BluSmart Rescue Hit by Assets Outside Insolvency Process

BluSmart's fleet comprised about 8,700 vehicles, of which about 4,700 came from Gensol Engineering

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firm, under the Insolvency and Bankruptcy Code, 2016, when a holding company is admitted into the corporate insolvency resolution process, the resolution professional gains control over only that company's assets and management.

"Subsidiaries are treated as separate legal entities, even if wholly owned, and their assets are not automatically available to the IRP unless those subsidiaries are themselves brought separately under insolvency," he said.

However, Agarwal argues that in a factual scenario like that of BluSmart, where a holding company within a group with closely linked operations between entities is admitted into the insolvency process, there can be certain provisions in the law to loop in the subsidiaries under the same process.