SC upholds 100-allottees rule in IBC Amendment
Real Estate

SC upholds 100-allottees rule in IBC Amendment

In a step that will safeguard real estate companies from frivolous litigation, the Supreme Court (SC) has upheld the constitutional validity of the Insolvency and Bankruptcy Code (IBC) amendment that requires at least 100 allottees, or 10% of creditors, to invoke an insolvency petition against a company.

A Bench of Justices said in its order that insisting on a threshold concerning these categories of creditors would lead to a halt in indiscriminate litigation, possibly resulting in an uncontrollable docket explosion as far as the authorities who work with the Code are concerned.

Upholding the constitutional validity of Sections 3, 4, and 10 of the IBC (Amendment) Act, 2020, the court said this was not a situation where, while treating them as financial creditors, they are totally deprived of the right to apply under Section 7 as part of the legislative scheme. The legislative policy reflects an attempt at shielding the corporate debtor from what it considers would be either for frivolous or avoidable applications, the court added.

The court backed the IBC amendment, saying it is likely to ensure the filing of the application is preceded by a consensus at least by a minuscule percentage of similarly placed creditors.

In a decision that will give impetus to a resolution plan, the SC has also upheld the inclusion of Section 32A to the Code that ensures a resolution applicant is not saddled with the burden of the actions of the erstwhile management.

The IBC had taken a major step in providing a clean slate to buyers of stressed companies by barring criminal proceedings such as attachment, seizure, or retention of the property of such companies for offences committed prior to the initiation of insolvency proceedings.

Also read: Realtor-to-owner loan is operational debt: Tribunal

Image Source

In a step that will safeguard real estate companies from frivolous litigation, the Supreme Court (SC) has upheld the constitutional validity of the Insolvency and Bankruptcy Code (IBC) amendment that requires at least 100 allottees, or 10% of creditors, to invoke an insolvency petition against a company. A Bench of Justices said in its order that insisting on a threshold concerning these categories of creditors would lead to a halt in indiscriminate litigation, possibly resulting in an uncontrollable docket explosion as far as the authorities who work with the Code are concerned. Upholding the constitutional validity of Sections 3, 4, and 10 of the IBC (Amendment) Act, 2020, the court said this was not a situation where, while treating them as financial creditors, they are totally deprived of the right to apply under Section 7 as part of the legislative scheme. The legislative policy reflects an attempt at shielding the corporate debtor from what it considers would be either for frivolous or avoidable applications, the court added. The court backed the IBC amendment, saying it is likely to ensure the filing of the application is preceded by a consensus at least by a minuscule percentage of similarly placed creditors. In a decision that will give impetus to a resolution plan, the SC has also upheld the inclusion of Section 32A to the Code that ensures a resolution applicant is not saddled with the burden of the actions of the erstwhile management. The IBC had taken a major step in providing a clean slate to buyers of stressed companies by barring criminal proceedings such as attachment, seizure, or retention of the property of such companies for offences committed prior to the initiation of insolvency proceedings. Also read: Realtor-to-owner loan is operational debt: Tribunal Image Source

Next Story
Products

Viva ACP Launches FR A1-Rated Honeycomb Panels for Fire Safety

Viva, Asia’s largest manufacturer and supplier of aluminium composite panels (ACP) introduced its FR A1-rated Honeycomb Panels, setting a new industry benchmark for fire safety and architectural excellence. Engineered to deliver exceptional performance, these panels combine advanced fire-resistance technology with aesthetic versatility, offering a revolutionary solution for safety-critical environments.The FR A1 rating represents the highest standard of fire resistance under the European Standard EN 13501-1, signifying non-combustibility and zero contribution to fire, smoke, or toxic emissio..

Next Story
Real Estate

Almal Real Estate Expands into Commercial, Global Markets

Almal Real Estate Development is soon to announce its upcoming expansion into new verticals and international markets as part of its strategic growth plans for 2030. The company, known for its innovative luxury residential and hospitality developments, is preparing to diversify into the commercial sector with the introduction of The Smart Space, a network of business centers in UAE featuring five-star amenities. Additionally, Almal is entering new markets in Bali and Thailand as a community developer, focusing on villa and townhouse projects.The expansion into the commercial real estate sector..

Next Story
Infrastructure Urban

NABARD Approves Rs 9.03 Billion for 127 Projects in Himachal

The Himachal Pradesh government has secured approval from the National Bank for Agriculture and Rural Development (NABARD) for 127 projects worth Rs 9.03 billion for the 2024-25 fiscal, Chief Minister Sukhvinder Singh Sukhu announced. During a meeting with MLAs from Kangra, Kullu, Kinnaur, Solan, Chamba, Bilaspur, and Lahaul-Spiti districts to discuss priorities for the 2025-26 budget, Sukhu said the approved projects include 50 MLA-priority schemes under the Public Works Department, valued at Rs 4.12 billion, and 23 MLA-priority schemes under the Jal Shakti Vibhag, costing Rs 1.79 billio..

Advertisement

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Advertisement

Talk to us?