In a significant judgment, the National Company Law Tribunal (NCLT), Mumbai, approved the consolidation of the Corporate Insolvency Resolution Process (CIRP) for Securevalue India Limited (SVIL), a 100% wholly owned subsidiary, with that of its holding company, AGS Transact Technologies Limited.
This order, secured by Dentons Link Legal, marks the first instance of such group insolvency consolidation achieved through an interim application filed within the holding company’s ongoing CIRP proceedings in absence of a separate CIRP initiation under the Insolvency and Bankruptcy Code (IBC).
SVIL, which did not have the requisite shareholders or directors to initiate a voluntary CIRP, approached the NCLT by way of an interim application in AGS Transact’s existing CIRP. In its assessment, the tribunal drew on the observations of the National Company Law Appellate Tribunal (NCLAT) in Radha Buildtech (India) Private Limited v. Solitaire Infomedia Private Limited and took note of SVIL’s constrained position. With no independent business operations following the insolvency of its holding company, SVIL was unable to service its debts. In this context, and despite the absence of a formal statutory framework for group insolvency under the IBC, the NCLT permitted consolidation of the proceedings.
The judgment has set a landmark precedence as there have been no prior instances of relief being granted on an interim application. While jurisprudence in this area continues to evolve, the judgment may also offer useful guidance on addressing insolvencies within group structures, particularly in situations where subsidiaries are operationally and financially interlinked with their holding companies.
The team was led by Petrushka Dasgupta (Partner), Krishna Baruah (Principal Associate), Ankita Yadav (Senior Associate) and Altamash Qureshi (Senior Associate).