Overview of Insolvency & Bankruptcy Code 2016.

Corporate Insolvency resolution Process Provision Covered in Part ii of the Code

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Corporate Insolvency The Process of Insolvency

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resolution.

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Is Triggered by Occurrence

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is a Process

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Of Default Means Non Payment of debt When whole or any

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part thereof
During which financial

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Creditors assess Of Minimum amount of

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Rs 1 lacs or more
& is not repaid by the debtor

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or the Corporate debtors

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Whether the debtors

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Only Covered or (C.G can specify

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business
maximum amount Rs 1 Crore.

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NO Higher Value

is viable to Continue & the option for rC Assets are realized & distributed by the
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its rescue & revival It Should be would up the debtors
liquidation
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Who Can make the Application

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Operational Creditors Corporate Debtors

Financial Creditors
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Any Person to Whom a financial debt A Person to whom an A Corporate Person Who Owns
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Operational debt is owned

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is Owned
To any Person
& Includes a person to whom. A Debt

Such debt legally assigned.

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 A Corporate debtor Includes a corporate applicant In respect of such
Person not entitled to make applications:
Corporate debtors.

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OR Having Completed
Undergoing OR

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a Financial In respect
OR

or
Creditor

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Corporate Insolvency

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resolution Process. Who has Violated Of Whom
A Corporate

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Insolvency

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resolution 12 Months Preceding
Any of the term of

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Process
resolution plan

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A Liquidation

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The date of making of the order has been

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application . Which was approved made .

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rC Twelve Months
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Before the date of making

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of an application Under this

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Time limit for Completion of Insolvency resolution Process:
Provided application is made to adjudicating
authority & is Satisfied

Within a Period of 180 days This Period Can be Extended

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Then Period can be extended but not

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exceeding 90 days

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Only if Creditors
From the date of admission of the application

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or
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Vote atleast 75% of the

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Voting Shares
Visit

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To Initiate Such Process.
:www.lawcharts.in

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For complete Charts

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Extension Can be granted only once .
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1) Issuance of Public notice of the Corporate Declaration of Moratorium & Public announcement:
Insolvency.
2) Resolution Process. A.A Means adjudicating
3) Collation of claims received . The A.A. ,After admission of the application, Shall by an Order authority
4) Constitution of the Committee of the creditor.
.
5) Conduct of the first meeting of the Committee of
Creditors.

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Key roles of

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Public announcement (P.A.) IRP Shall make (P.A.)

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Declare a (Moratorium) Appoint an Interim resolution TERM Within three days from the date of application of

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Professional.(IRP)
the IRP Includes:

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Means

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Within 14 days From the Shall not exceed 30 1) Name /Address of Corporate

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After the Commencement after insolvency Commencement date. days from the date of debtor.

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the declaration of corporate his appointment.
2) Name of the authority under which

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insolvency resolution Process of Appointment
the Corporate debtor is Incorporated.

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If the application for Corporate insolvency resolution process is made by

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A claim Period for 180 days is 3) Details of IRP.

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declared .

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4) Penalties for false Claims
During Which all Suits & legal proceeding

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A Financial Creditor
are stayed against Corporate debtor. 5) Last date for the submission of the
rC Operational creditor claims .
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& give time to the entity to
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6) The date on which the corporate

resolve its status . Proposal for IRP Made
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Or Corporate debtor insolvency process ends.

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It is Called the MORATORIUM PERIOD.

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& recommend
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appointment there of YES NO

Not allowed for following acts :
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Then Such IRP Shall Shall be appointed as IRP The Board within 10 days of receipt of a reference
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1) Institution of suits or Continuation of

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Pending Suits . be appointed. from AA

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2) Transferring of any property by Corporate Recommend the name of an insolvency Professional

If no disciplinary proceeds
debtors.
are pending against him
3) Any action to foreclose ,recovers.

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 (COC) COMMITTEE OF Creditors Sec 21 of the Code .

The IRP Shall after Collection of all Claims received against the Corporate debtor Shall Constitute a Committee of Creditors .
& determination of the financial position of the corporate debtor

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Constitution of All decision of the C.O.C

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Committee of Committee of Creditors .

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Creditors .
Shall have the

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or
Shall be taken by a Vote .

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Comprises of all financial Right to require the

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Creditors of the

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resolution (IRP)
Corporate debtors.

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Not less than 75% Voting

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To Furnish any financial
Share of the financial

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Information.
1) If Corporate debtor Creditors .

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owns financial debt to 2 or

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Such IRP Shall furnish within 7

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more financial Creditors .

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days of such requisition.
Ist Meeting of the C.O.C

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Each Such Financial rC Notice given by IRP to
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creditors shall be part of the
Shall be held within 7 days of its
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Committee of creditors &

Constitution.
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voting share shall be in 1) Members of C.O.C.

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accordance with financial Can be done by

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debt owned to them . electronic means or in 2) Members of suspended BOD or the

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participated also. partners of the Corporate debtors .

2) Where an operational
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creditors has assigned any 3) Operational Creditors or their

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operational debt to a The director May attend the representatives

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Partner & one meeting but no

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financial creditors
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representative of right to vote in

If the amount of their aggregate
Operational such meeting
dues is not less than 10 % of the
Then the assigner shall be Creditors.
debts.
Consider as an operation
creditors .
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 Replacement of resolution Professional by Committee of Creditors

Process

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C.O.C is of the opinion that a IRP as appointed

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Is Required to be replaced It may replace him with another resolution

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(YES) Professional

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In a meeting by a vote of 75% of Voting Shares

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C.O.C Shall forward the name of the proposed resolution

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Professional to the AA

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Forward to the board for its Confirmation & a resolution Professional shall be appointed
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Where any disciplinary Proceeding The Proposed IRP

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are Pending against

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Shall be Continued
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 Resolution Plan Sec 30 to 31 of the Code

Deals With resolution Plan

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Resolution Professional
Resolution Plan Resolution applicant can attend the

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or
Shall Present to the

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Shall be prepared by

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Meeting of C.O.C
resolution Professional

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Committee of crs for its
approval.

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Provided, No right to Vote

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In Form of information

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By Atleast 75% of
Memorandum

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Voting share of the

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Unless He is also a financial

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Creditors.

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Which Contain information for Financial Creditors
1) Corporate
preparing resolution plan. rC debtor
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YES Then Submit 2) Employee.

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It Contain : to A.A.
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Reject the resolution 3) Member.

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1) Details about insolvency If Satisfied NO plan.

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resolution process cost. 4) Creditors.

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2) Repayment of the debt of 5) Guarantors

Then approve such resolution plan
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Operational Creditors. 6) Other

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3) Provide for the management of Stakeholder

Shall be binding
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Effect involve in
the affairs of the Corporate Over on the
debtors. resolution Plan.

Moratorium Order Passed By the A.A. The resolution Professional

4) Does not Contravene any of the To be recorded on its
Provisions of the Law. Shall Ceased to have effort Shall forward all records To the Board database.
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 Liquidation Process : Sec (33 to 54)

The Code Concerns itself To resolve default in payment This Process is Called the If this process Then only the liquidation
of Corporate debtors. corporate insolvency does not works Provision of the Code are
resolution Process triggered.

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Event Triggering liquidation.

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A 75 % Majority of the The NCLT OR

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The Creditor Committee The Debtors
Creditors Committee.

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Reject the resolution Plan Contravenes
Does not approve
Resolve to Liquidate
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Submitted to it on technical The Agreed
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A Resolution Plan grounds. resolution Plan.

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The Corporate debtors

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& An affected
Within 180 days( or within
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At Any time person make an

the extended 90 days )
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application
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During the insolvency

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To the NCLT to
resolution Process
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liquidation the
Corporate debtors

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 Appointment of Liquidation Sec 34 of the Code

Power & duties of liquidator

Where the adjudicating authority
passes.

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Sec 35 of the code

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An Order for liquidation of the

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Corporate debtors

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1) To Verify Claims of all Creditors .

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The resolution professional 2) To take into his Custody or

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appointed Control all the assets.

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3) To Evaluate the assets & Property.

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Shall act as the
4) Measures to Protect & Preserves

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liquidation unless
the assets & Properties .

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replaced by A.A.

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5) To Carry on the business of the

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Corporate debtors .

1) All Powers of BOD ,KMP & the

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6) To Sell any immovable Property &
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partners of the Corporate debtors movable Property.
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7) To Obtain any Professional

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assistance.
Complete CA Final
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Shall ceased to have affect

8) To Investigate the financial affairs
Company law & Allied law
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9) To Perform Such other functions.

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Shall be Vested with the liquidator.

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