TABLE OF CONTENTS

Declaration ii

Certificate iii

Acknowledgement iv

Abstract v

Table of Content vi

CHAPTER 1-INTRODUCTION 1-12

1.1 Early Insolvency Regime in India 2

1.2 Knowledge Gaps that led to the Study 7

1.3 Research Problem 7

1.4 Research Questions 7

1.5 Research Methodology 8

1.6 Objectives of the Study 9

1.7 Scope of the Study 9

1.8 Significance of the Study 9

1.9 Limitations of the Study 10

1.10 Scheme of the Study 11

CHAPTER 2- LITERATURE REVIEW 13-28

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CHAPTER 3-INSOLVENCY AND BANKRUPTCY LAWS 29-45

JURISPRUDENTIAL ANALYSIS

3.1 Historical Background of Insolvency 30

3.2 History of Bankruptcy in Western Europe 31

3.3 History of Bankruptcy in the United States 32

3.4 Theories of Insolvency 33-42

3.4.1 The Creditor-Wealth Maximization Theory 35

3.4.2 The Broad-based Contractarian Approach 38

3.4.3 The Communitarian Vision theory 39

3.4.4 Vision Theories 40

3.4.5 Multiple Values Theory 41

3.4.6 Explicit Values Approach 42

CHAPTER 4- INDIAN LEGAL FRAMEWORK FOR 44-101

INSOLVENCY AND BANKRUPTCY

4.1 Early Legislative Framework in India for 44

Winding up of Companies and Corporate Rescue

4.2 Issues that affect the interest of Financial Creditors 52

in a Corporate Insolvency Resolution Process

4.2.1 Delays in following the timelines fixed by the Code 54

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4.2.2 Practical difficulties in following the 270 days’ time line 56

4.2.3 Difficulty in approving resolution plans resulting in 57

delays in debt recovery

4.2.4 Discretionary power of the Adjudicating Authority 59

4.2.5 Different Class of financial creditors and dividing the pie 60

4.2.6 Promoters delaying settlement with financial creditors 62

4.2.7 Lack of Diligence of the Insolvency Professionals 63

4.2.8 No Provision for Contingent liabilities and multiple charges on an asset. 64

4.2.9 More liquidation than resolution 65

4.2.10 More Operational Creditors approaching the Tribunal 66

than Financial Creditors

4.2.11 Lack of due diligence and failure in observing prudent lending guidelines 68

4.2.12 Interests of dissenting financial creditors not addressed 71

4.2.13 Covid-19 and its impact on bankers/financial creditors 72

4.2.14 Pre-Packaged Insolvency Resolution Process (PPIRP) 73

4.3 Issues that affect the interest of Operational Creditors 74

in a Corporate Insolvency Resolution Process

4.3.1 Timeline breaches and its impact on operational creditor 75

4.3.2 Ericson’s case and the plight of operational creditor 76

4.3.3 Procedure under Section 8 and related issues 78

4.3.4 Joint applications against a common debtor are not allowed 80

for operational creditors

4.3.5 Lack of representation in the Committee of Creditors and the 81

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 possible abuse of power by Committee of Creditors

4.3.6 Withdrawal of application under Section 12 A 83

4.3.7 Conflict between Section 12 A and Section 29A. 84

4.3.8 Recent Amendments, Judicial Pronouncements and its 85

impact on Operational Creditor.

4.4 Issues that affect the interest of Corporate Debtors 88

4.4.1 Minimum default amount and its impact on debtors 89

4.4.2 Lack of expertise or business acumen of the insolvency 90

professional who will be managing the affairs of the company.

4.4.3 Any financial creditor can bring an action against the debtor under 91

section 7, even if there is no default against him at the outset.

4.4.4 Creditor in control approach under IBC and the possible 92

abuse of it by the CoC.

4.4.5 Provision for withdrawal of application under the amended 93

section 12A and the possible abuse of it.

4.4.6 Section 29 A and its ill effects on the corporate debtor 95

it prevents a genuine corporate debtor from bidding for his entity.

4.4.7 More Liquidation of companies than Resolution 99

4.4.8 Delays in the CIRP and its impact on corporate debtors 100

4.4.9 Creditors using IBC as a tool for Debt Recovery 100

4.4.10 More Debt Recovery under IBC compared to other forums 101

4.4.11 Limited Role for the Adjudicating Authority under the Code 101

4.4.12 Insolvency of Group Companies not addressed under the Code 102

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4.4.13 Personal Guarantors liability under the IBC and its impact on corporates 102

CHAPTER 5- COMPARAITIVE POSITION OF INSOLVENCY 103-133

LAWS OF THE UNITED STATES AND THE UNITED KINGDOM

5.1 Insolvency Regime of the United Kingdom 104

5.1.1 Administration Order under the Insolvency Act of 1986 106

5.1.2 Company Voluntary Arrangements (CVA) 110

5.1.3 Pre-Packages 112

5.1.4 The Corporate Insolvency and Governance Act of 2020 113

5.1.5 Informal Rescues 114

5.2 A Brief Analysis of the English Insolvency system 115

5.3 Insolvency Regime of the United States 116

5.3.1 Federal Bankruptcy Reform Act of 1978 117

5.3.1.1 Chapter 11 proceedings under the US Bankruptcy Code, 1978 117

5.3.1.2 Pre-packaged Administration Process 120

5.3A Brief Analysis of the US System 120

5.4 Comparison between the UK and the US regarding 121

Resolution and Insolvency process of Companies.

5.5.1 Criteria for filing an application for Insolvency 124

5.5.2 Insolvency Test that is adopted- Cash flow test or balance sheet test 125

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5.5.3 Rescue and the ease of entry into the proceedings 126

5.5.4 Liquidation and running the entity as a going concern 126

5.5.5 Moratorium and stay of creditors claim 127

5.5.6 Whether the right to manage business with the corporate debtor 128

or with the creditor?

5.5.7 Priority List and order of claims 128

5.5.8 Management of Insolvency Proceedings 129

5.5.9 Renegotiation of liabilities 130

5.6 Balance of Debtor-Creditor Interests under the UK 131

and the US Insolvency Laws

CHAPTER 6-DATA ANALYSIS 136-205

6.1 General Introduction 134

6.2 Qualitative Data Analysis Report 134

6.2.1 Introduction 134

6.2.2 Methodology 134

6.2.2.1 Sources of Data 134

6.2.2.2 Structured Interview 134

6.2.2.3 Nature of Interview Questionnaire 140

6.2.2.4 Qualitative Data Coding 146

6.2.2.5 Thematic Analysis of Qualitative Data 147

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6.2.3 Results 148

6.2.4 Findings and Conclusion 206

CHAPTER 7- CONCLUSION AND SUGGESTIONS 217-229

TABLE OF CASES 230-233

LIST OF AUTHORITIES 234-242

ABBREVIATIONS 243

LIST OF STATUTES 245-246

LIST OF REPORTS 247-248

LIST OF FIGURES 249

APPENDICES 250-263

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