India: Financial Restructuring

The jurisprudence surrounding corporate criminal liability and insider trading in India has undergone considerable doctrinal refinement, particularly in relation to the attribution of knowledge, the evidentiary threshold for establishing regulatory contraventions and the relevance of commercial intention in determining liability.

The Insolvency and Bankruptcy Code, 2016 (IBC) was originally built as a monolithic architecture. Its primary mandate was clear: when a company defaults, the entirety of its corporate entity must be pulled into the Corporate Insolvency Resolution Process (CIRP). While this unified entity approach worked seamlessly for manufacturing units or simple corporate structures, its application to the real estate sector triggered catastrophic systemic failures. In real estate, a single developer frequently manages dozens of independent housing projects across varying stages of lifecycle, funding, and construction.

Diverging creditor timelines are what turn one company’s cash shortfall into several separate fights at once. Once suppliers, lenders and a personal guarantor are each entitled to act on their own schedule, one creditor moving first can reshape what’s left for everyone else which is a worse situation than the funding gap that started it.

Corporate demergers have long served as an effective mechanism for business reorganisation, enabling companies to segregate business verticals, streamline operations and facilitate strategic investments in a tax-efficient manner. It is not uncommon for group restructurings to involve transfer of an undertaking to a wholly owned subsidiary (“WOS”) while the consideration is discharged through issuance of shares by its holding company—a structure that has, on several occasions, received approval under the Companies Act, 2013.

Indian insolvency law has evolved significantly in addressing homebuyer distress, moving from initial exclusion to statutory recognition as financial creditors, then introducing safeguards against misuse, and finally implementing project-wise resolution mechanisms.

The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (the SARFAESI Act) was enacted to empower secured creditors to recover dues without the intervention of civil...

The Supreme Court recently examined whether corporate guarantees executed during financial distress can constitute 'financial debt' under the Insolvency and Bankruptcy Code, 2016. The case arose when SBI Consortium's claims as financial creditors were challenged on grounds including suspicious timing, non-disclosure in financial statements, and insufficient stamping.

The jurisprudence on protecting dissenting financial creditors under the Insolvency and Bankruptcy Code, 2016 (“IBC”) is rooted in a fundamental structural concern that a majoritarian framework...

For financial creditors navigating the dual landscape of traditional debt recovery and modern insolvency resolution, the personal guarantor provisions of the Insolvency and Bankruptcy Code...