IBC for Creditors
The Insolvency and Bankruptcy Code, 2016 ("IBC") is a law enacted with the aim of giving the
debtor the opportunity to recover and providing relief to all creditors, including other
stakeholders. There are 2 types of creditors under IBC, i.e. Financial creditors and
operating creditors. Let's explain it to them
1. 'Financial Creditor' refers to any person to whom any financial debt relates.
Financial debt as defined in U / S 5(8) of IBC means any debt that is paid out against a
consideration for the time value of money, i.e. interest, and includes any other debt as
described in the above section.
Example: – Whether any individual or company gives financial aid against interest to the
corporate debtor, it is a financial liability. That includes homebuyers who make an advance
payment to real estate developers for the reservation of some apartment / unit / property.
2. 'Operational Creditor' includes the people to whom the operating debt is owed and
includes any person to whom the debt has been legally assigned or transferred. Operational
debt as stated in U / S 5(21) of IBC shall mean any claims relating to the provision of
goods / services / employment or payable to Government.
Example: – If any person has any outstanding or any advance relating to the purchase or sale
of goods / services towards any debtor. This must have been an operating debtor.
Benefits to IBC Investors
In a recent interview dated 01/10/2018, Mr. M. S Sahoo, Chairman of the Insolvency and
Bankruptcy Board of India (IBBI), claimed that, owing to IBC, Rs. 1,00,000 Crs had been
recovered within 2 years of the IBC activities by IBC procedures.
Benefits should be made explicit and can be summarized as follows:
- Simple and time-limited procedure for filing a petition
- Comprehensive accountability by information usefulness
- Time-bound process for recovery and related process
- Clear synchronization between IBBI and NCLT.
- Quick and efficient return of interest capital
- Timely detection of distress assets
How to get the IBC process started
The proceedings under IBC may be initiated by filing a petition before the jurisdictional
NCLT u/s 7 or 8 or 10 of IBC to begin the Corporate Insolvency Resolution Process (CIRP) of
any Corporate Debtor. For more specific information, please click here
How is Rajput Jain & Associates going to support you?
Rajput Jain & Associates is having dedicated team of Qualified Insolvency professional, who
are well trained and experience in verifying the claims & supporting evidence of default,
lodging a timely complaint with NCLT, filling appeals before NCLT, bringing an appeal, among
others. Our services are as below;
- Interim Resolution Professional (IRP)
- Resolution Professional (RP)
- Representation on Committee of Creditors
- Corporate consulting for Resolution / liquidation
- Preparation of RFRPs, Evaluation Matrix , Process Documents
- Identification of prospective resolution applicants, investors, lenders.
- Managing operations/cash flows of the entity under Insolvency.
- IBC Acquisition Strategy Advisory for resolution applicants for acquisition of assets /
entities through the CIRP / Liquidation process
- Preparation of Resolution Plans
- Legal Advisory Service / Representation
- Interim Finance / Fund Syndications
We have a dedicated, committed & result oriented team of Qualified Insolvency Professionals
having specialised knowledge & experience of this code.