All the proceedings related to insolvency and bankruptcy in India are processed according to the insolvency and bankruptcy code of 2016. The first provision that the act provides is for the insolvency of the debtor. And secondly, it states about the procedure of declaring bankruptcy. Here in this article, we will be covering both things in brief, so that you can get a distinctive idea about the provisions the act provides.
The first step here is to make the application to NCLT, where you need to follow the procedure and the format that has been prescribed by the act itself.
As the application is accepted by the board a CRIT will be formed and that will be taking charge of the company of the debtor or the ventures if they are many in numbers. Here, you will be guided well by the bankruptcy law lawyer whom you will be appointing. The entire management of the ventures will be shifted under the CRIT, who will be inspecting the grounds of the ventures. During this time, the following things will not be possible by any means –
- No transfer of asset
- No enforcement regarding any security issue
- No recovery of property by the owner
- No suspension of goods supply
After the submission of the report from the CRIT, a COC or a committee of the creditors will be formed and they will be given the charge for 30 days for generating a report. After these 30 days, you can appoint bankruptcy law lawyer who will be the professional dealing with the resolution part. The resolution plan will be developed within 75-90 days and that will have some clauses, which will be approved both by the creditor and the debtor.
Procedure and Provision of Bankruptcy
Once the resolutions taken in the due course fails, for any reasons that accomplish the sections of insolvency and bankruptcy code, the debtor finds the provision to go for the bankruptcy provision to the jury. There he will have to prove his ground first according to the act and then only, he can move for bankruptcy, by following the below-mentioned stages –
- The application has to be made and that has to be attached with the documents, which is in accordance with the insolvency and bankruptcy law.
- Either the debtor or the creditor can pay the fees that have been sentenced in the provision of the act. After the application has been adjourned by the jury, the debtor can appoint a trustee, which also must be made in accordance with the provision of the bankruptcy and insolvency act.
- The declaration of bankruptcy is usually made within 14 days from the proceeding of the application. Once that is made, the trustee will be given the charge to dissolve the ventures of the debtor and divide it among the creditors.
- The trustee will also be following definite parts that have been mentioned in the sections of the bankruptcy and insolvency act, after which he can be released from the job. A report of the same has to be submitted to the jury by the trustee for the same.
- Finally, when the entire thing is checked, the trustee is released by the provision of the insolvency and bankruptcy code and then the fee that has been mentioned in the act has to be paid to the trustee for the completion of the procedure.
This is the complete procedure and the provision that has been mentioned in the bankruptcy law in India for insolvency and bankruptcy. You can get in touch with any of the bankruptcy law lawyers for a detailed overview of the same. The complete procedure needs to be finished within 180 days and the deadline can be exceeded by a maximum of 90 days.
Amy Jones has been serving as an experienced legal content writer in Ahlawat & Associates, who is related to Insolvency and Bankruptcy Law. She is a passionate writer and always on the lookout for opportunities for sharing her knowledge with legal community. Follow her company on various social media networks like: Twitter, Facebook and LinkedIn.