Insolvency & Bankruptcy

A unified code known as the Insolvency and Bankruptcy Code went into effect in 2016. All businesses, partnerships, and people are covered by the insolvency and bankruptcy law, which is a type of social legislation. It seeks to offer relief to everyone of them. It aims to balance the interests of all shareholders while also maximizing the value of the debtors’ assets. The Code promises to bring about significant reforms while emphasizing creditor-driven insolvency resolution. It tries to increase the asset value of bankrupt firms/companies and to identify financial disaster in advance. It is a statutory process brought on by insolvency that frees a person from the majority of their debts and subjects them to judicial oversight or a liquidator for the interest of their creditors.

The team of Legal Litigator provides consultancy services to clients in bankruptcy and liquidation processes, including corporate debtors, investors and asset purchasers, secured and unsecured creditors, Partnership Firms, troubled company directors, and any other interested parties.

Services we provide:-

• Advisory
• Litigation in Court & Tribunals
• Drafting of contracts & agreements
• Sale of Distressed Assets
• Restructuring of Distressed Assets
• Advising Companies Investing in Distressed Companies Undergoing Insolvency Proceedings
• Negotiating Settlements
• Distressed Acquisitions and Sales
• Securitization & Liquidation
• Corporate Debt Restructuring

PERSONS WHO MAY INITIATE CORPORATE INSOLVENCY RESOLUTION PROCESS:

On the corporate person’s acknowledgment of a default, the following individual could begin the recovery process: There are two types of creditors: financial and operational. A person who is owed money is known as a financial creditor. A person who is owing an operational debt is referred to as an operational creditor.

A demand for the provision of goods or services, employment, or a debt for the repayment of dues arising under any currently in effect law and payable to the Central Government, any State Government, or any local body is referred to as a “Operational Debt.”

PROCESS OF INITIATION OF CORPORATE INSOLVENCY RESOLUTION PROCESS:

In accordance with section 8 of the 2016 Insolvency & Bankruptcy Code, an operational creditor may, upon the occurrence of a default, deliver a demand notice of unpaid operational debtor copy of an invoice to the corporate debtor.

Within ten days of receiving the demand notice or copy of the invoice referred to in subsection (1), the corporate debtor shall notify the operational creditor of: (a) the existence of any disputes, if any, and the status of any litigation or arbitration proceedings commenced prior to the receipt of such notice or invoice with respect to such disputes; (b) the repayment of any outstanding operational debt by sending an attested copy of the record of electronic payment.

The effective creditor fails to receive payment from the corporate debtor after ten days have passed since the sending of the demand letter or invoice under Article 8(1) or the demand letter under Article 8(2); Subject to the provisions of Section 8, effective creditors may appeal to the NCLT to file a motion to commence liquidation proceedings under Section 9 of the Insolvency and Bankruptcy Act 2016.

An operational creditor initiating a corporate insolvency resolution process under this section may propose a resolution professional to act as an interim resolution professional.
The Adjudicating Authority (NCLT) shall, within fourteen days of the receipt of the application under sub-section (2), by an order –

• admit the application and communicate such decision to the operational creditor and the corporate debtor if,
  • the application made under sub-section (2) is complete;
  • there is no repayment of the unpaid operational debt
  • the invoice or notice for payment to the corporate debtor has been delivered by the operational creditor;
  • no notice of dispute has been received by the operational creditor or there is no record of dispute in the information utility; and
  • there is no disciplinary proceeding pending against any resolution professional proposed under sub-section (4), if any.
    
    
• reject the application and communicate such decision to the operational creditor and the corporate debtor, if
  • the application made under sub-section (2) is incomplete;
  • there has been repayment of the unpaid operational debt;
  • the creditor has not delivered the invoice or notice for payment to the corporate debtor;
  • notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility; or
  • any disciplinary proceeding is pending against any proposed resolution professional.

The following persons shall not be entitled to make an application to initiate corporate insolvency resolution process under Insolvency and Bankcrupcy Code, 2016:-

• a corporate debtor undergoing a corporate insolvency resolution process;
• a corporate debtor having completed corporate insolvency resolution process twelve months preceding the date of making of the application;
• a 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;
• a corporate debtor in respect of whom a liquidation order has been made.

Time to complete bankruptcy proceedings:

Pursuant to the Article 12 Order of the IBC, the corporate insolvency process must be completed within 180 days from the date of approval of the application to initiate such proceedings.

If directed by a resolution passed by a vote of 70 to 5 at a meeting of the Committee of Creditors, the resolution expert will ask the tribunal to extend the duration of the corporate insolvency process beyond his 180 days. You can apply by Number of voting rights. If, upon receipt of the application, the tribunal determines that the proceedings to terminate the bankruptcy proceedings are of such a nature as to be incapable of being completed within his 180 days, the order shall preclude such proceedings. You can extend the period. If it exceeds 180 days, we will extend it for as long as we deem appropriate, but not more than 90 days.

If an application under section 7, 9, or 10 is approved, the tribunal or the NCLT may, by resolution:
Declare a moratorium on the purposes set out in Article 14.
Arrange for public notice of the commencement of bankruptcy proceedings of the company in accordance with Article 15 and request the submission of claims. When
Appointment of a provisional settlement expert under Section 16 of the IBC. The public notice referred to in subsection (1)(b) shall be made immediately upon appointment of the interim liquidator.
The firm has a highly competent team practicing bankruptcy and bankruptcy law before the NCLT and the Bankruptcy and Bankruptcy Commission of India. We assist our clients at every step of the process, beginning with the delivery of the IBC’s Section 8 Notice and his submission of a Section 9 Application to the NCLT seeking initiation of bankruptcy proceedings.