The document provides an overview of corporate insolvency and the Insolvency and Bankruptcy Code (IBC) of 2016 in India. It discusses how corporate insolvency is determined, previous related legislation, and key aspects of the IBC including the corporate insolvency resolution process, fast track resolution, liquidation process, and voluntary liquidation of corporate entities. Key steps in liquidation and the waterfall mechanism for distribution of assets are also summarized. Relevant case laws are mentioned at the end.

1. CORPORATE
INSOLVENCY
(IBC,2016)
PRESENTED BY:
DHANYA.P.K
B.COM LLB(HONS.),
SCHOOL OF LEGAL
STUDIES, CUSAT

2. CORPORATE INSOLVENCY
 Corporate body is unable to pay its debts.
 Determined using the cash-flow test and
the balance sheet test.
 India – IBC, 2016
2

3. PRECEDENT LEGISLATIONS
SICA, 1985
SARFAESI,2002
COMPANIES ACT, 2013
3

4. INSOLVENCY AND BANKRUPTCY CODE, 2016
▪ Consolidate insolvency
laws.
▪ Provides for both
individual and corporate
insolvency.
▪ Individual Insolvency is yet
to be notified.
4
FRAMEWORK
Adjudicating
Authority
NCLT
DRT
Regulating
Authority
IBBI

5. CORPORATE INSOLVENCY AND IBC, 2016
5
▪ New framework.
▪ Chapter II and IV
▪ Two main stages : CIRP and liquidation
▪ Fastrack CIRP

6. CORPORATE INSOLVENCY RESOLUTION
PROCESS (SECTIONS 6 TO 32)
6

7. FASTRACK CIRP (SECTIONS 55 TO 58)
▪ These provisions apply only to those whose assets or
income or the creditor’s debt is as notified by the
Central Government.
▪Application to be submitted by creditor or corporate
debtor.
▪Process to be completed within 90 days. 7

8. LIQUIDATION PROCESS (SECTIONS 32 TO 54)
▪ Chapter III
▪ Initiated by the Adjudicating Authority when:
a) CIRP ends and plan is not submitted
b) Resolution plan is not approved and rejected u/s 3 for non-
compliance.
c) Decided so by the Committee of Creditors
d) The plan has not been properly implemented.
▪ Term : 2 years
8

9. STEPS INVOLVED IN THE LIQUIDATION PROCESS
9
1
• Appointment of Liquidator
2
• Formation of Liquidation Estate
3
• Consolidation of Claims
4
• Verification of Claims
5
• Admission or Rejection of Claims
6
• Determination of value of Claims
7
• Appeal by creditor to NCLT within 14 days of rejection
8
• Liquidator to scrutinize preferential, undervalued and extortionate transactions.
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• Distribution of assets and dissolution of Corporate debtors

10. WATERFALL MECHANISM
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11. VOLUNTARY LIQUIDATION OF CORPORATE
PERSONS (SECTION 59)
 follow requirements and conditions.
 submit declaration in the form of an affidavit.
 no intention to defraud.
 Declaration to be accompanied by documents such as
Financial statements, audit and valuation reports.
Special resolution required within 4 weeks of declaration.
Notify RoC and Board within 7 days.
 Sections 35 to 53 shall apply.
After winding up, liquidator has to send an application to
dissolve the corporate person and forward copy within 14 days.
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12. CASE LAWS
 Nikhil Mehta &Sons (HUF) & Ors vs. M/s AMR Infra. Ltd.
 IOB & Ors. vs. Kamineni Steel & Power India Private Limited
 Essar Steel India Limited vs. RBI
SRS Finance Ltd. vs. Omega Jewellers Private Limited
Sanjeev Shriya vs. State Bank of India & Ors.
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13. REVIEW
֍ Overview of IBC
֍ Corporate Insolvency Resolution Process
֍ Fastrack CIRP
֍ Liquidation Process
֍ Voluntary Liquidation Process
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14. 14

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