Concepts of “Insolvency” and “Bankruptcy”

The Insolvency and Bankruptcy Code, 2016 (IBC) is the primary legislation in India governing
insolvency and bankruptcy. The Code provides a unified framework for resolving financial
distress faced by individuals, companies, and partnership firms.

Concept of Insolvency

Insolvency refers to a financial condition (State of economic distress) where an individual or a

company is unable to meet its debt obligations. It is a state where liabilities exceed assets,
making it difficult for the entity to pay its creditors. Under IBC, insolvency is the first stage in
the process of resolving financial distress. Insolvency may lead to bankruptcy if not resolved.

Types of Insolvency:

1. Cash-flow Insolvency: When a person or company cannot pay debts as they become due,
despite having sufficient assets.

2. Balance-sheet Insolvency: When the total liabilities of an entity exceed its total assets.

Key Features of Insolvency under IBC:

• Corporate insolvency is triggered when a Corporate Debtor defaults on payments exceeding ₹1

crore (as per latest amendment).

• It can be initiated by financial creditors, operational creditors, or the corporate debtor itself.

• The Insolvency Resolution Process (IRP) is initiated under Section 7 (Financial Creditor),
Section 9 (Operational Creditor), or Section 10 (Corporate Debtor).

• A Resolution Professional (RP) takes control of the debtor’s assets and management.

• A Committee of Creditors (CoC) is formed to decide the future of the corporate debtor.
Concept of Bankruptcy

Bankruptcy is the legal declaration (Court declaration) that an individual or a company is

unable to repay its debts and requires legal proceedings to resolve the situation. It is a formal
process that follows insolvency when no resolution is achieved.

Under IBC:

• Bankruptcy applies only to individuals and partnership firms, whereas companies go through
Liquidation if the insolvency resolution process fails.

• The bankruptcy process for individuals is covered under Part III of IBC, which provides for
Fresh Start Process, Insolvency Resolution Process, and Bankruptcy Order.

• The Adjudicating Authority for bankruptcy:

• For Companies: National Company Law Tribunal (NCLT).

• For Individuals and Partnership Firms: Debt Recovery Tribunal (DRT).

Key Differences Between Insolvency and Bankruptcy:

Feature Insolvency Bankruptcy

A financial condition where liabilities A legal process where an entity is
Definition exceed assets, leading to an inability to declared bankrupt due to its inability
repay debts. to pay debts.
Applies primarily to individuals and
Application Applies to both individuals and companies.
partnership firms.
Legal Not necessarily a legal proceeding; it’s a A formal legal declaration under
Recognition financial state. IBC.
May lead to resolution, restructuring, or Results in liquidation of assets and
Outcome
liquidation. legal discharge from debts.
Corporate Insolvency Resolution Process Fresh Start or Bankruptcy Process
Resolution
(CIRP) for companies; Individual for individuals; Liquidation for
Process
Insolvency Resolution for individuals. companies if CIRP fails.

Conclusion

Under IBC, insolvency is a financial condition, while bankruptcy is a legal status resulting from
insolvency. The Code aims to provide time-bound resolutions, encourage restructuring, and
maximize the value of assets to balance the interests of creditors and debtors.
objectives of Insolvency and Bankruptcy Resolution

The Bankruptcy Law Reforms Committee (BLRC), in its endeavor to revamp India’s insolvency
framework, drew extensively from international best practices. A significant source of
inspiration was the United Nations Commission on International Trade Law (UNCITRAL)
Legislative Guide on Insolvency Law. This guide offers a comprehensive statement of key
objectives and principles that should be reflected in a state’s insolvency laws.

The BLRC’s report acknowledges the utility of the UNCITRAL Legislative Guide as a
benchmark for designing effective insolvency regimes. The report emphasizes the importance of
a collective insolvency resolution mechanism that balances the interests of debtors and creditors
while ensuring economic stability.

Key Principles Adopted from the UNCITRAL Legislative Guide on Insolvency Law

1. Maximization of Asset Value:

• The insolvency process should ensure the preservation and maximization of the debtor’s
assets for the benefit of all stakeholders.

2. Timely and Efficient Resolution:

• Establish procedures that provide for the efficient and swift resolution of insolvency
cases, minimizing delays and associated costs.

3. Transparency and Predictability:

• Promote clear and transparent insolvency processes to enhance predictability and trust
among investors, creditors, and other stakeholders.

4. Equitable Treatment of Similarly Situated Creditors:

• Ensure that creditors of the same class are treated equally, maintaining fairness in the
distribution of assets.

5. Balance Between Rehabilitation and Liquidation:

• Provide a framework that facilitates the rehabilitation of viable businesses while

allowing for the liquidation of non-viable ones.

6. Preservation of the Insolvency Estate:

• Protect the debtor’s assets to ensure equitable distribution among creditors, preventing
the dissipation/ dissolution of assets before resolution.
7. Protection of Creditor Rights:

• Recognize and safeguard existing creditor rights, establishing clear rules for the ranking
of claims and priorities.

8. Certainty in the Market:

• Establish clear and predictable legal parameters to promote efficiency, economic

growth, and stability in financial markets.

9. Establishment of a Framework for Cross-Border Insolvency:

• Develop mechanisms to address insolvency cases involving assets or creditors in

multiple jurisdictions, promoting cooperation and coordination among countries.

Conclusion

These principles were fundamental in shaping the IBC, 2016, ensuring that India’s insolvency
framework aligns with international best practices and fosters an efficient, transparent, and
predictable insolvency resolution mechanism.
Tests for determining insolvency

Columbia University Framework and its Application under IBC

Condition of insolvency is examined through different tests that help determine whether an
individual or corporate entity is unable to meet its financial obligations. Columbia University
identifies three primary ways to assess insolvency:

1. Technical Insolvency (Balance Sheet Insolvency Test)

• This test examines whether the total assets of an entity are less than its total liabilities at a given
point in time.

• It is a static measure based on the company’s balance sheet.

• Even if a company is meeting its payments, it may still be technically insolvent if its liabilities
exceed its assets.

• This type of insolvency is crucial for assessing a company’s long-term financial health.

Example:

A company has ₹100 crore in assets and ₹120 crore in liabilities. Even if it is paying debts on
time, it is technically insolvent because its net worth is negative.

2. Cash Flow Insolvency Test

• This test checks whether an entity has sufficient liquid funds to pay its debts as they become
due.

• It is a dynamic measure, as it focuses on real-time ability to meet financial obligations.

• A business may pass the balance sheet test but fail the cash flow test if it lacks liquidity.

Example:

A company has ₹200 crore in assets and ₹150 crore in liabilities, but its cash balance is only ₹5
crore while a ₹20 crore payment is due next week. Even though its assets exceed liabilities, it is
cash flow insolvent.
3. Default Test (IBC Application)

• Under the Insolvency and Bankruptcy Code (IBC), 2016, an entity is considered insolvent
when it defaults on a financial or operational debt.

• Threshold Limit:

• Initially, under Section 4 of IBC, a company was considered insolvent if it defaulted on

payments of ₹1 lakh or more.

• Post-COVID Amendment (2020): The threshold was increased to ₹1 crore to prevent frivolous
insolvency proceedings against companies struggling due to the pandemic.

• Once a default is established, Corporate Insolvency Resolution Process (CIRP) can be initiated
by financial creditors, operational creditors, or the corporate debtor itself.

Example:

A company defaults on paying a bank loan of ₹2 crore. Under the Default Test, it qualifies for
insolvency proceedings under IBC.

Comparison of the Three Tests

Test Focus Nature Key Indicator

Technical Insolvency (Balance
Assets vs. Liabilities Static Liabilities > Assets
Sheet Test)
Inability to pay debts
Cash Flow Test Liquidity Position Dynamic
when due
Legal Threshold for Default of ₹1 crore or
Default Test (IBC) Regulatory
Insolvency more

Conclusion

These insolvency tests help evaluate different dimensions of financial distress. Under IBC, the
Default Test is the legal standard for triggering insolvency resolution. However, investors and
analysts also use the Balance Sheet and Cash Flow Tests to assess a company’s financial stability
and potential risks.
Insolvency affects various stakeholders, including secured and unsecured creditors, employees,
investors, suppliers, and the government. The key debate in insolvency law revolves around
whether it should protect only creditors or balance the interests of all affected parties.

Several theories address this issue:

1. Creditors’ Bargain Theory – Focuses on maximizing creditor returns

(Jackson, Baird).

2. Communitarian Theory – Advocates for broader social and stakeholder interests

(Gross, Keay).

3. Multiple Values Approach – Recognizes diverse interests beyond creditors

(Warren, Korobkin).

4. Explicit Value Approach – Emphasizes transparency and clear insolvency objectives

(Finch).

Creditors’ Bargain Theory (CBT) – Detailed Notes

1. Introduction

• CBT is one of the most debated theories in insolvency law.

• First proposed by Thomas Jackson (1986) and later supported by

Douglas Baird and Robert Scott.

• Derived from contractarian theory and heavily influenced by the law

and economics movement from the 1970s.

• Focuses solely on creditors’ interests and ignores other stakeholders

(employees, suppliers, community, etc.).

2. Principles of Creditors’ Bargain Theory

• Primary Objective: Maximise the collective returns to creditors of an

insolvent debtor.

• Not Concerned With:

• The interests of the debtor.

• The interests of the community or public rights.

• Business reorganisation unless it benefits creditors.

• View of Insolvency Law:

• A collective debt-collection mechanism.

• Should replace individual enforcement actions by creditors.

• Ensures that all creditors act in a coordinated manner to prevent asset

dissipation.

• Key Idea: Insolvency law should mirror what rational creditors would
hypothetically agree upon if they had a chance to bargain ex ante
(before the insolvency).

• Based on Rawls’ “veil of ignorance” concept.

• Common Pool Problem:

• When a debtor becomes insolvent, multiple creditors compete to claim

assets.

• Without insolvency law, creditors would rush to seize assets (a “race to

the courthouse”), reducing overall returns.

• A mandatory collective system prevents this disorder.

• Two Main Principles to Maximise Asset Value:

1. Priority Rule: Shareholders get nothing until all creditors are paid.

2. Respect for Pre-Insolvency Rights: The legal rights of creditors

before insolvency should remain unchanged in insolvency
proceedings.

3. Strengths of the Theory

1. Prevents “Race to the Courthouse”

• Without a collective process, creditors compete to seize assets

first.

• Leads to asset fragmentation, reducing overall value.

 • CBT supports a compulsory insolvency system to avoid this
problem.

2. Reduces Debt Collection Costs

• Single insolvency process is cheaper than multiple lawsuits.

• Avoids wasteful litigation and monitoring costs for creditors.

3. Increases Returns to Creditors

o A going-concern sale (keeping the business operational) often yields

higher returns than piecemeal liquidation.

o Avoids unnecessary asset destruction.

4. Administrative Efficiency

• Simplifies the process by consolidating creditor claims into a

single structured system.

• Prevents delays and inefficiencies caused by multiple individual

lawsuits.

5. Encourages Lending and Investment

• Predictable insolvency laws increase creditor confidence.

• Encourages banks and investors to lend more freely, boosting

economic activity.

6. Addresses the “Prisoner’s Dilemma”

• Individual creditors acting in self-interest may harm overall

recovery.

• A compulsory system ensures cooperation, leading to better

outcomes.

7. Mandatory System is Necessary

• Even if a collective system is beneficial, no creditor would

voluntarily agree unless all others are bound by it.

• Therefore, a federal bankruptcy rule is required to enforce

participation.

4. Criticisms of the Theory

 1. Unrealistic Assumption of Equal Bargaining Power

• CBT assumes all creditors are equal in:

• Legal knowledge and power

• Ability to negotiate and enforce claims

• In reality, creditors have different levels of power (secured vs.

unsecured creditors).

• Powerful secured creditors are unlikely to voluntarily join a

collective system.

2. Ignores Non-Creditor Interests

• Employees, suppliers, shareholders, and the community are not

considered.

• Example: Employees may suffer job losses, but CBT states their
rights should be handled outside insolvency law.

• Critics argue that insolvency law should balance multiple

interests, not just creditors.

3. Fails to Address Real-World Complexities

• Presumes creditors would reach a unified agreement, but in

reality:

• Creditors have different priorities (secured vs. unsecured).

• Employee creditors may have non-monetary concerns (e.g., job

security).

4. Not All Creditors Prefer a Collective System

• CBT assumes that a collective process is always better, but some

creditors might benefit more from individual enforcement.

• Example: A secured creditor with a strong claim might prefer

quick enforcement over waiting for a collective process.

5. Limited Justification for Excluding Social Considerations

• CBT argues that protecting workers and communities should be

done outside insolvency law.

• Critics (e.g., Goode, 2011) argue that:

 • Some protections (e.g., employee rights) only become relevant in
insolvency.

• Labour laws do not address insolvency-specific risks, so special

protections are necessary.

6. Fails to Justify Why Only Creditors’ Interests Matter

• Insolvency law worldwide already protects other stakeholders

(e.g., worker wage priorities, environmental liabilities).

• Critics argue these provisions contradict CBT’s narrow focus on

creditors.

7. Misinterprets the Cost of Enforcement

• CBT claims that individual creditor actions are too costly.

• Critics argue that costs alone are not a valid reason to abandon
creditor rights.

• If enforcement provides high returns, creditors will still prefer

individual action.

5. Conclusion

• CBT provides a clear framework for insolvency law focused on

creditors.

• Strengths include efficiency, predictability, and better creditor

returns.

• However, it ignores broader social and economic concerns.

• Critics argue that insolvency law should balance creditor and

non-creditor interests rather than prioritising creditor wealth
maximisation.

• Modern insolvency laws often incorporate elements beyond CBT,

ensuring protection for employees, communities, and economic
stability.

6. Summary Table – Pros & Cons of CBT

Aspect Creditors’ Bargain Criticism

Theory (CBT)
Objective Maximise creditors’ Ignores debtor,
collective returns. employees, and
community.

Role of Insolvency Law A collective debt- Should consider

collection mechanism. broader economic and
social impacts.

Protection of Employees Not relevant to They are affected by

& Suppliers insolvency law. insolvency and need
protection.

Common Pool Problem Prevents disorderly Some creditors prefer

asset seizure by individual enforcement.
creditors.

Efficiency Reduces litigation & Assumes all creditors

maximises asset value. will benefit equally.

Assumption about All creditors are equal In reality, secured

Creditors in knowledge & power. creditors dominate
negotiations.

Legislative Approach Mandatory federal Critics argue for

bankruptcy rules. flexible, stakeholder-
inclusive laws.
The Communitarian Theory

This theory of Insolvency offers an alternative perspective to the traditional

creditors’ bargain theory, which focuses solely on maximizing creditors’
wealth. Instead, communitarianism argues that insolvency law should
consider the interests of a broader range of stakeholders, including
employees, suppliers, customers, the government, and the local community.

Key Principles of the Communitarian Theory

1. Stakeholder-Oriented Approach:

The theory holds that insolvency law should not only protect creditors
but also account for the interests of non-creditor stakeholders who are
affected by the debtor’s financial distress.

2. Public Interest Consideration:

It emphasizes that insolvency law should serve the broader interests of

society rather than being limited to private financial claims.

3. Company Survival vs. Orderly Liquidation:

Where possible, the theory favors corporate reorganization to preserve

jobs and economic stability. If survival is not viable, then an orderly
winding-up process should be conducted with community impact in
mind.

Challenges and Criticisms

1. Difficulty in Defining “Community” and “Public Interest”:

 There is no universally accepted definition of what constitutes community
interests or the public good in insolvency cases. (Gross, 1994; Keay,
2000).

2. Too Many Competing Interests:

Every insolvency case involves multiple stakeholders with conflicting

interests, making it difficult to determine whose claims should be
prioritized (Schermer, 1994).

3. Lack of Judicial Expertise:

Courts may not be equipped to assess community interests, such as

balancing job preservation against environmental concerns, as these are
complex socio-economic matters rather than purely legal ones.

Counterarguments

• Courts already consider public interest in other areas of law, so it

is reasonable to expect them to do the same in insolvency
proceedings (Finch, 2009).

• The difficulty in quantifying community interests should not

justify their exclusion from insolvency considerations.

Conclusion

The communitarian theory offers a more inclusive view of insolvency law,

promoting social welfare alongside creditor rights. However, its practical
application is complex due to definitional ambiguities, competing stakeholder
claims, and the challenge of judicial enforcement. Nonetheless, as insolvency
law evolves, there is increasing recognition of the need to incorporate
broader societal concerns into corporate restructuring and liquidation
processes.
Multiple Values Theory of Insolvency

The Multiple Values Theory (also called the Eclectic Theory) was developed
by Elizabeth Warren (1987) and later supported by Korobkin (1991). It
challenges the traditional creditors’ bargain theory, arguing that insolvency
law is not just about maximizing creditor returns but involves a complex
balancing of competing values and interests.

Key Principles of the Multiple Values Theory

1. Insolvency Law Serves Multiple Interests

• Unlike the creditor wealth maximization theory, which prioritizes

creditors, Warren argues that insolvency law serves a range of
stakeholders, including employees, suppliers, customers, and the
broader community.

• Insolvency law should not be rigid but should adapt to the

different values at play in each case.

2. Reckoning with Multiple Defaults

• Warren sees insolvency as a mechanism for distributing the

consequences of a debtor’s financial failure across various
affected parties.
 • There is no single dominant value—rather, insolvency policy
must integrate multiple factors to determine how losses should
be distributed.

3. Beyond Economic Efficiency

• The theory criticizes economic approaches for failing to recognize

moral, political, social, and personal considerations in business
failures (Korobkin, 1991).

• Economic value enhancement is only one aspect of insolvency

law, not its sole objective.

4. Goals of the Insolvency System (Warren, 1993)

• Enhancing Debtor Value: Maximizing value so that all

stakeholders get more than they would under individual
enforcement.

• Deliberate Asset Distribution: Ensuring assets are distributed

according to a structured plan that protects deserving parties.

• Loss Allocation: Preventing externalization of business losses to

uninvolved parties.

• Timely Intervention: Ensuring insolvency proceedings begin at

the right time to minimize overall harm.

5. Legal and Social Function of Insolvency

• Korobkin (1991) states that insolvency law must modify

substantive legal rights where necessary to address financial
distress.

• Insolvency law is distinct from general contract or commercial

law—it must create conditions for discourse about the future of a
failing business.

Criticisms of the Multiple Values Theory

1. Lack of Clear Guidance

• Critics argue that the theory fails to provide clear decision-

making principles for balancing competing interests (Finch, 2009;
Keay & Walton, 2003).

• Without defined priorities, courts and policymakers may struggle

to apply insolvency law consistently.
 2. Uncertainty and Indeterminacy

• Because there are no set rules for weighing different interests,

outcomes could become unpredictable, leading to inconsistent
legal decisions (McCormack, 2008).

3. Redistribution vs. Insolvency

• Warren suggests that insolvency law should help redistribute

wealth, favoring those who are least able to bear losses.

• However, Baird (1987) argues that business failure is not always

tied to insolvency, and redistribution is not an insolvency issue
but a broader legal concern.

4. Conflict with Traditional Economic Theories

• The creditors’ bargain theory rejects the idea that insolvency law
should address broad social values, arguing that insolvency
should remain focused on creditors’ rights and financial recovery.

• Baird (1987) states that concerns like employee protection or

environmental impact should be addressed in general legal
frameworks, not in insolvency law.

5. Rebuttal from Goode (2011)

• Goode argues that certain social values (e.g., employee rights,

tort claims) only arise due to insolvency and thus must be
considered within insolvency law itself.

• He states that non-insolvency laws cannot provide solutions to

insolvency-specific problems.

Conclusion

The Multiple Values Theory presents a holistic and flexible approach to

insolvency law, recognizing that financial distress affects more than just
creditors. However, its lack of clear prioritization makes it difficult to
implement practically. While traditionalists argue that broader social
concerns should be handled by general laws, Warren and Korobkin maintain
that insolvency law must go beyond mere debt collection and consider the
social and economic impact of business failure.

The debate remains ongoing—should insolvency law prioritize financial

recovery, or should it act as a broader social safety net?
Explicit Value Theory (Finch, 1997, 2009)

Overview:

• A critique of existing insolvency theories, which Finch argues fail to provide a

complete framework for assessing insolvency law.
• Proposes a new approach based on explicit values to measure and legitimate
insolvency processes.
• Focuses on both public and private interests in insolvency law.

• Key Principles:

1. Legitimation of Insolvency Processes:

• Insolvency law must be justified as it affects managerial power, creditors, employees,
and the broader public.
• Since insolvency transfers power from management to insolvency practitioners, it
requires strong justification.
• Both public (economic and social impact) and private (creditors, stakeholders) interests
must be considered.

2. Four Benchmarks for Measuring Insolvency Law:

1. Efficiency: Ensuring insolvency law achieves mandated objectives with minimal costs.
2. Expertise: Decision-making should be in the hands of qualified professionals.
3. Accountability: Ensuring transparency and control through courts, regulations, and
democratic institutions.
4. Fairness: Protecting the rights and interests of affected parties.

3. Assessment of Legitimacy:

• Requires stepping back from personal preferences and assessing values broadly
accepted as relevant.
• Questions to assess legitimacy:
• Does the process effectively implement legislative objectives?
• Are accountability measures sufficient?
• Are affected parties given fair access and consideration?

4. Transparency & Trade-offs in Decision-Making:

• Clear benchmarks help evaluate insolvency law, but trade-offs (e.g., creditor vs.
employee protection) require prioritization.
• Different political perspectives may influence how these trade-offs are balanced.

5. Statutory Mandates & Justification:

• Clarity in statutory mandates is a crucial benchmark for legitimacy.

• If statutory mandates are unclear, legitimacy must be evaluated based on expertise,
accountability, and fairness.

Criticism of Explicit Value Theory:

1. Lack of Distinction Between Benchmarks:

• Mokal (2003) argues Finch does not distinguish between different benchmarks and their
governing principles.
• Does not explain why certain types of efficiency are prioritized over others.
 2. Substantive vs. Procedural Goals:

• Fails to differentiate between:

• Substantive goals (why insolvency law exists).
• Procedural goals (how it operates).
• Efficiency should be a tool to evaluate procedures, not a justification for the law itself.

3. Unclear Definition of Fairness:

• No precise theory of fairness is provided.

• Criticism of floating charge holders (e.g., lack of obligation to consider other parties’
interests) lacks explanation on how fairness should be implemented.

Conclusion:

• Finch’s Explicit Value Theory provides a structured way to evaluate insolvency law using
efficiency, expertise, accountability, and fairness.
• However, it is criticized for its lack of clarity in defining benchmarks, distinguishing
between substantive and procedural goals, and addressing fairness effectively.
• It offers a framework for discussion rather than a definitive theory of insolvency law.

Case Laws

Rajendra Narottamdas Sheth & Anr. Vs. Chandra Prakash Jain & Anr.
The burden of prima facie proving occurrence of the default and that the application filed under
section 7 is within the period of limitation, is entirely on the FC.

Surendra Trading Company Vs. Juggilal Kamlapat Jute Mills Company Ltd. & Ors.
The time limit of 7 days for removal of defects in the application as provided in proviso to sub-
section (5) of section 7, is directory and not mandatory in nature.

9
Excel Metal Processors Ltd. Vs. Benteler Trading International GMBH and Anr.
CIRP is not a ‘suit’, a ‘litigation’ or a ‘money claim’ for any litigation and no one is selling or
buying the CD a ‘resolution plan’. It is not an auction or a recovery or liquidation. It is a
resolution process so that the CD does not default on dues.

10

Export-Import Bank of India & Anr. Vs. Astonfield Solar (Gujarat) Pvt. Ltd. & Anr.
The shareholder has a right to decide whether approving or disapproving the decision be
proceeded with the CIRP under section 10 of the Code.

12

Surendra Trading Company Vs. J.K Jute Mills Company Ltd. & Ors.
The statutory scheme laying down time limits sends a clear message that time is the essence of
the Code.

12A

Maharashtra Seamless Ltd. Vs. P. Venkatesh

The exit route prescribed in section 12A is not applicable to a Resolution Applicant. The
procedure envisaged in the said provision only applies to applicants invoking sections 7, 9 and
10 of the Code.

14

Indian Overseas Bank Vs. RCM Infrastructure Ltd. Anr.

• FC cannot continue the proceedings under SARFAESI Act once the CIRP is initiated and
moratorium was ordered.

Swiss Ribbons Pvt. Ltd. & Anr. Vs. Union of India & Ors.
• Moratorium imposed by section 14 is in the interest of the CD itself, thereby preserving
its assets during the CIRP.

Alchemist Asset Reconstruction Company Ltd. Vs. Hotel Gaudavan Pvt. Ltd. & Ors.
• The mandate of the Code is that the moment an insolvency application is admitted, the
moratorium that comes into effect under section 14, it expressly interdicts institution or
continuation of pending suits or proceedings against CD.

Anand Rao K Vs. Varsha Fabrics (P) Ltd. & Ors.

• if the assets of the CD are alienated during the moratorium & pendency of the
proceedings under the Code, it will seriously jeopardise the interest of all the
stakeholders.