Alerts & Updates 11th Nov 2024
The treatment of lease dues during the Corporate Insolvency Resolution Process (CIRP) has emerged as a crucial yet contentious issue in India’s insolvency framework. Industrial lands leased by entities like Industrial Infrastructure Development Corporations (IIDCs) are often the cornerstone of a Corporate Debtor’s (CD) operations.
The recent NCLAT judgment in Mr. A. Guhan and Anr. vs. Ms. Sunita Umesh (Liquidator), Deltronix India Ltd. exposes the vulnerabilities of lessors, whose dues may not be recognized as CIRP costs, leaving them to rely on CoC discretion or face the uncertainties of the liquidation waterfall under Section 53 of the Insolvency and Bankruptcy Code (IBC). This gap in the IBC framework threatens not only the recovery prospects of lessors but also the continuity of industrial operations vital for the revival of distressed entities.
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