Status as on- 23/09/2020
An Interim Resolution Professional [“IRP”] is appointed at the time of admission of the application for initiation of the corporate insolvency resolution process [“CIRP”]. The IRP then takes over the management of the corporate debtor. The IRP may then continue in the capacity of a Resolution Professional [“RP”] if approved by the Committee of Creditors [“CoC”]. The role of an RP primarily entails making efforts to find the best resolution plan for the corporate debtor.
What is CoC (Committee of Creditors)?
The first task of the IRP is to make a public announcement in leading newspapers to inform all the creditors of the corporate debtor. Thereafter, the creditors have to file their claims in the respective forms prescribed by the Insolvency and Bankruptcy Board of India (IBBI) along with all the documents to prove their claim against the corporate debtor. After the receipt and verification of claims submitted by the creditors, the IRP constitutes the CoC.
All the Financial Creditors who filed the claim and accepted by IRP, shall be part of CoC and shall be entitled to vote in CoC for the decision. If any person does not file any claim, he/she shall not entitle to any claim or part of CoC in the CIRP.
Importance of filing of claim
It becomes very important to understand why every creditor should file their claims? After the public announcement for calling of claims by the IRP has been made and in case anyone does not file their claims then this means that the corporate debtor does not owe any amount or any claim to the individual and cannot be included in the resolution plan.
Thereafter, the IRP who has received and verified the claims of the creditors based on the documents provided to him, the voting share is allotted to the creditor in accordance with the amount of claim due on the concerned corporate debtor. The percentage of voting rights is directly proportional to the amount of claim submitted and approved by the IRP.
Therefore, a duty is cast on every creditor to file their claims as soon as possible before the IRP. Only the creditors who are members of the CoC can vote on the resolution plans submitted by the resolution applicants. Once the resolution plan is approved, the resolution applicant will pay all the creditors as per the terms of the approved resolution plan.
As per IBC Laws and other judicial pronouncements by NCLAT, if any person/creditor fails to file the claim before the resolution plan, then his amount shall not be paid or acknowledged by the company or new resolution company. IN other words, the amount of debt is forfeited.
It may be concluded that if any individual has any outstanding claims against a company and the said company has been subjected to CIRP, the first thing that has to be done by such creditor without delay is to file his/her claims before any IRP/RP.
Disclaimer- The above article is based on the interpretation of the related laws and judicial pronouncements. The readers are expected to take legal advice before relying on this article. The author can be reached at firstname.lastname@example.org or call the IP expert at 8383011629