The Resurgence of Schemes of Arrangement in Insolvency and Liquidation

Schemes of arrangement have historically been available under Indian company law as a means to carry out corporate debt restructuring. However, as I have found in this paper, schemes were hardly used for this purpose in India. The enactment of the Insolvency and Bankruptcy Code, 2016 (IBC) and the implementation of the corporate insolvency resolution process (CIRP) therein were expected to further diminish the utility of schemes in debt restructuring. However, very recent practice in corporate insolvency cases suggests that schemes of arrangement are witnessing a strong comeback. Interestingly, it is not parties (and their lawyers) who have sought to use the tool, but adjudicating authorities that are steering failed insolvency cases, which would have otherwise resulted in liquidation of the corporate debtor company, towards possible revival using schemes of arrangement. This trend and its implications are worth a brief look. Schemes in Case of Failed Insolvency Resolution The…

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