application under Section 9? The Legal Framework Statutory Timeline : The Code strictly prescribes 10 days from receipt of the Section 8 notice. There is no provision for extending this timeline merely bec...