Quick review on Insolvency and Bankruptcy code

 

Quick review on Insolvency and Bankruptcy code

The meaning of Insolvency and Bankruptcy is not the same. “Insolvency” means the situation where an entity (the debtor) cannot raise enough cash to meet its obligations or to pay debts as they become due for payment

Bankruptcy is the term for when an individual is declared bankrupt by the Court because they are insolvent. People go bankrupt for two reasons; one is if their assets are less than their liabilities the second is where they are unable to pay their debts when they fall due.

The code would have an overriding effect on all other laws relating to Insolvency & Bankruptcy

The provisions of this Code shall apply to—

• Company incorporated under company act 2013(or any previous company law)
• Any other company governed by any special Act
• such other body incorporated under any law
• Any Limited Liability Partnership incorporated
• Partnership firms and individuals,

Insolvency Professionals

• The Code provides for insolvency professionals as intermediaries who would play a key role in the efficient working of the bankruptcy process.
• Role of the IP encompasses a wide range of functions, which include adhering to the procedure of the law, as well as accounting and finance-related functions.
• In the resolution process, the insolvency professional verifies the claims of the creditors, constitutes a creditors committee, runs the debtor’s business during the moratorium period and helps the creditors in reaching a consensus for a revival plan.
• In liquidation, the insolvency professional acts as liquidator and bankruptcy trustee.
• Where any corporate debtor commits a default, following persons:
  • A financial creditor,
  • An operational creditor, or
  • The corporate debtor itself

May initiate corporate insolvency resolution process in respect of such corporate debtor.

Persons not entitled to make application

The following persons shall not be entitled to make an application to initiate corporate insolvency resolution process –

• A corporate debtor undergoing a corporate insolvency resolution process; or
• An corporate debtor having completed corporate insolvency resolution process twelve months preceding the date of making of the application; or
• Corporate debtor or a financial creditor who has violated any of the terms of resolution plan which was approved twelve months before the date of making of an application under this Chapter; or
• A corporate debtor in respect of whom a liquidation order has been made

ADJUDICATING AUTHORITIES:

• The adjudicating authority for corporate insolvency and liquidation is the NCLT. Appeals arising out of NCLT orders lie to the National Company Law Appellate Tribunal within 30 days and, thereafter, to the Supreme Court of India on a question of law arising out of such order under this Code within forty-five days from the date of receipt of such order.
• For individuals and other persons, the adjudicating authority is the DRT. Appeals arising out of DRT orders lie to the Debt Recovery Appellate Tribunal within 30 days.
• Thereafter, to the Supreme Court on a question of law arising out of such order under this Code within forty-five days from the date of receipt of such order.

We also wish to inform you that, before the advent of (‘I&B Code, 2016) partners of the ‘Rajput Jain and Associates’ were working in the field of Debt Recovery and Securitization of financial assets and are fortunate to have an experience of more than 1 decades in Insolvency laws.

Our Partners possess diverse experience in the field of Insolvency Professional activities and since the inception of I&B Code, 2016 have executed several projects including settlement of IBC Matters, Conduction of CIR Process, finalization of Resolution Plans, providing legal and secretarial support to IP members including appearances before the adjudicating authorities.  

Partners are also involved in Statutory Audit, Secretarial Audit, Forensic Audit, Branch Audit, and other allied activities.

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We offer the following gamut of services to the industry in the field of Insolvency Laws,

• Services as ‘Insolvency Professionals’
• Team of Experts to act as an ‘Insolvency Professional’.
• Equipped with the required infrastructure to take control of Corporate Debtor and to make a meaningful concern in the long run.
• Cash flow monitoring and coordinating with banks
• Drafting & vetting of Expression of Interest, Information Memorandum and Evaluation Matrix
• Expert team for filing and Verification of claims
• Drafting and Filing reports with the Adjudicating Authority (NCLT)
• Filing of replies and applications with the Adjudicating Authority as and when the situation demands.
• Equipped with necessary Infrastructure to Liquidate the Corporate Debtors-
• Assist in Valuation & Forensic audit/Transaction audit, Assist in Sale of the corporate debtor as going concerned