Auto Components Ltd. (ACL), an industrial company became sick and the Board of directors of the company referred it to the BIFR on 15th March, 2013. Credit Bank Ltd. (CBL), a secured creditor of ACL took possession of th
CS Professional · Corporate Restructuring, Valuation and Insolvency · PYQS · December 2015
Auto Components Ltd. (ACL), an industrial company became sick and the Board of directors of the company referred it to the BIFR on 15th March, 2013. Credit Bank Ltd. (CBL), a secured creditor of ACL took possession of the land and building of the company on 18th November, 2013 under section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. The company has challenged the action of the bank on the ground that the company is under reference to BIFR. Give your opinion as to whether the contention of the company will hold good.
Answer & Explanation:
The Sick Industrial Companies (Special Provisions) Act, 1985 has been amended to the extent it provides that after the commencement of SRFAESI Act, 2002 and if the financial assets have been acquired by securitization or Reconstruction Company, no reference shall be made to BIFR. Moreover, after the commencement of SRFAESI Act, 1956 and if the reference is pending, then the reference shall abate, if 75% of the Secured Creditors have taken measures to recover their Secured Debts. Thus the contention of the company may not hold good.
Topics: Insolvency
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