THE INSOLVENCY AND BANKRUPTCY CODE, 2016 (AMENDED UPTO 18-03-2020) Maruthi Sabbani Source: https://www.ibbi.gov.in/
Part I 2 Preliminary
Part I – Preliminary 3 Section 2 Section 1 Short title, extent and Application commencement Any company incorporated under the • Companies Act, 2013 (18 of 2013) or under Code may be called the • any previous company law Insolvency and Bankruptcy Code, 2016 Any other company governed by any • special Act It extends to the whole of • India Any Limited Liability Partnership • Personal guarantors to CDs • Partnership firms and proprietorship firms • Individuals • in relation to their insolvency, liquidation, voluntary liquidation or bankruptcy,
Part I – Preliminary (Contd … ) 4 Section 3 Definitions “financial product” • “Board” means the IBBI • means securities, contracts of “claim” means – • insurance, deposits, A right to payment, whether or not such credit arrangements including loans right is reduced to judgment, fixed, and advances by banks and disputed, undisputed, legal, equitable, financial institutions, secured, or unsecured; retirement benefit plans, small Right to remedy for breach of contract savings instruments, under any law for the time being in force, if such breach gives rise to a right to foreign currency contracts other payment, whether or not such right is than contracts to exchange one reduced to judgment, fixed, matured, currency (whether Indian or not) for unmatured, disputed, undisputed, another which are to be settled secured or unsecured immediately,
Part I – Preliminary (Contd … ) 5 Section 3 (Contd…) “person” includes • “ security interest” means • an individual right, title or interest or a claim to property, created in favour of, or Hindu Undivided Family company provided for a secured creditor by a transaction which secures payment or Trust performance of an obligation and includes partnership mortgage, charge, hypothecation, assignment limited liability partnership and encumbrance or any other entity established by a any other agreement or arrangement securing statute payment or performance of any obligation of any person: a person resident outside India Provided that security interest shall not include • a performance guarantee;
Part II Insolvency Resolution And Liquidation 6 For Corporate Persons
Chapter – I 7 Section 4 Section 5 Definitions Application of this Part This Part shall apply to matters Adjudicating Authority, for the • • relating to the insolvency and purposes of this Part, means liquidation of CDs where the National Company Law Tribunal minimum amount of the default is ICD means the date of admission • one lakh rupees of an application for initiating CIRP Provided that the Central by the AA under sections 7, 9 or • Government may, by notification, section 10 specify the minimum amount of default of higher value which shall not be more than one crore rupees
Chapter – I (Contd … ) 8 Section 5 (Contd…) a public company in which a “related party”, in relation to a CD, means • director, partner or manager of the a director or partner of the CD or a relative CD is a director and holds along of a director or partner of the CD with relatives, more than two per cent. of its paid- up share capital a KMP of the CD or a relative of a KMP of the CD A body corporate whose board of directors, managing director or a LLP or a partnership firm in which a manager, director, partner, or manager of the CD or his relative is a partner in the ordinary course of business, acts on the advice, directions or a private company in which a director, instructions of a director, partner or partner or manager of the CD is a director manager of the CD and holds along with his relatives, more than two per cent of its share capital
Chapter – I (Contd … ) 9 Section 5 (Contd…) any LLP or a partnership firm whose partners any person who controls more than or employees in the ordinary course of twenty per cent. of voting rights in business, acts on the advice, directions or the CD on account of ownership or instructions of a director, partner or a voting agreement manager of the CD any person in whom the CD controls any person on whose advice, directions or more than twenty per cent. of instructions, a director, partner or manager voting rights on account of of the CD is accustomed to act ownership or a voting agreement a body corporate which is a holding, any person who can control the subsidiary or an associate company of the composition of the board of CD, or a subsidiary of a holding company to directors or corresponding which the CD is a subsidiary governing body of the CD
Chapter – II 10 Section 6 Section 7 Initiation of CIRP by financial creditor Persons who may initiate corporate insolvency A FC either by itself or jointly with may file an • application for initiating CIRP against a CD resolution process before the AA when a default has occurred. Where any CD commits a • Provided that for the FC , referred to in clauses • default, a FC , an OC or the (a) and (b) of subsection (6A) of section 21, CD itself may initiate CIRP in an application for initiation CIRP against respect of such CD in the the CD shall be filed jointly by not less than one hundred of such creditors in the same manner as provided under class or this Chapter not less than ten per cent. of the total number of such creditors in the same class, whichever is less The FC shall make an application under sub- • section (1) in such form and manner and accompanied with such fee as may be prescribed.
Chapter – II 11 Section 7 (Contd…) default has not occurred or the application The FC shall, along with the application furnish – • under sub-section (2) is incomplete or any disciplinary proceeding is pending against record of the default recorded with the IU or such other the proposed RP , it may, by order, reject record or evidence of default as may be specified such application the name of the RP proposed to act as an IRP Provided that the AA shall, before rejecting the any other information as may be specified by the application give a notice to the applicant to rectify the defect in his application within seven Board. days of receipt of such notice from the AA The AA shall, within fourteen days ascertain the • The CIRP shall commence from the date of • existence of a default from the records of an IU or on admission of the application under sub- the basis of other evidence furnished by the FC section (5). Where the AA is satisfied that – • The AA shall communicate- • a default has occurred and there is no disciplinary the order to the FC and the CD proceedings pending against the proposed RP , it may, the order to the FC within seven days of by order, admit such application; or admission or rejection of such application
Chapter – II (Contd … ) 12 Section 8 Section 9 Insolvency resolution by operational creditor Application for initiation of CIRP by operational creditor An OC may, on the occurrence of a default, • deliver a demand notice of unpaid After the expiry of the period of ten days • operational debtor copy of an invoice from the date of delivery of the notice or demanding payment of the amount involved invoice demanding payment in the default to the CD if the OC does not receive payment from The CD shall, within a period of ten days bring • the CD or to the notice of the OC notice of the dispute the OC may file an existence of a dispute, [if any, or] record of the application before the AA for initiating a pendency of the suit or arbitration proceedings CIRP filed before the receipt of such notice the [payment] of unpaid operational debt- The application shall be filed in such form • and manner and accompanied with by sending an attested copy of the record of electronic transfer of the unpaid amount from the such fee as may be prescribed. bank account of the CD by sending an attested copy of record that the OC has encashed a cheque issued by the CD
Chapter – II (Contd … ) 13 Section 9 (Contd…) The OC shall, along with the application • a copy of any record with IU confirming furnish- that there is no payment of an unpaid operational debt by the CD a copy of the invoice demanding payment any other proof confirming that there is or demand notice delivered by the OC to no payment of any unpaid operational the CD debt by the CD or such other an affidavit to the effect that there is no information, as may be prescribed. notice given by the CD relating to a dispute The CIRP shall commence from the • of the unpaid operational debt date of admission of the application a copy of the certificate from the financial institutions maintaining accounts of the OC An OC initiating a CIRP under this • confirming that there is no payment of an section, may propose a RP to act as unpaid operational debt an IRP
Recommend
More recommend
