The Insolvency Code has made a provision for the Corporate Debtor to pro bono file an application for initiation of corporate insolvency process in case of default and without any malicious intent under section 10 of IBC, 2016.
In this article we will precisely discuss about the conduct of insolvency process by corporate debtor who is also called as corporate applicant.
Pecuniary Jurisdiction– This part shall apply to matters relating to the insolvency and liquidation of corporate debtors where the minimum amount of the default is one lakh rupees.
*Provided the Central Government may, by notification, specify the minimum amount of default of higher value which shall not be more than one crore rupees.
Insolvency process by corporate debtor
The Corporate Debtor has to follow the below mentioned procedure-
- File application for default before NCLT (AA)
- NCLT to accept or reject the application within 14 days.
- If it rejects the application then a time period of 7 days is given to re-file a fresh application.
- If the application is admitted the insolvency commencement date begins from the very date of admission of application and the Adjudicating Authority appoints an interim resolution professional for 30 days.
- The IRP collate the claims, forms a committee of creditors and calls them for a meeting.
- The CoC to accept or reject the IRP to be appointed as RP within 7 days.
- If rejected then an application for proposed RP will be filed before NCLT.
- NCLT to take recommendation from Board for appointing proposed RP or else the IRP to continue as RP for the process.
- RP to commence and conduct insolvency process within 180 days.
- RP to invite resolution plans from resolution applicants.
- RP to submit those plans after verification of claims before the CoC for their approval by majority voting of 75%.
- Committee to either accept or reject the plan.
- If they reject the plan then RP to invite fresh plans from applicants
- If they accept the plan, then RP to submit the plan before NCLT.
- NCLT to pass orders directing the corporate debtor to pay the debt amount as per the proposed resolution plan within 30 days.
- If corporate debtor feels aggrieved then he may appeal before NCLAT.
- NCLAT to decide upon the matter within 30 days.
- If the debtor still feels aggrieved then he may approach the Supreme Court and SC to decide upon the matter within 45 days.
The IBC has given opportunity to the corporate debtors to self-initiate the insolvency process in case default is detected. The companies can in the very early stages of detecting a default can approach the tribunal to reorganize them. This way lenders will also get back their monies and the defaulter can get relieved from debt.
Disclaimer – The above summary is based on the personal interpretation of the revised regulations, which may differ person to person. Hence, the readers are expected to take expert opinion before placing reliance on this article.