“Misuse of the insolvency process has been coming up more and more often in recent years, and the courts have already dealt with a fair number of cases where companies or creditors tried to bend the IBC to serve purposes it was never meant for,” said Piyush Agrawal, Partner, AQUILAW.
IBC practitioners also pointed out that the Code does not contain a specific provision dealing with “misuse” of the insolvency framework. This, they said, raises questions about whether the National Company Law Tribunal may have jurisdiction in this matter.
“In the absence of clear legal guidance, insolvency professionals will likely rely on the facts of each case, surrounding circumstances, established legal principles, circulars issued…