LEXSTREET ADVISORS LLP
INSOLVENCY

INSOLVENCY

INSOLVENCY PROCEEDINGS AGAINST ANOTHER COLLECTIVE INVESTMENT SCHEME ( PONZY SCHEME). INSOLVENCY & BANKRUPTCY CODE, 2016 V/s. SEBI In yet another Ponzy Scheme of HBN Dairies & Allied Ltd, NCLT, Principal bench has triggered insolvency. RBI referred the case to SEBI for investigation for illegal mobilisation of funds. SEBI concluded that HBN, was, in fact, operating as ponzy scheme without obtaining a Certificate. HBN filed an appeal to SAT but SAT directed SEBI to sell properties of HBN within 6 months. Meanwhile, few investors filed an insolvency petition as Financial Creditors claiming a sum of more than Rs. 90 lakhs. They relied on NCLAT ruling of Nikhil Mehta & Sons Vs. AMR Infrastructure where it was held that a commitment to pay 'assured return" would make investor a financial creditor. HBN opposed the petition on many grounds but were not accpted by NCLT. NCLT ruling in HBN reaffirms the interplay of Insolvency & Bankruptcy Code with SEBI proceddings as far as ponzy scheme is concerned.

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