Eligibility and qualification of prospective resolution applicant in cirp: a study in light of recent enactments

Abstract

The Insolvency and Bankruptcy Code, 2016 (IBC2016) provides for a tool for revival and reorganization for distressed entities. It provides that the debtor entity should be recused and revived under the supervision of the creditors and further limits the participation of the current management of debtor. § 29A which spells out the ineligibilities provides that the promoters and management of the debtor with an account marked as NPA are prohibited from submitted a resolution plan. The applicability of the provision is further extended to the provisions of the Companies Act though judicial interpretation followed by the legislative amendments. The paper is aimed at evaluating the extent of the effectiveness of the § 29A and also takes a peek into the growing demand for relaxation of the provisions of § 29A, especially for the persons with an account declared as NPA. It uses the laws prevalent in UK and US to draw references and contrasts to further the arguments.