To check eligibility Test for filing Resolution plan by RA

To check eligibility Test for filing Resolution plan by Resolution applicant.

Meaning of IBC Section 29A

• When the Insolvency and Bankruptcy Code, 2016 was passed by the Indian Parliament, insolvency rules were still in the early stages in India. Its goals were to safeguard an individual’s or corporation’s interest in insolvency or bankruptcy and to make doing business in India easier.
• Insolvency and Bankruptcy Code, 2016 Section 29A is the most controversial section of IBC. It was amended multiple times to remove the errors. Insolvency and Bankruptcy Code, 2016 clearly stated under Section 29A talks about the circumstances under which an individual acquires their eligibility to apply for a resolution. The precise interpretation of this provision and the elimination of any irregularities or inaccuracies that may have been there have been examined numerous times in the legal system.
• So, Section 29A—often considered as the IBC’s most controversial clause—was implemented through an amendment. The provision of section 29A’s adversely prescribed list prohibits from applying for resolution.

Important & Purpose of Section 29A :

• Indian Parliament enacted the landmark legislature Insolvency and Bankruptcy Code, 2016  have basic purpose of the IBC Code, 2016 is to facilitate the come & check the adoption of a resolution plan for corporate debtor.
• The Insolvency and Bankruptcy Code, 2016 was developed to address a highly fragmented & slow-moving regulatory environment related to bankruptcy & stressed debt resolution, as well as an alarming growth in non-performing loans (NPAs) in the Indian banking sector in India.
• Importance of Section 29A was introduced in the Insolvency and Bankruptcy Code, 2016 in Nov 2017, IBC to stop stubborn insolvent company promoters from trying to take over the business and give creditors a significant haircut.  Now a days  IBC Section 29A is the subject of the majority of IBC-related litigation.
• Section 29A was initially written in such a stringent way that it blocked off too many options, which decreased the likelihood of obtaining a resolution plan for each layer of restriction it added. Moreover that, several of the unjustified expansions found in section 29A were found in other provisions. This study reads the text through and addresses a few pertinent aspects.
• The Section lists a wide range of disqualification standards for resolution applicants, indicating which individuals will not be permitted to submit a resolution plan in accordance with the IBC.  The Main Objective of the introducing the resolution plan is to Support &b help already troubled corporate debtor as well as the creditors.Latently NCLT in its last so many decisions has allowed promoters to file their resolution plan after company has been declared insolvent.
• While many academics applauded these choices for protecting the defaulting entity’s resuscitation, authors are concerned that this will ultimately undermine the goal of this code by weakening the intent & purpose of section 29A under Insolvency and Bankruptcy Code, 2016.

Requirements for introducing IBC Section 29A

• The Insolvency and Bankruptcy Code Section 29A was come into picture in order to curtail a bar on the eligibility of the resolution applicant. IBC Section 29A is a restrictive concern/ relevant provision that particularly lists down specified class of persons who are ineligible to be RA’s in the Company. Section 29A of IBC in its wholly not only one restricts to the promoters of the Corporate Debtors Company, However also people connected  or any kind of related party with promoters of the CD Company.
• However Provision of section 29A initially was written in an overly strict manner, far too many points were changed / omitted from consideration as resolution applicants.
• Therefore, by way of a notification dated January 6, 2020, a simplified version of section 29A was established to address the issue.  Currently from 6^th Jan 2020 Section 29A allowed in the provision that sale during liquidation, as well as sales outside the liquidation process, and participation in a scheme of arrangement during liquidation processes.
• However, Section 29A has overly expanded the grounds for disqualification to a point where it has significantly decreased the number of potential resolution applicants based on what may be considered generalised disqualification criteria, which do not distinguish between a legitimate applicant and one who has prior convictions.
• In the matter of RBL Bank Ltd v. MBL Infrastructure Ltd, the NCLT court held a similar opinion, stating that the legislature’s intention could not have been to disqualify the promoters as a class but rather to exclude those individuals who, given their past, could undermine the legitimacy of the resolution process.

Required to make & encourage restructuring instead of liquidation of CD.

• Under the New IBBI Amendments made via change in (the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 ) liquidation process regulations, ineligible persons are now barred from being part of any compromise or arrangement at stage of liquidation under the Insolvency and Bankruptcy law.
• Moreover, In case secured creditor decides to sell secured assets on their own, they are likewise prohibited from selling them to individuals who are not eligible under the the Insolvency and Bankruptcy Code, 2016. This was introduced with the express purpose of overturning certain NCLT rulings that held that, in cases where a secured creditor sold secured assets to the CD former promoters as per Section 52 of the Insolvency and Bankruptcy Code, 2016, there was no prohibition against such sales.
• Although many people think that legitimate promoters will lose their eligibility and that acquirers/bidders and promoters won’t compete, creditors won’t get enough consideration.
• Due to the controversy surrounding the Ordinance, the Indian Govt is expected to announce some easing of the “strict” qualifying standards for resolution applicants and bidders and is also thinking about reviewing the sweeping prohibitions outlined in the Ordinance.
• The Resolution Professionals take control of the CD company with primary goal of safeguarding its assets & essential business operations once moratorium period begins. The management of the Corporate debtor company is done by one person.
• It makes clear where the business debtor’s promoters and management stand during the insolvency and liquidation procedure. It eliminates the contradiction between the Act and the Insolvency and Bankruptcy Code.

Rajput Jain and Associates – 29A Eligibility Check Services

• Supreme Court, in the matter of Swiss Ribbons vs. UOI, given its landmark ruling & upheld the constitutional validity of the Insolvency and Bankruptcy Code, 2016 Section 29A, On consideration of arguments put forward,  Supreme Court found that Section 29A of the Insolvency and Bankruptcy Code, 2016 includes in its purview those persons or class of persons who unfit or are considered to be unfit for acquiring, managing and/or reviving the business of the corporate debtor in question, viz. insolvent persons, persons managing accounts which have been classified as nonperforming asset etc.
• In addition, the Insolvency and Bankruptcy Code, 2016 now offers a window through section 12A for CD withdrawal from the Corporate Insolvency Resolution Process, if maximum value the optimisation by legitimate promoters is taken into consideration. Thus, the entirety of Section 29A of the Insolvency and Bankruptcy Code, 2016 was upheld, with the exception of a reduction in the number of “related parties” who must successfully complete a test in order to be for disqualification.
• RJA Eligibility Check solution is trailer made or custom-built to help & support to the  Insolvency Professionals analyze Resolution applicant’s, discover all related or unrelated connected parties, establish CD / independence of RA’s & analyze CD’s.

• • 29A Cerificate under the IBC law
  • Related party under section 29a of ibc Code
  • Section 29A of IBC act