Swiss Ribbons Private Limited Vs Union of India [Writ Petition (Civil) No. 99 of 2018] - Synopsis
Team SoOLEGAL 6 Nov 2020

In the case, Swiss Ribbons Private Limited Vs Union of India [Writ Petition (Civil) No. 99 of 2018], the Supreme Court of India upheld the constitutionality of the rules of Insolvency and Bankruptcy Code, 2016.
The entry requirement is low. It is based on the fact of default without an insolvency test. The constitution of a single creditors committee composed of only financial creditors treated similarly for voting for secured and unsecured creditors. Disqualification from inclusion in the resolution process for such bidders. The Government was able to make a point to the Supreme Court that these attributes worked and in the initial years of the legislation resulted in substantial results. The Government's strong determination to overcome the non-performing assets (NPA) crisis by the implementation of the IBC was an important aspect that weighed in retaining the legislation, and that the Government was alive with the problems and changed the law to suit the needs of the case. The major consequences of the judgement of the Supreme Court are as follows:
1. There has been a judicial recognition of the distinction between the promoters/management and the corporate debtor. To secure the company and its properties, the displacement of the promoter or the manager of a company in default can now be achieved reasonably easily.
2. The acknowledgment that the corporate debtor is not adversarial to the insolvency proceedings by design. The Supreme Court concluded that the IBC is a favourable statute for the good of the corporate debtor and that it is also difficult to consider a company's entry into the Corporate Insolvency Resolution Process (CIRP) through the conventional prism of adversarial proceedings.
3. For operating creditors, the Supreme Court has imported equal and equitable treatment as a condition for acceptance of settlement plans. This was primarily triggered by legislative changes that allow for the requirement to compensate operating creditors instead of financial creditors (without defining the amount that needs to be paid).
4. Under Section 12A, the withdrawal from the CIRP of a corporate debtor was allowed until the period when the Committee of Creditors was formed with the approval of the National Company Law Tribunal. The important thing is that Rule 11 of the NCLT Rules was applied by the Supreme Court to allow withdrawal after entry, but prior to the establishment of the Committee of Creditors. In circumstances not protected by the Code, the identification of the inherent forces of NCLT can add consistency to the IBC procedure. Furthermore, if the Committee of Creditors refuses a request for a settlement, an appeal can be taken to the NCLT and, thereafter, the NCLAT.


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