Bankruptcy proceedings have been initiated against Aviva Life Insurance Co. Ltd India, according to a National Company Law Tribunal (NCLT) order dated November 9, 2019, for non-payment of license fees, car parking, maintenance or service charges and service tax to Mumbai-based Apeejay Trust. Aviva, which took up office space at Apeejay Express in Vashi, Mumbai in June 2008 owes Apeejay Rs. 27,67,203 in the form of dues, this post is all about Aviva Life Insurance Bankruptcy effect latest news and policy holder updates.
Apeejay which is the operational creditor issued a notice to Aviva in April this year demanding a total sum of Rs. 27,67,203. However, Aviva replied to the notice in May denying any liability and stated that no dues were payable. The denial was further contended by Apeejay which said Aviva had failed to liquidate lease rental dues payable for the premises taken on lease. With no action taken by Aviva in this regard, NCLT admitted a petition initiating a Corporate Insolvency Resolution Process (CIRP).
The debtor raised an objection saying it is an insurance company which is a financial service provider and the business of which is regulated by a financial sector regulator. Therefore, it said, according to the provisions of Insolvency and Bankruptcy Code (IBC), the petition should be dismissed. The insurer gave examples of how no such proceedings were initiated against banks in the past on the ground of absolute bar. However, Apeejay’s legal counsel said the absolute bar provision claim was fallacious as it didn’t cover insurers as defined under Section 3(16) of the code.
"In my view, Section 2 read with Section 3 (7) and Section 227 excludes financial services provider from the purview of IBC unless notified by the central government. Aviva has an option to continue with the proceedings and fight this matter," said Rajesh Narain Gupta, Managing Partner, SNG & Partners, a law firm. Aviva Life Insurance Bankruptcy effect latest news is that Gupta said Aviva has an option to challenge this order before the National Company Law Appellate Tribunal. However, Amit Vyas, founder partner, Vertices Partners, a Mumbai-based boutique law firm said bankruptcy proceedings can be initiated against Aviva despite it being an insurance company because the defaulted dues are with respect to unpaid lease rentals.
The tribunal has upheld Apeejay’s claim, which is the operational creditor, and ordered the appointment of an Insolvency Resolution Professional (IRP). An Apeejay spokesperson said they would not like to comment as the matter is under judicial consideration.
Gupta said the broader question here should be whether the provisions of IBC should be used to solve a civil or contractual dispute as in this case. "There should be a strict criterion for such disputes being entertained under IBC," he added.
Aviva Life Insurance Bankruptcy effect latest news in a media statement, the insurer said, “Aviva India enjoys a robust solvency margin in excess of 300% versus the regulatory requirement of 150%. The issue at hand is a commercial dispute with a vendor and Aviva reserves its rights and remedies in the court of law." The statement further said that the insurer’s policyholders are fully secure. "If Aviva decides to pay, it’s an operation issue linked to its balance sheet. As such, it will not impact the policyholders," said Gupta. socure - livemint.com/ insurance/news/ibc-proceedings-against-aviva -life-insurance-may-not-impact-policyholders-11573470616366.html
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The debtor raised an objection saying it is an insurance company which is a financial service provider and the business of which is regulated by a financial sector regulator. Therefore, it said, according to the provisions of Insolvency and Bankruptcy Code (IBC), the petition should be dismissed. The insurer gave examples of how no such proceedings were initiated against banks in the past on the ground of absolute bar. However, Apeejay’s legal counsel said the absolute bar provision claim was fallacious as it didn’t cover insurers as defined under Section 3(16) of the code.
"In my view, Section 2 read with Section 3 (7) and Section 227 excludes financial services provider from the purview of IBC unless notified by the central government. Aviva has an option to continue with the proceedings and fight this matter," said Rajesh Narain Gupta, Managing Partner, SNG & Partners, a law firm. Aviva Life Insurance Bankruptcy effect latest news is that Gupta said Aviva has an option to challenge this order before the National Company Law Appellate Tribunal. However, Amit Vyas, founder partner, Vertices Partners, a Mumbai-based boutique law firm said bankruptcy proceedings can be initiated against Aviva despite it being an insurance company because the defaulted dues are with respect to unpaid lease rentals.
The tribunal has upheld Apeejay’s claim, which is the operational creditor, and ordered the appointment of an Insolvency Resolution Professional (IRP). An Apeejay spokesperson said they would not like to comment as the matter is under judicial consideration.
Gupta said the broader question here should be whether the provisions of IBC should be used to solve a civil or contractual dispute as in this case. "There should be a strict criterion for such disputes being entertained under IBC," he added.
Aviva Life Insurance Bankruptcy effect latest news in a media statement, the insurer said, “Aviva India enjoys a robust solvency margin in excess of 300% versus the regulatory requirement of 150%. The issue at hand is a commercial dispute with a vendor and Aviva reserves its rights and remedies in the court of law." The statement further said that the insurer’s policyholders are fully secure. "If Aviva decides to pay, it’s an operation issue linked to its balance sheet. As such, it will not impact the policyholders," said Gupta. socure - livemint.com/ insurance/news/ibc-proceedings-against-aviva -life-insurance-may-not-impact-policyholders-11573470616366.html
