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Withdrawal of Buyback Offer due to COVID 19: Thomas Cook India Ltd case

By Shivanjali Shukla, Student at Jindal Global Law School

On 12th February 2021, the Securities and Exchange Board of India (SEBI) approved Thomas Cook India to withdraw its buyback offer. This was a rare move by SEBI. The reasoning given by the company for withdrawing the offer was the deterioration in the financial position of the company due to the COVID 19 pandemic which had led to the situation where it was impossible to perform the buyback.

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Status of Homebuyers in IBC

By Shivanjali Shukla, Student at Jindal Global Law School

Introduction

The status of a home buyer in insolvency proceedings has been a contentious issue for the past couple of years. The matter holds a lot of significance since it involves the rights of the home buyers against the developers who are the corporate debtor in an insolvency proceeding. Under the current framework of The Insolvency and Bankruptcy Code (the Code), there are three categories of creditors: (i) Financial Creditor, (ii) Operational Creditor, and (ii) Other creditors. During the nascent stage of the Code, the homebuyers were neither considered as financial nor as operational creditors, on account of which they suffered huge losses for the advances made. However, in 2018 with the advent of the Insolvency and Bankruptcy Code, (Second Amendment) Act, 2018, the home buyers were conferred the status of ‘financial creditor’ wherein any amount which was raised from a real estate allottee was deemed to create a ‘commercial effect of borrowing’. Despite the amendment of 2018, the position remained unsettled and numerous changes were made time and again due to which the position of home buyers always remained unsettled. The present article tries to study the entire journey of home buyers under the Code till date, and analyse the effectiveness of the amendments made keeping in mind the homebuyers.

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Tata Consultancy Service Limited V. Cyrus Investments Pvt. Ltd and Others: Supreme Court Judgement Summary

By Utkarsh, Student at National University of Study and Research in Law (NUSRL)

Background Facts

On 10.08.2006 Cyrus Mistry was appointed as a Non­-Executive Director on the Board of Tata Sons. By a Resolution of the Board of Directors of Tata Sons dated 16.03.2012, Cyrus Mistry was appointed as Executive Deputy Chairman for a period of five years from 01.04.2012 to 31.03.2017, subject however to the approval of the shareholders at a General Meeting. By a Resolution dated 18.12.2012, the Board of Directors of Tata Sons re-designated Cyrus Mistry as its Executive Chairman with effect from 29.12.2012, even while designating Ratan Tata as Chairman Emeritus. By a Resolution passed on 24.10.2016, the Board of Directors of Tata Sons replaced Cyrus Mistry (CPM) with Ratan Tata (RNT) as the interim Non-Executive Chairman. It is relevant to note that Cyrus Mistry was replaced only from the post of Executive Chairman and it was left to his choice to continue or not, as Non-executive Director of Tata Sons. As a follow up, certain things happened and by separate resolutions passed at the meetings of the shareholders of Tata Industries Limited, Tata Consultancy Services Limited and Tata Limited, CPM was removed from directorship of those companies. CPM then resigned from the Directorship of a few other operating companies such as the Indian Hotels Company Limited, Tata Steel Limited, Tata Motors Limited, Tata Chemicals Limited and Tata Power Company Limited, after coming to know of the impending resolutions to remove him from Directorship. Thereafter, 2 companies by name, Cyrus Investments Private Limited and Sterling Investment Corporation Private Limited, belonging to the SP Group, in which CPM holds a controlling interest, filed a company petition in C.P No.82 of 2016 before the National Company Law Tribunal (“NCLT”) under Sections 241 and 242 read with 244 of the Companies Act, 2013, on the grounds of unfair prejudice, oppression and mismanagement. Along with the application for waiver of the requirement of Section 244(1)(a), the complainant companies also moved an application for stay of an Extra­ordinary General Meeting (“EGM” for short) of Tata Sons, in which a proposal for removing CPM as a Director of Tata Sons had been moved.

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Franklin Templeton Case study

By Shivanjali Shukla, Student at Jindal Global Law School

“Mutual fund investments are subject to market risks. Please read the offer document carefully before investing.”

Introduction

Franklin Templeton is one of the leading mutual fund houses in the country and a premier organization for global investment management. On 24th April, the company announced that it would be winding up six debt schemes. The schemes which were announced to be wrapped up are: Franklin India low duration fund, dynamic accrual fund, credit risk fund, short term income plan, ultra-short bond fund and income opportunities fund. These schemes consisted of investor’s assets worth around INR 30000 crore. The schemes which were wound up by the company were credit risk funds. Credit risk funds are basically those kinds of funds which lend 65% or more to the low-credit quality debt securities. People who have low credit rating, try to compensate by agreeing to pay a higher rate of interest in comparison to those people who have a decent credit rating. However, since they have low credit ratings, the chances of defaulting are very high, thus this creates huge risk for the lenders.

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Unpacking YES BANK AT-1 Bond Saga

By Tarun Agarwal, Student at Institute of Law, Nirma University

Introduction

The Additional Tier 1 (AT 1) Bondholders of Yes Bank have filed a case in the Madras High Court challenging the legal validity of the Master Circular issued by the RBI. The circular allowed to write down the AT 1 bonds worth Rs 8,415 crore completely after a scheme of reconstruction of Yes bank was approved by the government and the RBI.

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