Amendment to the Insolvency and Bankruptcy Code (IBC)
The Ministry of Corporate Affairs (MCA) plans to amend the IBC to clarify the necessity of prior Competition Commission of India (CCI) approval in the corporate insolvency resolution process.
- This decision follows the Supreme Court's rejection of AGI Greenpac's bid for Hindustan National Glass due to a lack of CCI approval before the Committee of Creditors (CoC) nod.
- The aim is to reduce CCI's burden by amending Section 31A (4) of the IBC.
Supreme Court's Ruling
The Supreme Court ruled that AGI Greenpac's plan was unsustainable without prior CCI approval, quashing CoC's approval of the plan dated October 28, 2022.
- This decision potentially impacts future IBC-driven mergers.
Expert Opinions and Implications
Experts believe government clarity would ease bidder concerns about approaching CCI before CoC approval.
- Anshul Jain of PwC India points out the uncertainty in plan amendments between initial submissions and final CoC approval.
Reconsideration and Legal Dispute
The Supreme Court agreed on May 8 to consider a request from CCI to revisit its January judgment.
- AGI Greenpac and INSCO were competitors for HNG, with INSCO securing CCI clearance, but AGI Greenpac winning the CoC's choice despite lacking CCI approval.
- The core issue is whether CCI approval is mandatory before or after CoC's resolution plan approval.
Legal Interpretation by NCLT
- The NCLT and the National Company Law Appellate Tribunal ruled CCI approval as mandatory but not necessarily before CoC's approval, indicating a directory requirement.
