A trademark does not stop being a business asset the moment its owner becomes insolvent. If anything, it becomes one of the few assets still capable of holding its value. Under the Insolvency and Bankruptcy Code (IBC), these intellectual property rights remain vital components of a corporate debtor’s estate, subject to specific statutory mechanics that determine how they are valued, licensed, or transferred.
The moratorium under Section 14 of the IBC imposes a freeze on lawsuits, recoveries, and asset transfers once proceedings commence. This prohibition on transferring, encumbering, or disposing of assets applies squarely to trademarks. A resolution professional’s duty to preserve asset value therefore extends to these rights, which can lose commercial worth quickly if use lapses during the resolution timeline.
The Moratorium and Resolution Planning
Trademarks owned by a corporate debtor are classified as assets under the Code. They can be sold, licensed, or bundled into a resolution plan, but only through the correct statutory route. The assets of a debtor are not confined to plant, receivables, and cash; registered trademarks, pending applications, and the goodwill attached to them must be accounted for in the information memorandum.
In the Jet Airways case, the resolution applicant identified the debtor’s brand name and logo as assets and included them in the memorandum. This has a practical consequence: the resolution professional is not merely an administrator of tangible assets. Where trademarks form a meaningful part of enterprise value—as they often do for FMCG, hospitality, and pharmaceutical businesses—their proper identification and valuation can materially affect the plans submitted.
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A brand’s insolvency value is rarely its book value. Where the mark still carries market recognition, it is frequently the single asset a resolution applicant is bidding for.
Trademark licences are not automatically exempt from the moratorium. A licensor seeking to terminate a licence to an insolvent licensee, or a licensee seeking to walk away from royalty obligations, cannot assume ordinary termination rights survive the freeze untouched. During the Corporate Insolvency Resolution Process (CIRP), the professional typically assesses whether a licence adds value and should be preserved or is a liability to be addressed.
This distinction changes the calculus for everyone involved. For consumer-facing businesses where the logo often holds more weight than the physical inventory, the entire resolution strategy might pivot around keeping that specific legal right alive and transferable, rather than salvaging the company’s operations.
Liquidation and Jurisdictional Boundaries
If the debtor proceeds to liquidation, Section 33 empowers the Liquidator to sell the debtor’s assets, including trademarks, for distribution. They may be sold individually, as a bundled portfolio, or with the business as a going concern, depending on what maximizes recovery under the regulations.
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However, a transfer of ownership is not complete on paper alone. Under the Trade Marks Act, 1999, an assignment must be recorded with the Registrar of Trade Marks for the assignee’s title to bind third parties. Treating the sale deed as the end of the process, rather than the start of the recordal formalities, frequently creates avoidable title gaps.
Jurisdiction presents another layer of complexity. Section 60(5) vests the National Company Law Tribunal (NCLT) with jurisdiction to entertain applications by or against the corporate debtor, covering questions of law or fact arising from the insolvency proceedings.
Where a dispute over ownership or validity surfaces during CIRP, the forum selection becomes critical. The question is rarely whether a trademark dispute is valid—it is which forum is entitled to decide it once insolvency proceedings are underway. The Adjudicating Authority has read its jurisdiction broadly, meaning ownership disputes arising during CIRP may need to be raised before the NCLT rather than the Registrar or a civil court.
