Insolvency & Bankruptcy Code

Evolution of Insolvency law in India

Evolution

Presidency Towns Insolvency Act 1909

Companies Act, 1956, 2013

Provincial Insolvency Act 1920

SICASARFAESIDRT

Indian Partnership Act

Insolvency & Bankruptcy code

Journey

Draft Bill was introduced in Lok Sabha on 21st

December, 2015.

Referred to Joint Committee on 23rd December, 2015.

Joint Committee Report placed on 28th April, 2016

Passed by LS - 5th May, 2016. Passed by Rajya Sabha -11th May, 2016.

Notified on 28th May, 2016

The objective of the Code is to consolidate and amend the laws relating to reorganization and insolvency of corporate persons, partnership firms and individuals

in a time bound manner.

The LawArrangement of Sections

PART - I PART – II PART – III PART - IV

Preliminary ( Section 1 to 3)

Insolvency Resolution & Liquidation for Corporate Persons (Section 4 to 77)

Insolvency Resolution & Bankruptcy for Individuals & Partnership Firms(Section 78 to 187)(NA Jammu & Kashmir )

Regulation of Insolvency Professionals, Agencies & Information Utilities

(Section 188 to 255)

SchedulesSchedules I Amendment to the Indian Partnership

Act,1932Schedules VII

Amendment to the Securitisation & Reconstruction of Financial Assets & Enforcement on Security Interest Act, 2002

Schedules II Amendment to the Central Excise Act, 1944

Schedules VIII

Amendment to the Sick Industrial Companies (Special Provisions) Repeal Act, 2003

Schedules III Amendment to the Income Tax Act, 1961 Schedules IX Amendment to the Payment & Settlement System Act, 2007

Schedules IV Amendment to the Customs Act, 1962 Schedules X Amendment to the Limited Liability Partnership Act, 2008

Schedules V Amendment to the Recovery od Debts due to Banks and Financial Institutions Act, 1993

Schedules XI Amendment to the Companies Act, 2013.

Schedules VI Amendment to the Finance Act, 1994

Applicability

Companies LLPs Notified body corporate Partnerships Individual

Insolvency Resolution Process- Triggers

Default

Trigger

Partnership & Individuals min amt.

of INR 1000

Company & LLP- min. amt. of INR 1 L

Adjudicating Authority & admission of Insolvency petition

For Individuals & Partnerships For Companies , LLPs and other Body Corporates

National Company Law Board Tribunal

Debt Recovery Tribunal

Rejects or accepts the petition within 14 days and before accepting or rejecting provide 7 days for corrections, if any

Appointment of interim resolution professionalAward Moratorium

Issue public announcement

Moratorium

The Adjudicating Authority shall by order prohibit the following namely:

The institution/ continuation/ proceedings of suits against the company/ LLP including

execution of any judgement, decree or order in any court of law.

Transferring encumbering, alienating or disposing of by the company/ LLP of its assets/ legal

right/ beneficial interest.

Any action under the SARFAESI Act, 2002

Recovery of any property by an owner or lessor where such property is occupied by or in the

possession of the company LLP.

Period may be as mentioned in the order or till the completion of the insolvency resolution

process

Public Announcement

The public announcement shall contain the following information, namely:

Name and address of the defaulted company/ LLP

Name of the Register with which the company/ LLP is incorporated or registered.

Last date for submission of claims.

Details of interim resolution professional.

Penalties for false or misleading claims.

Date on which the insolvency resolution process shall close

(i.e. 180 days from the date of the admission of the application.)

Appointment of an Interim Resolution Professional

Interim Resolution Professional is appointed within 14 days from the admission to find solution within 30 days with following powers

Management of the affairs of the

company/ LLP

Powers of the Board of directors/ partners

Reporting of Officers and managers

Issue instructions to Financial institutions maintaining accounts of the company/ LLP

1. Collation of all claims received against the company/ LLP2. Determination of the financial position of the company/ LLP3. Constitute a committee of creditors

1. Resolve to appoint the interim resolution professional as a resolution professional (IP)2. Replace the interim resolution professional by another resolution professional

Duties of Resolution Professional (Insolvency Professional)

Convene and attend all meetings.

Present all resolution plans at the meetings

Maintain an updated list of claims.

Prepare the information memorandum.

Take immediate custody and control of all the

assets including business records of the company/

LLP.

Represent and act on behalf of the company/ LLP with third parties.

Raise interim Finances subject to the approval of

the committee of creditors.

Appoint accountants, legal or other professionals.

Invite prospective lenders, investors and any other persons to put forward

resolution plans.

Resolution Plan

IP to provide Information memo formulating the

RP

IP to provide access of physical and electronic

information to the Applicant

Applicant to submit RP based on IM

IP places the resolution plan before creditor’s

committee

Once approved IP submits the plan before

the adjudicating authority (AA)

AA may approve the plan and end the Moratorium

Decision to be binding on Applicant and other

stakeholders

RP to be prepared/approved

within 180 days. In case of failure A may order

the liquidation

Benefits

Time bound resolution

process

Better recovery chances

Less wastage of resources

Lessor involvement of judicial

process

Power of AA to stay

several recovery

proceedings

Insolvency and Bankruptcy Board Of India

B. Insolvency Professional Agency

A. The Insolvency and bankruptcy Board of India is constituted to Promote the professional development of and regulation of insolvency

professionals.

Promote good professional and ethical conduct amongst insolvency professionals.

Protect the interests of debtors, creditors etc.

Promote the services of competent insolvency professionals to cater to the needs of debtors, creditors etc.

Thank You

Vimal KishorConvener- ICSI-Ghatkoper Study Circle

advocatevimal@gmail.com

Mobile no: 77388 89789, 9987719880