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1-Basic Framework of Insolvency laws in India.pptx

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1-Basic Framework of Insolvency laws in India.pptx

  1. 1. Raunak Arora Intern (Litigation and Dispute Resolution Team)
  2. 2.  Insolvency and Bankruptcy Code was introduced in 2016.  Provides with a mechanism to initiate an insolvency resolution process in the event a debtor is unable to pay its debts or if the Company on its own wants to liquidate itself.  Initiation of CIRP at the behest of Financial Creditor (Section 7)
  3. 3.  Initiation of CIRP at the behest of Operational Creditor subject to issuance of demand letter (Section 8)  Initiation of CIRP at the behest of the Corporate Debtor (Section 10)  Moratorium declared under Section 13  Interim Resolution Professional is appointed under Section 16
  4. 4.  IRP constitutes a Committee of creditors (‘CoC’).  An Information memorandum is prepared (section 29)  Resolution Plans are submitted by applicants, one of which is approved by CoC and subsequently by the NCLT. (Section 30)
  5. 5.  However, if no resolution plan is received or approved by NCLT, order for liquidation is passed and a Liquidator is appointed. (Section 33)  Invitation of Claims by the Liquidator  After verification, the Liquidator can accept or reject the claims.
  6. 6.  Duty of Liquidator – to carry out effective valuation of all claims and assets and liquidate the Corporate Debtor accordingly.  Order of priority of debts is also established under the code. (Section 53) (Also known as the Waterfall Mechanism)  A Company can also opt for voluntary liquidation. (Section 59)  Once the affairs of the Company have been wound up and assets liquidated, the company is dissolved by an order of the Adjudicating Authority.
  7. 7. Thank you!

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