It should protect the interest of the creditors by reorganizing the viable businesses to the extent possible and should quickly liquidate the unviable businesses. Early completion of insolvency process also protects the interest of other stakeholders i.e. employees and shareholders.

A corporate insolvency regime should help in promoting the growth of an economy through efficient reallocation of resources, which otherwise remain locked in unviable / closed entities.

An efficient corporate insolvency regime improves the rights of the creditors and incentivizes them to increase the supply of credit in the market. As a result, not only that the supply of credit in the market improves, the cost of credit also reduces improving the viability and competitiveness of the businesses.

An efficient corporate insolvency regime improves business environment and thus encourages entrepreneurship. The same also results in improving the investor confidence.

A financial creditor (himself or jointly with other financial creditors), or an operational creditor or the corporate debtor (through Corporate applicant i.e. corporate debtor itself; or an authorised member, partner of corporate debtor; or a person who has control and supervision over the financial affairs of the corporate debtor) may initiate corporate insolvency resolution process in case a default is committed by corporate debtor.

An application to be made to NCLT for initiation of Insolvency proceedings.

NCLT appoints an interim Insolvency Professional (IP) within 14 days of acceptance of application. Interim IP holds office for 30 days only. Interim Insolvency Professional takes control of the debtor’s assets and company’s operations, collect financial information of the debtor from corporate debtor /information utilities.

Public Announcement need to be given within 3 days from date of appointment of Interim Resolution Professional, inviting claims of stakeholders.

Public Announcement to be made in Form A (as per regulation 6 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016)

Public Announcement to be published in one English Newspaper and One Regional Language Newspaper having wide circulation where the principal and registered office of the Company is situated;

Website of the corporate debtor if any.

Website of IBBI (Intimation to IBBI needs to be given both by IRP and Corporate Debtor.

IRP to appoint two registered valuer within 7 days of his appointment.

Duties of Interim Resolution Professional as per section 18 of Chapter 2 (Corporate Insolvency Resolution process)

Collect all information relating to the assets, financial and operations of the corporate debtor for determining the financial position of the corporate debtors, including information relating to-

Business operational for the previous two years;

Financial and operational payment for the previous two years.

List of assets and liabilities as on the initiation date; and

Such other matters as may be specified.

Verify the claim within 7 days of last receipt of the claim and maintain the list of creditors along with the amount of claimed by them and amount of claim admitted.

The list of Creditors to be:

To be displayed on the website, if any, of the Corporate Debtor.

To be filed with the Adjudicating Authority

To be presented at the first meeting of the Committee.

IRP to file report with Adjudicating Authority regarding Constitution of Committee of Creditors on or before the expiry of his tenure i.e. within 30 days (Regulation 17 the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016)

Note: After receiving claims pursuant to public announcement, interim IP constitutes the creditors’ committee. All financial creditors shall be part of creditors’ committee and if any financial creditor is related party of corporate debtor, then such financial creditor will not have any right of representation, participation or voting. Operational creditors should be part of Creditors’ Committee (without voting right) if their aggregate dues are not less than 10% of the debt. The creditors’ committee has to then take decisions regarding insolvency resolution by a 75% majority voting.

IRP shall prepare an Information memorandum and submit it to the members in e-form before the 1st meeting of committee of creditors, covering the points a to i of the sub regulation 2 of 36 Information Memorandum.

Resolution Professional shall be appointment in the 1st meeting of creditors.

Resolution applicant (which can be anyone interested in corporate debtors’ business) may submit a resolution plan to the resolution professional prepared on the basis of Information Memorandum 30 days before the expiry of maximum period [180 days/270 days (in case of extension)].

Mandatory Contents of the Resolution Plan:

Insolvency Resolution Cost

Liquidation Value

Terms of Plan and its implementation schedule

Management and control of the business of the corporate debtor

Adequate means for supervising its implementation.

The resolution professional shall present the resolution plan to the Committee of Creditors for its approval; the Committee of Creditors may approve a resolution plan by a vote of not less than 75% of voting share of financial creditors.

The resolution professional shall submit resolution plan to the Adjudicating Authority with the certification that:

Contents meets the requirements of the Code and the regulations

The resolution plan has been approved by the Committee of Creditors

Where the Adjudicating Authority before the expiry of the Insolvency Resolution Process period or the maximum period permitted for completion of the CIRP does not receive a resolution plan it may pass an order for liquidation of Corporate Debtor.

Causing Public Announcement as required under the Code within 3 days from date of appointment of Interim Resolution Professional, inviting claims of stakeholders.

Collecting all information relating to the assets, finance and operations of the Corporate Debtor for determining the financial position of the Company.

Analyzing the financial statement, financial and operational payments of the past two years of the Corporate Debtor.

Analyzing the list of assets and liabilities as on the date of initiation of CIRP.

Assessing the Books of accounts, agreements, returns, registers and records of the Company.

Assisting in appointing accountants, registered valuer, legal or other professionals as required under the CIRP process

Claims assessments, consolidation of claims submitted by creditors, maintenance of claims registers.

Preparation, development and submission of Information Memorandum

Constitution of Committee of Creditors.

To convene and attend meeting of Committee of Creditors

To take over control and custody of any assets over which Corporate Debtor has ownership rights.

Assessing the books of accounts, agreements, returns, registers and records of the Corporate Debtor.

Consultation and Co-ordination with Stakeholders

Assistance in assessing the viability of the Corporate Debtor for formulating the Insolvency Resolution Plan

Inviting prospective lenders, investors and other persons to put forward Insolvency Resolution Plan

Implementation, Monitoring of Performance and submitting various periodical reports to the Committee of Creditors and Adjudicating Authority (NCLT).

Submission of Resolution Plan to Committee of Creditors and Adjudicating Authority (NCLT).