India’s leading law firms, including JSA Advocates and Solicitors, have raised concerns about the challenges in withdrawing companies from insolvency proceedings due to a stringent 90% voting threshold requirement from the Committee of Creditors under the Insolvency and Bankruptcy Code. This high threshold often proves difficult to achieve, even when a viable insolvency resolution plan is near, as seen in cases like Byju’s. Once insolvency proceedings are admitted, they impact all stakeholders, and dissenting creditors can object to withdrawals if their claims remain unresolved. Soumitra Majumdar, partner at JSA Advocates & Solicitors, emphasized that commercial considerations should be paramount in the court’s decision-making to prevent delays, while also supporting a high CoC approval threshold to ensure broad acceptance. The Supreme Court’s clarification on the procedure for withdrawal under Section 12A has not fully resolved the issue, as the lack of clear criteria for approval creates legal uncertainty and procedural delays.
The article was authored by Soumitra Majumdar (Partner), published in Mint.
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Soumitra specializes in Banking & Finance. He works closely with Indian and multinational banks, development financial institutions, commodity finance houses, non banking finance companies as well as corporates, for structuring, due diligence, documentation and negotiations.