NCLAT Ruling on Maintainability of Application under the IBC after Winding Up Proceeding is Initiated

In Indiabulls Housing Finance Limited v. Shree Ram Urban Infrastructure Limited, the National Company Law Appellate Tribunal (‘NCLAT’) was faced with the issue of whether an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (‘IBC’) is maintainable when winding up proceedings against the ‘Corporate Debtor’ have been already initiated. The impugned order, passed by the National Company Law Tribunal, Mumbai (‘NCLT Mumbai’) had dismissed the application as not maintainable as the winding up proceeding against the ‘Corporate Debtor’ had already been initiated by the High Court of Bombay. The NCLAT upheld the NCLT decision and held that once the second stage i.e., the initiation of liquidation process, is initiated, then there is no question of reverting to the first stage i.e., initiation of corporate insolvency resolution process (‘CIRP’).

Published In:Inter Alia - Quarterly Edition - June 2018 [ English Chinese japanese ]
Date: June 1, 2018