The Code mainly addresses the five most important areas which were not dealt with earlier-First, the Code provides for a single platform for insolvency resolution process. Earlier there were various different legislations. Two, it is time bound, it sets a time limit of 180 days for formulation and approval of insolvency resolution plan, with a one-time extension upto 90-days. Three, it shifts the control of affairs of the company from the hands of Board/ Promoters to Resolution Professional till the resolution plan is finalised. Fourth, the control of assets moves from debtor to creditors. Fifth, the Code provides for the resolution of debt while the company continues to operate as a going concern.

Debtor (Corporates/individual and other debtors) - A debtor can revive its debt crisis through effective time bound resolution mechanism. Creditors - Can expect of repayment of their loans or amount due. Small Companies/Start-ups/Unlisted Companies - Can revive their business through fast track insolvency resolution process. Small Traders/Farmers - Can come out of insolvency through fresh start process.

Where an application is filed against a Company or LLP under the Code, the process is termed as Corporate Insolvency Resolution Process (CIRP) which may be initiated by: (i) Financial Creditors like banks, financial institutions/debenture/ deposit holders or individuals (ii) Operational Creditors like supplier of goods or service providers or any workmen, or employee etc. (iii) Corporate Debtor i.e. the Company or the LLP itself Provided such Company/LLP must have defaulted in repayment of an amount of Rs. 1,00,000/- (Rupees One Lac) or more.

In view of the recent order of the Hon'ble Supreme Court of India in the matter of the homebuyers, those who have not received possession of their flats have got a ray of hope that their interests will be protected in pending insolvency proceedings against a company.

No, it does not mean Company has become insolvent, it indicates there is a need for business and /or financial restructuring of the Company.

The forum for initiating CIRP is National Company Law Tribunal (NCLT). The forum for filing application against an Individual or Partnership Firm is Debt Recovery Tribunal (DRT).

NCLT is a Tribunal vested with the powers of a Court.

CIRP is conducted by an Insolvency Professional (IP) who is appointed as Resolution Professional (RP) for this purpose. Once an application for insolvency resolution is admitted against a Company before NCLT, the NCLT appoints an RP. Immediately thereafter the powers of Board of Directors of the Company are suspended and the control of affairs of the Company shifts to the hands of RP. The RP then advertises for claims, constitutes a Committee of Creditors (CoC) with representatives of creditors of Company as its members. The CoC approves the resolution plan for restructuring and revival of Company including debt restructuring which is finally approved by NCLT. Once CIRP starts, all legal proceedings including existing ones are stayed.

Upon appointment of a Resolution Professional by NCLT, the RP is required to issue a public announcement. A creditor must submit proof of claim within the time provided in public announcement. A creditor, who fails to submit proof of claim within the time limit stipulated in the public announcement, may submit such proof till the approval of a resolution plan by the committee of creditors.