Category: immigration attorney

US Visa Application

Protecting U.S Citizenship: Can it be Revoked?

US Immigration Advisor

A naturalized United States citizen is someone who has voluntarily obtained U.S. citizenship based on certain grounds other than by birth in the U.S. The process by which they obtain U.S. citizenship is called naturalization. The U.S. citizenship of such individuals can be stripped away or revoked through what is known as the “denaturalization” process. U.S. citizenship of a person who is born on US soil cannot generally be revoked, but such a person can lose citizenship by engaging in certain explicit voluntary acts.

The U.S. government can rescind a naturalized person’s citizenship for a variety of reasons which are:

“Illegally” procuring citizenship

Procuring naturalization illegally simply means that the person was not eligible for naturalization, therefore any eligibility criterion that was not fulfilled can form the basis for revocation. This includes the requirements for residence, physical presence, lawful admission for permanent residence, good moral character, and attachment to the U.S. Constitution. This applies even if the person unintentionally made a mistake.

Non-Disclosure of Material Fact or Willful Misrepresentation

If a naturalized person misrepresented or hid a material fact deliberately which fact impacted his naturalization application, the citizenship in such cases may be revoked. This ground of revocation includes omissions as well as affirmative misrepresentations. Examples of such instances include failure to disclose an arrest or criminal conviction or lying about one’s marital status.

The misrepresentations can be oral testimony provided during the naturalization interview or can include details provided on the N-400. The materiality test is whether the misrepresentations or concealment had the ability to affect the grant of citizenship decision.

In 2017, the U.S. Supreme Court in the case, Maslenjak v. United States, 37 S. Ct. 1918 (2017), limited the grounds for revoking citizenship by holding that unless the underlying omission or false statement was significant to the acquisition of citizenship, citizenship cannot be revoked for a false statement that has no bearing on the decision.

Membership or Affiliation with Certain Organizations

A person is subject to revocation of naturalization if he or she becomes a member of, or affiliated with, the Communist party, other totalitarian party, or terrorist organization within five years of naturalization. There is an assumption that the person dd not have allegiance to the U.S. Constitution and was never well-disposed to the wellbeing of the United States.

Separation from the Military

Some people can obtain U.S. citizenship by serving honorably in the U.S. armed forces. The government can revoke citizenship obtained on this basis if the naturalized person separates from the armed forces under other than honorable discharge before serving five years of military service.

The Denaturalization Process

Unlike most other immigration matters that USCIS handles in an administrative setting, revocation of naturalization can only occur in federal court. A person’s naturalization can be revoked either by civil proceeding or pursuant to a criminal conviction. For civil revocation, the U.S. Attorney’s Office must file the revocation of naturalization actions in a Federal District Court. For criminal revocation of naturalization, the office files criminal charges in Federal District Court. The government holds a high burden of proof when attempting to revoke a person’s naturalization. For civil revocation, the burden of proof is clear, convincing, and unequivocal evidence and for criminal revocation, it’s proof beyond a reasonable doubt, as required in every other criminal case.

Source: USCIS Policy Manual I Grounds for Revocation of Naturalization

This article has been written by Zeenat Phophalia, Esq. Of Counsel, Davies & Associates, India Office.

Zeenat Phophalia is qualified to practice law in New York, United Kingdom and India. She practices in the area of U.S. immigration law with a focus on business immigration, and has represented corporate clients including large and medium sized companies and startups across sectors such as IT, consulting, consumer goods, manufacturing and telecommunications.

Looking for an US immigration lawyer? Request free consultation at Davies & Associates or find our closest location around the world.

E-2 Visa approved for a Singaporean national during COVID-19

Guidance on Compelling Circumstances EADs

US Immigration Advisor

In June 2023, the U.S. Citizenship and Immigration Services (USCIS) released an updated guidance on the employment authorization document (EAD) based on compelling circumstances for beneficiaries of an approved I-140 petition. The guidance clarifies the eligibility criteria for a compelling circumstances EAD.

A compelling circumstances EAD is a stopgap measure for non-immigrant visa holders, in the process of applying for their green cards, who have been lawfully residing in the US and are faced with unforeseen or sudden circumstances that would cause them to immediately depart the United States. The compelling circumstances EAD provision which came into effect in January 2017, provides a temporary benefit for eligible foreign nationals and their family members to continue to reside and work in the United States without interruption and accruing unlawful presence.

For an applicant to be eligible for an initial EAD based on compelling circumstances, they must meet the following eligibility requirements:

  • The principal applicant must be the beneficiary of an approved Form I-140 in either EB-1, EB -2 or EB-3 category;
  • The principal applicant must be in a valid non-immigrant status (E-3, H-1B, H-1B1, O-1, or L-1) or authorized grace period
  • The principal applicant must not have filed a I-485 adjustment of status application;
  • The applicant and their dependents have not been convicted of a felony or two or more misdemeanors ; and
  • An immigrant visa is not available to the principal applicant based on the applicant’s priority date according to the relevant Final Action Date in the U.S. Department of State’s Visa Bulletin in effect when they file Form I-765; and

Examples of Compelling Circumstances

The regulations do not define “compelling circumstances”, but in general, are situations outside one’s control that adversely affect their ability to continue working for their employer. USCIS exercises discretion on a case-by-case basis in assessing. Below are non -exhaustive examples that could justify the existence of compelling circumstances.

Serious Illness and Disability

A principal applicant or their dependent faces a serious illness or disability that substantially changes employment circumstances, such as requiring them to move to a different geographic area for their or a dependent’s treatment, or the illness or disability otherwise reduces or adversely affects the principal applicant’s ability to continue their previously approved employment.

Employer Dispute or Retaliation

A principal applicant is involved in a dispute regarding their employer’s alleged illegal or other forms of abusive conduct, which may take the form of a whistleblower action, litigation, or other documented dispute.

Other Substantial Harm to the Applicant

The principal applicant is unable to timely extend or otherwise maintain status, or obtain another nonimmigrant status, and would suffer substantial harm as a result. This harm may be financial or may be due to an inability to return to their home country due to conditions there.

Financial hardship to the principal applicant may rise to the level of compelling circumstances when coupled with circumstances beyond those typically associated with job loss, for example, loss of health insurance.

Significant Disruption to the Employer

If the applicant is unable to continue working due to failure of filing a timely extension of change of status, and as a result, the employer will suffer significant disruption of business or that the loss of the employee will negatively impact project and cause significant monetary loss, such situation could establish compelling circumstances.

USCIS generally does not consider unemployment or job loss, in and of itself, to be a compelling circumstance unless the principal applicant can show additional circumstances that compound the hardship ordinarily associated with job loss.

Impact on Non-Immigrant Status

While a discretionary relief, the compelling circumstances EAD is an alternative that allows one to continue to stay and work in the United States in an authorized period of stay. Note that this is not a substitute for a “non-immigrant” status. An applicant would not accrue unlawful presence during the EAD’s validity or during the pendency of a timely filed non-frivolous EAD application. Spouses and children of the principal EAD applicant may also receive EADs provided that they individually meet the compelling circumstances and filing requirements.

Resource: Chapter 3 – Certain Employment-Based Immigrants in Compelling Circumstances | USCIS

This article has been written by Zeenat Phophalia, Esq. Of Counsel, Davies & Associates, India Office.

Zeenat Phophalia is qualified to practice law in New York, United Kingdom and India. She practices in the area of U.S. immigration law with a focus on business immigration, and has represented corporate clients including large and medium sized companies and startups across sectors such as IT, consulting, consumer goods, manufacturing and telecommunications.

Looking for an US immigration lawyer? Request free consultation at Davies & Associates or find our closest location around the world.

L1 Visa

L1 Study Cases

US Immigration Advisor

L-1A status for an Executive extended for another two years

Getting a new office L1-A Visa petition approved for an executive or manager does not automatically mean that he or she will get an extension of another two years. It is not a matter of right to get your status extended and it is certainly not a ministerial act on the part of USCIS to approve the petition. At the time of filing, the petitioner must prove that it can clearly elevate the beneficiary to a managerial or executive position. This means that USCIS will look into whether the petitioner has hired the right people to relieve the beneficiary from performing non-qualifying duties. This is why personnel planning in the business plan for new office L-1 Visa petitions is critical. Aside from this, both the foreign entity and the petitioning US entity must continue to meet all other requirements. 

 APPROVAL OF ANOTHER L-1A PETITION AN EXECUTIVE FROM INDIA

 
We filed an extension of L-1A Visa status petition on behalf of an executive from India. We worked with the Petitioner in getting the new office petition approved and now we have successfully obtained approval of the extension of status petition for an additional period of two years.

The beneficiary is an executive of a digital outdoor marketing agency, specializing in advertising via digital screens set in high traffic public areas, such as retail stores. The Company outsources the content creation and focuses primarily on digital screen setup and sales activities. 

As a multinational executive or manager, you can be transferred to the U.S. for a maximum period of 7 years. If the U.S. company has not been operational for more than a year, the company is eligible to file a new office petition for the transfer of the executive or manager for one year. Extensions can be granted in increments of 2 years until the maximum period of 7 years has been reached. Within the 7 year period, it is possible for the beneficiary to transition to become a permanent resident of the U.S. through the EB-1C Visa petition for a multinational executive or manager. 

L-1 PETITION APPROVALS – L-1A EXECUTIVE FROM INDIA AND L-1B SPECIALIZED KNOWLEDGE EMPLOYEE FROM ARMENIA


The first approval is for a specialized knowledge employee from Armenia. His petition for intracompany transfer as a Cloud Architect has been approved for 3 years. He is the third beneficiary under the L-1 Visa program to be transferred to the US company. We had previously secured approvals for two executives of the same company.

The second approval is for an executive from India, a VP for Engineering for an organization that provides cloud governance platform that empowers enterprises to increase top-line revenues, improve bottom-line efficiencies, and gain a competitive edge through AI-powered real-time cloud governance on autopilot. The beneficiary has been given three years as well. We had also obtained prior L and H-1B approvals for the U.S. company. 

Looking for an US immigration lawyer? Request free consultation at Davies & Associates or find our closest location around the world. 

This article has been written by Verdie J. Atienza, Esq., Senior Immigration Attorney, Head of E-2 and L-1 Visas Practice Team at Davies & Associates, New York Office.

Verdie J. Atienza is a Senior Attorney in charge of the firm’s L-1 and E-2 visa practice. He is a dual qualified lawyer in New York and in the Philippines and is qualified to practice immigration law in any state in the United States. 

 

O1 Study Cases

US Immigration Advisor

O-1A Petition Approved for 3 years for a UK national

 
The beneficiary is an expert in innovation, particularly in digital strategy, corporate innovation, and building start-up companies.  

The petitioning US company provides innovation strategy, lean start-up experimentation and organizational design. The company caters mostly to high growth European tech start-ups with goals of expanding operations in the US. The company assesses current organizational structure, identifies barriers to innovation, and develops custom organizational design that aligns with the goals and supports innovation of the clients.  

O-1A  APPROVALS


The first one is an O-1A petition for a scientific/medical researcher and physician of extraordinary ability from Spain. The beneficiary has been approved to work for the petitioner for 3 years. 

Looking for an US immigration lawyer? Request free consultation at Davies & Associates or find our closest location around the world. 

This article has been written by Verdie J. Atienza, Esq., Senior Immigration Attorney, Head of E-2 and L-1 Visas Practice Team at Davies & Associates, New York Office.

Verdie J. Atienza is a Senior Attorney in charge of the firm’s L-1 and E-2 visa practice. He is a dual qualified lawyer in New York and in the Philippines and is qualified to practice immigration law in any state in the United States. 

 

US Citizenship parents

Citizenship Application: Section 322 Process

US Immigration Advisor

Did you know that you may be eligible to apply for U.S. citizenship if you have a U.S. citizen parent even if your U.S. citizen parent has not been physically present in the U.S.?

To be eligible:  
1.     You must not be not married; 
2.     USCIS must administer the Oath of Allegiance to you before reaching 18 years of age; 
3.     You regularly reside outside the United States; 
4.     You are in the legal and physical custody of your U.S. citizen parent; 
5.     Your U.S. citizen parent has been physically present in the United States for a period or periods totaling at least five years, at least two of which were after 14 years of age. 
6.     If your U.S. citizen parent does not meet the physical presence requirement, the U.S. citizen parent’s own U.S. citizen parent (your grandparent) has to have been physically present in the United States for a period or periods totaling at least five years, at least two of which were after 14 years of age. 
In cases where the U.S. citizen parent died in the preceding five years, and Form N-600K has been properly filed on behalf of the child by the U.S. citizen grandparent or by the U.S. citizen legal guardian, the child does NOT have to be residing in the legal and physical custody of the person as long as the person who has legal and physical custody of the child does not object to the Form N-600K; and 
7.     You are temporarily present in the United States at the time of interview in a lawful status pursuant to a lawful admission. 

Looking for an US immigration lawyer? Request free consultation at Davies & Associates or find our closest location around the world. 

This article has been written by Verdie J. Atienza, Esq., Senior Immigration Attorney, Head of E-2 and L-1 Visas Practice Team at Davies & Associates, New York Office.

Verdie J. Atienza is a Senior Attorney in charge of the firm’s L-1 and E-2 visa practice. He is a dual qualified lawyer in New York and in the Philippines and is qualified to practice immigration law in any state in the United States. 

 

E-2 Visa approved for a Singaporean national during COVID-19

New Policy Guidance on Employer’s Ability to Pay in I-140 Filings

US Immigration Advisor

On March 15, the US Citizenship and Immigration Services issued a policy guidance addressing the analysis of an employer’s ability to pay the proffered wage for certain employment-based immigrant petitions. This guidance, contained in Volume 6 of the Policy Manual, is effective immediately and applies to I-140 petitions filed on or after March 15, 2023. The updated guidance discusses in more detail various types of evidence and explains how USCIS reviews all evidence relevant to the employer’s financial strength and the significance of its business activities.

US employers seeking to sponsor employees under EB-1, EB-2 and EB-3 employment-based immigrant classifications that require a job offer must demonstrate their continuing ability to pay the proffered wage to the employee as of the priority date of the immigrant petition. The employer’s/petitioner’s ability to pay the proffered wage stated on Form I-140 is one of the essential elements that USCIS considers in evaluating whether the job offer is realistic.

Regulations require an employer to submit annual reports, federal tax returns, or audited financial statements for each available year from the priority date. An employer can alternatively submit a financial officer statement attesting to its ability to pay the proffered wage if it has 100 or more workers. Additional evidence such as profit and loss statements, bank account records, or personnel records may also be submitted. Many employers satisfy the ability to pay requirement by also submitting payroll records demonstrating that, during the relevant time period, they have been paying the employee at least the proffered wage indicated on the Immigrant Petition for Alien Workers (Form I-140).

Here’s what the updated USCIS guidance provides:

  • USCIS reviews all evidence relevant to the employer’s financial strength and the significance of its business activities.
  • Employer must submit one of the three forms of initial required evidence listed in the regulation but may also include other types of relevant evidence.
  • Discussion of each form of initial required evidence listed in the regulation and several other forms of additional evidence employers might submit to establish their ability to pay the proffered wage.
  • Explains how USCIS analyzes evidence and issues relevant to an employer’s ability to pay the proffered wage, such as the petitioner’s current employment of the beneficiary, prorating the proffered wage for the priority date year, multiple beneficiaries, successors-in-interest, and non-profit organizations.
  • Addition of information about types of business structures to help officers better understand the types of petitioning employers and the evidence they may submit to establish their ability to pay the proffered wage

Reference Links

Chapter 4 – Ability to Pay | USCIS

20230315-AbilityToPay.pdf (uscis.gov)

EB1c Visa | EB1c US Lawyer | Davies & Associates (usimmigrationadvisor.com)

Merit Based EB-1A Visa | National Interest Waiver (usimmigrationadvisor.com)

EB3 Visa | Permanent Residency for Skilled Workers | Davies & Associates LLC (usimmigrationadvisor.com)

This article has been written by Zeenat Phophalia, Esq. Of Counsel, Davies & Associates, India Office.

Zeenat Phophalia is qualified to practice law in New York, United Kingdom and India. She practices in the area of U.S. immigration law with a focus on business immigration, and has represented corporate clients including large and medium sized companies and startups across sectors such as IT, consulting, consumer goods, manufacturing and telecommunications.

Looking for an US immigration lawyer? Request free consultation at Davies & Associates or find our closest location around the world.

L-1 Visa for Spouses

Can a spouse work on L1 Visa

US Immigration Advisor

Yes, the spouse of an L1 visa holder can work in the United States. An Employment Authorization Document used to be required, but USCIS has updated the guidance in the USCIS Policy Manual to address the documentation that certain E and L nonimmigrant spouses may use as evidence of employment authorization based on their nonimmigrant status.

On November 12, 2021, USCIS clarified that L spouses are now considered employment authorized based on their valid L nonimmigrant status. Since the November 2021 announcement, the Department of Homeland Security added new Class of Admission (COA) codes to distinguish between L spouses and children. As of January 30, 2022, USCIS and CBP began issuing Forms I-94 with L-2S code for L spouse. An unexpired Form I-94 reflecting one of these new codes is acceptable as evidence of employment authorization for spouses.

It’s important to note that the L1 visa holder’s spouse can only work in the United States for the duration of the L1 visa holder’s authorized stay in the United States.

To obtain an L1 visa to work in the United States, your employer outside the US must first have a qualifying relationship with a U.S.-based employer. This means that you must either be an executive, manager, or specialized knowledge employee of a multinational company that has a subsidiary, branch, affiliate, or parent company in the United States. Your employer must also file a petition on your behalf with the United States Citizenship and Immigration Services (USCIS).

D&A Immigration Newsletter: July 2020 Updates India, US, Italy, Vietnam Immigration

usimmigrationadvisor
Join our EB-5 Visa Webinar | July 8 2020

Interest in EB-5 visa is growing quickly because it has not been included in President Trump’s “immigration ban”. 

Join us for a free webinar where our Global Chairman, Mark Davies, will answer all your EB-5 questions. Mark will be joined by Matt Hogan, Vice President of Project Development at CMB Regional Centers. The EB-5 visa offers a path to US permanent residency (Green Card) for a minimum $900,000 investment per family. Conditions apply.

July 8, 2020 – 5:30pm India | 7pm Vietnam | 1pm London | 8am New York

Davies & Associates Italy: Expansion

We are pleased to announce the appointment of a new Italian-speaking team member, Matteo Tisato. Matteo is based in our Miami, Florida office and brings experience from working for law firms on both sides of the Atlantic. Matteo is already busy assisting our Italian clients with realizing their US immigration goals. He is also our go-to staff member for anyone seeking residency and citizenship of Italy. Matteo can be reached at [email protected] 

Siamo lieti ti annunciarvi l’ingresso di Matteo Tisato nella squadra Davies & Associates. Matteo gestisce il nostro ufficio a Miami (Florida), assiste tutti i nostri avvocati americani ed è punto di riferimento per la clientela Italiana. Matteo si occupa inoltre di permessi di soggiorno e naturalizzazioni Italiane

Read Matteo’s latest blog on the Italian Elective Residency Visa

Davies & Associates India: Remittance Taxes

The Indian government is changing the way it collects tax on remittance payments from October 1. People seeking to emigrate who do not wish to pay this tax at source and rather account for it later may wish to move their money ahead of the new rules coming into effect. It is possible to pre-emptively move money into an escrow account in the United States until such a time as they are ready to proceed with emigration process.

Read more about India’s remittance tax at source 

Davies & Associates Vietnam: New Hanoi Office

Davies & Associates is opening a new office to meet demand in Vietnam. Our new premises are located in the Hanoi Lotte Center in Ba Dinh, Hanoi. This complements D&A’s Ho Chi Minh City office, located in the landmark Bitexco Tower. Davies & Associates Global Chairman Mark Davies is currently based out of our Vietnam office and is available for meetings. 

Davies and Associates đang mở một văn phòng mới để đáp ứng nhu cầu tại Việt Nam. Cơ sở mới của chúng tôi được đặt tại Trung tâm Lotte Hà Nội, quận Ba Đình, Thành phố Hà Nội.

Contact us to schedule a meeting with D&A Chairman Mark Davies

Davies & Associates India: Retrogression

Big news for EB-5 in India is that the country is technically no longer in retrogression. This may be the artificial result of a slowdown in processing at USCIS. Given recent changes to the way USCIS sequences applications, this could be a favourable time to make an application before processing picks up and India potentially returns to retrogression.

Contact us for a more detailed explanation. 

D&A in the News

Davies & Associates was quoted in the Financial Express on the impact of President Trump’s suspension of H-1B, J-1 and L-1 visas through the end of the year. Mark Davies, Global Chairman of D&A, explained that restrictions on the H-1B have been tightening for years, and that we are seeing an increasing number of H-1B holders looking at the E-2 and the EB-5 visa as alternatives. Both visas have been exempted from the “immigration ban”.

Read the article here.

Finally: Happy Independence Day to Those Celebrating on Saturday

EB-5 Project Due Diligence in Covid-19 era

usimmigrationadvisor

By Mark Davies, Global Chairman, D&A

While the pandemic was not predictable economic shocks such as the mortgage crisis or just a plain economic downturn are.

Without making any comment at all on any specific EB-5 project, it is true that investors need to make sure that proper protections are in place when investing in any project. Many, not all, EB5 projects simply do not have the protections in them that a normal non-EB5 investor would demand.

There absolutely are real estate EB-5 projects in the market that are doing well, such as pre-leased warehouses or office buildings that are pre-leased to “AAA” clients.

There is far more to EB-5 project review than EB-5 compliance.

It is quite common to see EB-5 projects that have no language protecting clients from future subordination of the EB-5 position. In pre-leased commercial projects immigration lawyers often fail to take “due diligence” step 101 and read that lease on behalf of their client.

There are absolutely steps clients facing challenged projects must take now to protect themselves. Workouts 101.

Also, consider the position of a developer who is also a Regional Center in a workout or bankruptcy. Can they effectively represent the interests of EB5 investors?

***

The EB-5 Immigrant Investor Visa Program offers a direct route to a US Green Card. The minimum investment requirement is $900,000 and other conditions, such as job creation, apply. The EB-5 Visa is exempted from President Trump’s current “immigration ban”.

Contact me for more information.

Nothing in this blog constitutes legal advice, please contact Davies & Associates for a consultation with an attorney

Bankruptcy in India during Covid-19

Insolvency & Bankruptcy in India during Covid-19

usimmigrationadvisor

Neha Mehta analyses what the Indian government is doing to mitigate the impact of Covid-19 on bankruptcy and insolvency.

COVID-19 & INITIAL MEASURES

Covid-19 has altered the fabric of the global economy. Worldwide lockdowns, travel restrictions, restraint on international trade and other stringent measures to curb the pandemic, has led to uncertainty around the future of many businesses.
With the objective of lending support to struggling businesses, most nations, including India, have introduced fiscal, monetary and protective measures to prevent multiple bankruptcies.
In its first measure to protect small and medium enterprises, already under severe financial stress, the Government of India, in March 2020, raised the threshold of the default amount for invoking the Insolvency and Bankruptcy Code, 2016 (IBC) to Rupees One Crore (earlier Rupees One Lakh).
The Government, to support and provide relief to businesses across all sectors subsequently indicated that it may suspend, for an initial period of six months, the (key) sections 8, 9 and 10 of IBC which trigger the insolvency process, and perhaps further extend such shield to a year, if the pandemic continues.


THE UNCERTAINTY
The effective date of such amendments would be the date of promulgation of an ordinance. However, as one was not issued, till now, speculation was rife over what the Government will do, especially with respect to the cut-off date to invoke insolvency under sections 8, 9 or 10.
In the midst of this, there has been an overwhelming section of the public that has been disenchanted over the attempt to shield defaulters and provide them benefits that they may not deserve. There has also been concern over whether the protections would extend to prior defaults, existing pre Covid-19. This includes borrowers, banks, financial institutions, legal professionals and parties affected by breached contracts.

Ultimately, on 17th May 2020 the Union Finance Minister, in line with earlier announcements, announced that the Government will promulgate an ordinance suspending initiation of fresh insolvency cases for a year, and that the amended definition of ‘default’ under the IBC would exclude Covid-19 related debt.
Despite the announcement, it was unclear whether fresh insolvency filings would include a debt or default occuring prior to the onset of Covid-19.

CLARITY
The air was cleared with the promulgation of an Ordinance on 5th June 2020 (Ordinance), suspending the Corporate Insolvency Resolution Process (CIRP) for all defaults arising on or after 25th March 2020 for a period of six months, with a possible extension upto one year that may be notified subsequently (Suspension Period)
In essence, by virtue of the Ordinance no CIRP proceedings, may be invoked at any time in future, for defaults that have arisen during the Suspension Period. However, defaults occurring before or after the Suspension Period are not protected.
In addition, the Suspension Period is excluded from the six-month default period for declaration of a debt as a non-performing asset (NPA).


LENDERS – A HAPLESS BUNCH?
To say that these are challenging times for lenders would be an understatement. The IBC has not only provided efficacious and speedy remedy for recovery, it has also proved a strong deterrent against borrowers defaulting.

In the absence of this formidable weapon and shield, lenders may turn to The Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (SARFAESI) for enforcement of security interests, including enforcing mortgages of real property, and assuming management and control of a debtor.

While the Government has not suspended SARFAESI (at least not as yet), the deferment of NPA classification for the six-month Suspension Period may render SARFAESI a toothless tiger. This may leave lenders with the sole option of invoking dispute resolution provisions, as a method of recovery, in respect of a default. 

As far as affected parties to a contract, as IBC is off the table for the time being, their only option would be to resort to dispute resolution, which, of course, is neither as economical or as speedy as the CIRP process. 

CONCLUSION 

With a flood of defaults looming, questions will arise over whether these protective measures shield those who don’t really deserve protection, with a view to save the few who are genuine and well-intentioned. The argument in favour will, of course, be that the Government, by taking the broader long-term view, and allowing distressed businesses to heal and recover, will help the economy recover and, in the long run, even recoveries. Certainly, that would be the ideal outcome, but until we see that happen, lenders and parties to contracts that are owned monies will have to hold their breath and hope for the best. 

Disclaimer: This article is provided for informational purposes only and is not legal advice. For more advice on the topic, please contact the author.