INDIA Law and Practice Contributed by: Shardul Shroff, Misha, Kritika Poddar and Aishwarya Satija, Shardul Amarchand Mangaldas & Co
Shardul Amarchand Mangaldas and Co Amarchand Towers, 216 Okhla Phase III Okhla Industrial Estate Phase III New Delhi Delhi 110020 India Tel: +91 11 4060 6060 Email: shardul.shroff@amsshardul.com Web: www.amsshardul.com
enterprises under the Micro, Small and Medium Enter - prises Act, 2006. The Companies Act, 2013 (CA 2013) allows for vol - untary schemes of arrangements and compromise between the company and its creditors or members and winding up of companies on grounds other than the inability of the company to pay its debts such as (inter alia): • the company has voluntarily decided to be wound up; • it is just and equitable to wind up the company; • the company has acted against the security and interests of the country; or • the affairs of the company are being conducted in a fraudulent manner. In addition to statutory regimes, the Reserve Bank of India (RBI) (banking regulator) periodically issues circulars and notifications for the restructuring of stressed assets outside the remit of the Code. 1.2 Types of Insolvency Types of Insolvency Under Indian Law Under Indian law, insolvency proceedings may be ini - tiated against a company either under the Code or under the CA 2013. The grounds on which insolvency proceedings may be initiated under the two pieces of legislation vary.
1. Overview of Legal and Regulatory System for Insolvency/Restructuring/ Liquidation 1.1 Legal Framework The restructuring market in India is composed of var - ious processes under different pieces of legislation and different frameworks. The insolvency landscape in India witnessed a com - plete change in 2016 with the enactment of the Insol - vency and Bankruptcy Code, 2016 (the “Code”). The Code is a comprehensive piece of legislation that provides for the corporate insolvency resolution pro - cess (CIRP) and liquidation for all companies exclud - ing financial service providers (FSPs). The Code also governs the insolvency resolution and bankruptcy of individuals and partnership firms. However, provisions relating to partnership firms have not yet been enacted and those relating to individuals have only been enacted in respect of personal guaran - tors of the corporate debtor (CD). Pending enactment of a comprehensive insolvency regime for FSPs, the government has extended the application of the Code to non-banking financial institutions with asset sizes above 500 crores. The Code was amended in 2021 to introduce a pre- packaged insolvency resolution process (PPIRP) for companies classified as micro, small and medium
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