In a recent case, Smithton Ltd v Naggar  EWHC 680 Ch, the Court of Appeal reconsidered the difference between de facto and shadow directors.A de facto director is a person who performs the functions of a director but who has not been formally appointed as such (s250 Companies Act 2006 (“CA 2006”)). Whereas, a shadow director is a person in accordance with whose directions or instructions the directors of the company are accustomed to act (s251(1) CA 2006).Smithton Ltd (the “Company”) claimed for loss suffered after two of its clients became insolvent and defaulted under their contracts. Both of these clients were introduced to the Company by Mr Naggar, who was a director of the holding company, Dawnay Day International Limited. The Company claimed that Mr Naggar was either a de facto or a shadow director and had breached his statutory duties towards the Company, in particular, his obligations to disclose conflicts … [Read more...] about UK Legal Update: De facto vs Shadow Directorships
Insolvency vs default
Share Tweet Plus One Pin It Email Print By: ANUPAM LAL DAS March 26, 2018 10:39 am Change Font Size The Insolvency and Bankruptcy Code, 2016 (“Code”) was conceived as a path-breaking legislation to consolidate and amend the laws relating to reorganisation and insolvency resolution of corporate persons, partnership firms and individuals, in a time bound manner. The avowed objective was also to secure maximization of the value of assets of such persons, to promote entrepreneurship and balance the interest of all the stakeholders. The Legislative intent was to improve ease of doing business and to facilitate more investments, leading to a higher economic growth and development. The Supreme Court of India in a recent judgment in Innovative Industries Vs. ICICI Bank (2018) 1 SCC 407, authored by Hon’ble Justice R.F. Nariman, has exhaustively dealt with the provisions of the Code. It has eruditely delved into the Bankruptcy Reforms Act, 1978, adopted by … [Read more...] about The Insolvency And Bankruptcy Code: Some Fundamentals And Issues
Share Tweet Plus One Pin It Email Print By: Ashok Kini August 20, 2018 9:16 pm Change Font Size ‘We repeat that the object of the Code, at least insofar as operational creditors are concerned, is to put the insolvency process against a corporate debtor only in clear cases where a real dispute between the parties as to the debt owed does not exist.’ The Supreme Court has held that an insolvency process cannot be put into operation when there is a pending proceeding challenging against an arbitral award. A bench of Justice Rohinton Fali Nariman and Justice Indu Malhotra (in K Kishan vs. Vijay Nirman Company Pvt Ltd) observed that filing of Section 34 (Arbitration) petition against an arbitral award shows a pre-existing dispute which culminates at the first stage of the proceedings in an award continues even after the award, at least till the final adjudicatory process under Sections 34 & 37 has taken place. In this case, the NCLT had admitted a … [Read more...] about Insolvency Process Can’t Be Admitted During Pendency Of Proceedings Challenging Arbitral Award: SC [Read Judgment]
By: Tariq Khan & Byron Sequeira 29 April 2019 12:04 PM GMT To borrow the golden words of Justice Rohinton F. Nariman in Swiss Ribbons Pvt. Ltd. & Anr. vs. Union Of India WP(Civil) No. 99 of 2018 whereby upholding the Constitutional validity of the Insolvency and Bankruptcy Code, 2016 ("IBC") it was held as under: "85. The Insolvency Code is legislation which deals with economic matters and, in the larger sense, deals with the economy of the country as a whole. Earlier experiments, as we have seen, in terms of legislations having failed, 'trial' having led to repeated 'errors', ultimately led to the enactment of the Code. The experiment contained in the Code, judged by the generality of its provisions and not by so-called crudities and inequities that have been pointed out by the petitioners, passes constitutional muster. To stay experimentation in things economic is a grave responsibility, and denial of the right to experiment is fraught with serious … [Read more...] about 40 Important Judgments On Insolvency And Bankruptcy Code, 2016 [Part-1]
Can Flat Buyers initiate insolvency proceedings against Builders under the Insolvency & Bankruptcy Code? This question assumes greater significance now because many real estate giants are facing insolvency proceedings in various Company Law Tribunals under the new I & B Code, 2016 across the country. Latest is the case of J.P. Infratech which is one of the largest real estate Developer in North India. Flat buyers are in absolute legal chaos.The ‘locus standi’ of the flat buyers for initiating Insolvency Resolution Process against the defaulting Real Estate Developer Companies is a grey area. Under Chapter II of the I & B Code, 2016, either the Financial Creditor, Operational Creditor or the Corporate Debtor can initiate Insolvency Resolution Process as per Sec.7, 9 and 10 respectively. But the legal question as to whether a flat purchaser who invested his hard earned money for purchasing residential/ commercial flats would come in any of the above … [Read more...] about Can Flat Buyers Initiate Insolvency Proceedings Against Builders Under The Insolvency & Bankruptcy Code?