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Corporate Laws Central Ministry of Finance Insolvency and Bankruptcy Code, 2016

Ministry of Corporate Affairs Exempts Aircraft Transactions from IBC Moratorium under Section 14(3)(a)

03-Oct-2023 | S.O. 4321(E)

Ministry of Corporate Affairs has issued a Notification under Section 14(3)(a) of IBC for transactions, arrangements or agreements, under the Convention and the Protocol, relating to aircraft, aircraft engines, airframes and helicopters.

Background: The notification references the Convention on International Interests in Mobile Equipment and the Protocol to the Convention, which pertain to matters specific to aircraft equipment. These were adopted in Cape Town on 16th November 2001.India has acceded to these agreements by depositing the instruments of accession on 31.03.2008.

Invocation of Section 14(3)(a): Section 14 of the IBC provides for a moratorium period during the insolvency resolution process. This period protects the debtor from legal proceedings and actions by creditors. Section 14(3)(a) likely specifies exceptions to the applicability of the moratorium period.

Effect of the Notification: The notification essentially states that, in this specific context of transactions, arrangements, or agreements related to aircraft, aircraft engines, airframes, and helicopters governed by the Convention and Protocol, the provisions of Section 14(1) of the IBC shall not apply.

Practical Implications: This means that, during insolvency proceedings involving matters related to the mentioned aircraft equipment, the usual moratorium period, which restrains legal actions against the debtor, will not be in effect. Creditors or other parties involved in these specific types of transactions can continue with their legal actions, irrespective of the ongoing insolvency process.

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