WHAT IS THE PROCESS FOR FILIFILING A BANKRUPTCY CLAIMING A BANKRUPTCY CLAIM?

Making The Important Financial Decision To File For Bankruptcy Might Help People Or Organizations Who Are Drowning In Debt. Debtors Who File For Bankruptcy Can Restructure Or Pay Off Their Debts With The Court's Protection. While The Step Involved May Seem Overwhelming, Some Of The Anxiety It Causes Can Be Minimized By An Understanding Of The Mechanisms.

WHAT IS THE PROCESS FOR FILIFILING A BANKRUPTCY CLAIMING A BANKRUPTCY CLAIM?

The Filing Process For Bankruptcy In India Is Regulated By The Insolvency And Bankruptcy Code (IBC), 2016. The Object Of This Statute Is To Improve The Process Of Bankruptcy For Individuals, Businesses, And Financial Service Providers. The IBC is Designed To Ensure The Resolution Of Insolvency Without Undue Delay In Favour Of Creditors And Debtors Alike. The Procedure For Making A Claim In Accordance With This Statute On Bankruptcy Is Aimed At Either Restructuring The Debtor’s Estate Or Selling It Off, For Purposes Of Providing Relief To The Debtor.

Insolvency And Bankruptcy Code 2016: Key Concepts

  • Corporate Insolvency Resolution Process: The Corporate Insolvency Resolution Process (Cirp) Comprises The Steps Taken Whenever A Corporate Debtor Defaults On The Payments Of Its Obligations To Creditors Or The Resolution Is Guided Towards Ending The Corporate’s Insolvency Through Business Reorganization Or Sale Of The Assets. 

  • Individual Bankruptcy: This Is The State Of Affairs In Which The Individual, In Every Conceivable Scenario, Be It A Partnership Or A Sole Proprietorship, Is Incapable Of Meeting His, Her Or Its Debts And Such A Situation Culminates In Either Bankruptcy Or An Arrangement. 

  • Adjudicating Authority: The Jurisdiction Over Individual Insolvency Is Vested in the Debt Recovery Tribunal (Drt) While That Of Corporate Insolvency Is Upon The National Company Law Tribunal (Nclt). 

  • Financial Creditors: A Financial Creditor Is An Individual Or Organization Who Has In Any Manner Extended Credit Facility To The Debtor. 

  • Operational Creditors: Operational Creditors Shall Mean Any Creditor Who Is Not A Financial Creditor And Has Provided Goods And Services To The Debtor.

Bankruptcy Claim: Who Can File?

  • Financial Creditors: These Are Persons Or Groups Who Have Lent Money Or Given Financial Credit To The Borrower Including Banks And Other Financial Institutions.

  • Operational Creditors: Operational Creditors Are Vendors Or Service Providers That The Debtor Owes Money To.

  • Debtors (Corporate Or Individual): In The Case, Where The Debtor Fails To Meet Them Financially, The Person May File A Bankruptcy Petition.

  • Guarantors: Guarantors Are Individuals Or Organizations Who Endorse A Payment On Behalf Of The Main Borrower In Case Of Default.

Filing A Bankruptcy Claim: Pre-Requisites

  • Threshold Amount: For Corporate Organizations, Inr 1 Crore Is The Threshold Amount That Must Be Reached To Start The Insolvency Process. Individuals’ Thresholds Are Different.

  • There Must Be No Prior Action At Law: To Advance, The Petitioner (Whether A Creditor Or A Debtor) Has To Ensure That The Debtor Is Not Already Involved In Any Other Legal Proceedings Regarding The Same Debt.

  • Ground For Filing Evidence: A Bank Statement, Invoice, Contract, Loan Agreement, And Other Financial Documents Must Serve As Evidence Of Default.

Filing A Bankruptcy Claim: Required Documents

  • Application Form: Submission Shall Be Made Either To The Drt Or Nclt.

  • Financial Records: These Include Bank Statements, Cash Flow Statements, Balance Sheets, Income Statements, Etc.

  • Proof Of Default: Letters Of Demand, Accounts Payable, Loan Sanction Letters, And Any Other Evidence Of A Loan Are Considered As Proof Of Default.

  • Listing Of Debtors: Contains Every Single Creditor And All Their Respetion Plans (Where Applicable): In Instances, Where A Proposal For Resolution Is Brought Forward By The Debtor Or The Creditors.

  • Power Of Attorney: When An Effective Amount Owed As Well As The Addresses As Well.

  • ResoluAttorney Will Act On Behalf Of The Applicant.

Filing A Bankruptcy Claim: Procedure

Establishing Qualification: 

  • A Bankruptcy Claim Can Be Filed By Both The Debtor And The Creditor. Any Individual Or Entity Who Is In Default Of Any Debt(S) That Total Inr 1 Lac Or More Can File For Bankruptcy Protection Under The Provisions Of The Indian Bankruptcy Code (IBC). 

  • Corporate Entities And Individuals Such As Partnership Firms Are Also Included. 

  • That Is To Say, The Debt Recovery Tribunal (Drt) Has Jurisdiction Over Partnerships And Individuals While The National Company Law Tribunal (Nclt) Has Jurisdiction Over Everything Else Corporate And Insolvency-Related.

Submission Of The Application:

  • Corporate Debtor: The Initiation Stage Entails The Submission Of An Application To The NCLT by A Debtor (The Company) And Its Creditors. The Application Should Also Contain The Necessary Additional Documents Such As The Debtor’s Clean Bank Statements, Proof Of The Defaults, And The Entire Debt Amount.

  • Individual Or Firm: In The Case Of Individuals Or A Partnership Firm Filing With The DRT, They Would Have To Provide Their Income, Assets, Liabilities As Well As Reasons For Bankruptcy.

Process For Resolving Insolvencies: 

After An Application Is Submitted, The Tribunal Reviews It To Make Sure It Complies With All Procedural Requirements. Assuming The Claim Proves To Be True, The Tribunal Allows That Application And Imposes A Freeze On Any Legal Proceedings Against The Debtor, Known As A Moratorium, where the Creditors Are Restrained From Initiating Recovery Measures At That Stage.

  • An Insolvency Resolution Professional (IRP) Is Assigned The Responsibility Of The Affairs, Business, And Assets Of Corporate Debtors. Once Managing The Corporation Is Taken Over By The Irp, The Person Has 180 Days (Allowable On Appeal For Other 90 Days) To Work Out A Resolution Plan. 

  • The Drt May Appoint An Expert To Evaluate The Repayment Capability Of The Entity And Recommend A Plan For The Settlement Of Debts For Individuals And Partnership Firms.

Creditors' Meeting:

  • For The Creditors To Adopt Or Refuse The Resolution Plan Proposed By Irp Or Resolution Specialist, They Summon A Meeting. 

  • Once Sanctioned The Implementation Of The Plan Commences To Mitigate The Problem Of Insolvency. 

  • If The Resolution Plan Is Disallowed Or No Compromise Can Be Reached, The Winding Up Process Commences.

Liquidation: 

  • The Debtor's Assets Are Sold Off If The Insolvency Settlement Process Is Unsuccessful. 

  • This Is Carried Out Under The Direction Of A Liquidator In Corporate Situations. 

  • Individual Debt Settlement And Asset Liquidation Are Governed By Priority Debt Settlement Orders Issued By The Drt.

One Can Talk To A Lawyer From Lead India For Any Kind Of Legal Support. In India, Free Legal Advice Online Can Be Obtained At Lead India. Along With Receiving Free Legal Advice Online, One Can Also Ask Questions To The Experts Online For Free Through Lead India.

Source:-

Visit us: — www.leadindia.law

Call Us: +91–8800788535

Email: care@leadindia.law

YouTube: — https://www.youtube.com/c/LeadIndiaLawAssociates

Facebook: — https://www.facebook.com/leadindialaw

LinkedIn: — https://www.linkedin.com/company/76353439

Twitter: — https://twitter.com/leadindialaw

Pinterest: — https://in.pinterest.com/lawleadindia

Instagram: - https://www.instagram.com/leadindialawofficial

Location: Kanchanjunga Building, Kanchanjunga Building, Barakhamba Rd, Fire Brigade Lane, Barakhamba, New Delhi, Delhi 110001, India

Comments

Post a Comment

Popular posts from this blog

How To Sell Property Which Is Captured By A Criminal?

Image
India Is A Country Where Natural Resources Such As Land, Etc. Are Worshipped. An Ordinary Man Here For His Whole Life,  Invests His Blood And Flesh To Own A Piece Of Land For His Family. And If One Day Someone Else Misappropriated Such  Property, Then The Rightful Owner Has No Proof Of Ownership Of The Same. A Land Could Have A Variety Of Definitions, As  It May Be An Indicator Of National Development For The State Or  A Profitable Asset For The Corporations. Sometimes, It Could Be Greed Leading To Unlawful Entitlement Or Unauthorized Possession Of Land, Hence Violating The Rights Of The Lawful Owners. In Case You Have Questions Related To The Issue Of Land Grabbing And Why It Should Be A Matter Of Concern Or If You Wish To Sell A Property Illegally Possessed By A Person Of Criminal Background, You Can Contact An Experienced Property Lawyer In Mumbai . Land Grabbing And Why Is It A Matter Of Concern? An Act Or Attempt To Acquire Or Occupy Such Land Or Property Which Belongs T
Read more

What Are The Legal Implications Of Selling Spoiled Or Non-Vegetarian Food Online?

Image
It is the responsibility of the Food Safety and Standards Authority of India (Fssai) to set scientifically based guidelines for food items and Control their production, storage, sale, and import. Thus, In Order To Govern The Food Sector, Several Penalties And Punishments Are Prescribed By The Fssai Act For Any Violations. What Are Food Safety Violations? Food Safety Rules Apply In Every State With The Goal Of Protecting Consumers From Food Poisoning And Other Food-Borne Illnesses. Food Producers, Wholesalers, And Restaurants Are Subject To Strict Regulations Regarding How They Serve Food To Customers. Food Safety Regulations, For Instance, Specify That Tainted, Damaged, Or Expired Food Must Never Be Served To Consumers. Furthermore, A Lot Of The Nearby Counties Also Conduct Routine Inspections Of Eateries And Other Establishments That Sell Food. The Goal Of These Inspections Is To Make Sure That Food Safety Regulations Are Being Followed By These Eateries And Enterprises That S
Read more

How To Book A Court Marriage Date In The Registrar Office?

Image
The Sole Prerequisite Should Be That The Special Marriage Act Of 1954 Be Followed. A Judicial Marriage Does Not Require Indian Ancestry For Either Partner. A Judicial Marriage May Be Performed Between An Indian National And A Foreign National. People Of Different Sexes And From The Same Or A Different Religious Background Can Get Married Through Judicial Marriage. Indian Court Marriage Procedure: The Court Marriage Application Form, Also Known As Notification Of The Approaching Marriage, Must Be Sent To The Marriage Officer By The Bride And The Groom. The Notification Of The Intended Marriage Must Be Provided In Accordance With The Second Schedule Of The Act's Requirements No Later Than 30 Days Before The Expected Wedding Day. It Needs To Be Given To The Marriage Officiant Whose Territory Either Party Has Continuously Resided In For At Least 30 Days. The Marriage Officer Shall Publish The Notice Of The Intended Marriage Given By The Parties By Attaching It In A Conspicuous Place Wi
Read more