Insolvency Professional Lawyers
The Insolvency & Bankruptcy Code, 2016 offers a standardized, comprehensive financial condition legislation encompassing all corporations, partnerships and Sole Proprietorship. One in every of the elemental options of the Code is that it permits creditors to assess the viability of the debtors and encourage reconciliation for its revival or a speedy liquidation. The IBC creates a brand new institutional framework, consisting of insolvency professional, regulator professionals, and adjudication forum to facilitate a proper and time bound insolvency resolution process and liquidation.
The Insolvency Application are filed before the NCLT. As per the Code, the entire process should be completed within 180 days and can be extended upon an application for a period not exceeding 90 days, so totally it should end within 270 days.
The Insolvency Filing Procedure.
- Demand Notice by the Operational or Financial Creditor (OC/ FC) – 10 days time given for the Debtor to accept the truth and for repayment of the alleged debt;
- After expiry of 10 days of issuing a Demand Notice, an OC can file an application for initiation of Insolvency Resolution Process (IRP) shall be filed by the OC/ FC or the Corporate Debtor Himself.
- The IRP shall commence from the date of admission of application by the Adjudicating Authority (NCLT).
- The OC who initiates IRP shall propose a Resolution Professional to act as an IRP.
- The NCLT shall within 14 days of receipt of an application for initiating Insolvency Resolution Proceedings, shall admit the application and communicate the same to the OC or FC.
- The NCLT shall after admission of the Application shall by an order declare a Moratorium for the purposes referred to in S,14 of the Code. The Order of Moratorium Shall have effect from the date of such order till completion of Insolvency Process.
- The OC through the NCLT shall appoint an Interim Resolution Professional (IRP) within 14 days from the Commencement of IR process, and the term of IRP shall not exceed 30 days.
- The IRP shall constitute a Committee of Creditors (CoC), and the first creditor meeting shall be held within 7 days of such constitution.
- The CoC may in its first meeting may by a majority of not less than 75% of voting share of the FCs or may resolve either to reappoint the IRP as a Resolution Professional (RP); or to replace the IRP with another RP.
- The RP shall file application for avoidance of certain transactions
- The RP shall prepare an Information Memorandum (IM) in such form and manner as may be specified by the CoC for creation of a Resolution Plan.
- The Applicant shall submit the Resolution Plan to the RP prepared based on the IM. The RP shall submit the Resolution Plan for approval of not less than 75% of voting share of the Creditors before the CoC, provided that the Resolution Applicant shall not have a right to vote in the relevant meeting.
- The NCLT may either approve or reject the Resolution Plan. Upon approval of the Resolution Plan, the moratorium order under Section 14 of the Code shall cease to have effect.
- If the NCLT is agreeing with the proposed Resolution Plan, it shall approve the same. If the NCLT is not agreeing with the proposed Resolution plan, it may reject the same and order liquidation process as against the Corporate Debtor. Amidst the IR Process the NCLT may at any time order for liquidation upon an application with recommendation of the Committee of Directors for liquidation or if it is not receive any recommendation for appointment of Resolution Professional by the Corporate Debtor, Financial Creditor or Operational Creditor.
- An appeal against such rejection of plan shall lie as in Section 61 within 30 days of such order. And, any person aggrieved by the order of NCLAT shall file an appeal before the Supreme Court.