NCLAT says lenders cannot treat telcos spectrum as security interest under insolvency proceedings
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Last Updated: Apr 13, 2021, 10:59 PM IST
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Synopsis
NCLAT on Tuesday ruled that debt-ridden telecom companies undergoing insolvency proceedings cannot claim rights to their spectrum, which is a natural resource unless requisite spectrum usage payments have been made to the government.
Agencies
The National Company Law Appellate Tribunal (NCLAT) on Tuesday ruled that debt-ridden telecom companies undergoing insolvency proceedings cannot claim rights to their spectrum, which is a natural resource unless requisite spectrum usage payments have been made to the government. In what could be a landmark judgement amid multiple telecom players undergoing proceedings under the insolvency law, a three-member bench of the tribunal also made it clear that spectrum cannot be treated as a security interest by the lenders .
A Bench comprising of
Navin Sinha and
KM Joseph observed that an application under Section 34 of the Arbitration and Conciliation Act to set aside an award is covered by moratorium under Section 14 of the Insolvency and Bankruptcy Code.
Section 34 proceeding is a proceeding against the corporate debtor in a court of law pertaining to a challenge to an arbitral award and would be covered just as an appellate proceeding in a decree from a suit would be covered, the bench headed by Justice RF Nariman observed in the judgment titled P Mohanraj & Ors. v. M/s Shah Brothers Ispat Ltd.
MSMEs get new insolvency route
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MSMEs get new insolvency route
TNN / Apr 6, 2021, 08:41 IST
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(Representative image)
NEW DELHI: The Centre has promulgated an ordinance to speed up the insolvency resolution process for micro, small and medium enterprises (MSMEs), which are expected to be the hardest hit by the pandemic.
The ordinance, promulgated on Sunday, provides for a pre-packaged insolvency resolution process, something that was not available so far.
Last week, TOI had reported that the Union Cabinet had recommended the ordinance, which has now received the green light from President Ram Nath Kovind. Under the provisions, an MSME can avail of the special option, provided it has used the window during the preceding three years, or was part of the corporate insolvency resolution process in the past or is facing liquidation, apart from certain other conditions.
Summary
One of the key drivers of economic recovery in India will be the efficient movement of capital from inefficient firms to efficient ones. The economic downturn caused by the coronavirus pandemic has been severe, and India’s economy was one of the worst affected in 2020–2021. Though the economy is recovering faster than initial estimates, sustained economic recovery will not take place if stressed businesses cannot restructure their debts properly or if failing firms cannot be resolved efficiently. India’s bankruptcy law is key to solving these challenges.
In 2016 India enacted the Insolvency and Bankruptcy Code, 2016 (IBC), which was a landmark reform to the nation’s financial system and the first comprehensive law to regulate insolvency.
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