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(yes). Suspension / termination of concessions, licenses, etc.: The Amendments Act has introduced an amendment under Section 14 of the IBC to stipulate that concessions, licenses, permits, authorizations and other similar rights / grants, which have been granted by any governmental / statutory authority, may not be suspended / terminate due to insolvency of the corporate debtor, as long as all the installments of said subsidy are paid. Such fees may be paid as “insolvency resolution process costs” incurred by the resolution professional for managing the corporate debtor’s business as a going concern under the IBC.
The amendment will allow the operation of the corporate debtor’s business as a going concern during the moratorium period and will encourage the successful resolution of insolvency of corporate debtors belonging to sectors that are highly dependent on the continuation of such concessions / rights. For example, project developers are generally structured as special-purpose vehicles that are granted concessions / rights for the development / implementation of infrastructure projects. However, the concession agreement entered into for the concession of such a concession would generally grant termination rights to the government authority in the event of the project developer’s insolvency. If such a termination of the concession is allowed, the possibility of a viable insolvency resolution would be denied, and the project developer would be propelled towards liquidation, thus eroding value for all interested parties. Similar problems would also be faced for the beneficiaries of long-term industrial leases granted by government authorities.
Prior to the amendment, in the event that any government authority terminated a concession, license, permit, or other similar rights due to the insolvency of the corporate debtor, general resolution professionals sought exemptions from the Honorable Court of National Company Law (“NCLT”) Under Section 60 (5) of the IBC to ensure the continuation of such rights, and the NCLT would generally grant such exemptions. In the matter of Embassy Property Developments Private Limited v. Karnataka State, Karnataka Government rejected the professional resolution request for the estimated extension of mining leases held by the corporate debtor under the Mines and Minerals (Development and Regulation) Act, 1957. When addressed, the NCLT stopped He disregarded the order approved by the Karnataka Government on the grounds that it violated Section 14 (1) of the IBC. However, the Honorable Supreme Court held that the accuracy of said decision can only be questioned in a higher court that has the power of judicial review of administrative actions, since such extension would be the subject of ‘public law’. , and not the NCLT under Section 60 (5) of the IBC.
Therefore, the aforementioned amendment will provide much-needed relief to the interested parties of such corporate debtors who are beneficiaries of such concessions, licenses and permits, since the amendments would have a primary effect in case of any inconsistency with other applicable laws in view of section 238 of the IBC.
