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In order to tackle the problem of unscrupulous debtors escaping
and delaying the repayment of debts, the Government of India
brought forth the Insolvency and Bankruptcy Code, 2016 (hereinafter
referred to as the 'IBC'). Not only does it seek to promote
the availability of credit in a more transparent and systematic
manner, but, it also balances the interests of all stakeholders by
making the legal framework stronger in terms of reorganization and
insolvency resolution of corporate persons, insolvent entity in a
time bound manner and for maximization of the value assets.
Procedure under IBC
With the view to carry out liquidation or resolution process,
the following steps are to be followed -
Apply to National Company Law
Tribunal (hereinafter referred to as the "NCLT");
The NCLT merely has to see the
records of the information utility or other evidence produced by
the financial creditor to satisfy itself that a default has
occurred. However, in case of an operational creditor such party
needs to first make a demand for his unpaid debt and it is open to
the corporate debtor to defend the claim on the basis that there is
an ongoing dispute;
Once the application is admitted,
NCLT may issue a moratorium, because a public announcement of the
initiation of corporate insolvency resolution process and call for
the submission of claims or appoint an interim resolution
professional (hereinafter referred to as "IRP") within 14
days of commencement of insolvency to manage the operations of the
corporate debtor as a growing concern;
The IRP shall verify claims of all
the creditors; take into his custody or evaluate all the assets,
property, effects and actionable claims of the corporate debtor;
take measures to protect and preserve the same; carry on the
business of the corporate debtor for its beneficial liquidation,
etc.
The corporate insolvency resolution
process shall be completed within a period of 180 days from the
date of admission of the application to initiate such process.
In the news
On August 30, 2018, the NCLT Mumbai Bench admitted an insolvency
petition against Lavasa Corp. Ltd. (subsidiary of Hindustan
Construction Co. Ltd) filed by one of its creditors, Raj
Infrastructure Development (India) Pvt. Ltd.1 The
tribunal has approved the appointment of Devendra Prasad as the IRP
under the provisions of the IBC.
Conclusion
The enforcement of IBC reposed faith of the creditors in the
legal mechanism assuring them speedy resolution of their disputes
against the debtors who may evade off their liabilities taking
recourse to the insolvency proceedings.
For further information please contact at S.S Rana &
Co. email: info@ssrana.in or
call at (+91- 11 4012 3000). Our website can be accessed at
www.ssrana.in
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