Concept Book and Master Index Insolvency and Bankruptcy CS Vaibhav

CS PROFESSIONAL
MODULE 2 | NEW SYLLABUS
INSOLVENCY
AND BANKRUPTCY
CS Vaibhav Chitlangia
CONCEPT BOOK &

MASTER INDEX
“It always seems impossible, until its DONE!”
INDEX
Sr. No. Topic Page No. Page No. of
Main Book
CH 01 – INTRODUCTION TO INSOLVENCY AND BANKRUPTCY CODE

1. Insolvency and Bankruptcy – Meaning & Differences 1.1
2. Meaning of Liquidation 1.3
3. Insolvency laws in UK 1.4
4. Insolvency laws in USA 1.6
5. Concept and Evolution of Insolvency Laws 1.8
6. Government Committees On Bankruptcy Reforms 1.9
7. Timeline of Insolvency and Bankruptcy Code, 2016 1.10
8. Why New Law? 1.11
9. Meaning of the name of the IB Code, 2016 1.12
CS Vaibhav Chitlangia | Yes Academy for CS, Pune (8888 235 235)
10. Objectives of Insolvency and Bankruptcy Code, 2016 1.13

11. Organisation of the IB Code, 2016 1.14
12. Applicability of the Code – Section 2 1.15
13. Pillars of IBC, 2016 1.16
14. Insolvency and Bankruptcy Board of India 1.17
15. Insolvency Professionals 1.18
16. Insolvency Professional Agencies 1.19
17. Insolvency and Adjudication Process 1.20
18. Information Utilities 1.21
CH 02 - CORPORATE INSOLVENCY RESOLUTION PROCESS

19. Corporate Insolvency Resolution Process 2.1
20. Meaning of Default 2.3
21. Persons who may initiate Corporate Insolvency Resolution 2.5
Process
22. “Financial Creditors” “Operational Creditors” 2.6
23. Application By Financial Creditor 2.7

24. Application By Operational Creditor 2.9
25. Application By Corporate Debtor 2.10
26. Meaning of “Corporate Applicant” 2.11
27. Suspension of Initiation of Corporate Insolvency Resolution 2.12
Process
28. Persons NOT Entitled to make Application 2.13
29. Time Limit for Completion of the CIRP 2.14
30. Acceptance of Application for CIRP 2.15
31. Moratorium Period 2.16
32. Content Of Public Announcement 2.17
33. Appointment of IRP 2.18
34. End of Debtor in Possession Regime 2.19
35. Duties of the IRP 2.20
36. Personnel to extend co-operation 2.21
37. Management of Affairs of the Corporate Debtor as a Going 2.22

Concern
38. What is Interim Finance? 2.23
39. Committee of Creditors 2.25
40. Committee of Operational Creditors 2.26
41. Committee with only Creditors in Class 2.28
42. Rights and Duties of Authorised Representative 2.29
43. When a single trustee or agent acts for all financial creditors 2.30
44. Meeting of Committee 2.31
45. Notice of Meeting 2.32
46. Certain Actions requiring 66% approval by the CoC 2.33
47. Appointment of Resolution Professional 2.34
48. Eligibility of Resolution Professionals 2.35
49. Duties of a Resolution Professional 2.36
50. Replacement of Resolution professional 2.37
51. Preparation of Information Memorandum 2.38

52. Contents of Information Memorandum 2.39
53. Invitation to expression of Interest 2.40
54. Resolution Plan and Resolution Applicant 2.43
55. Who cannot be a Resolution Applicant? 2.44
56. Mandatory Contents of a Resolution Plan 2.46
57. Submission of Resolution Plan 2.47
58. Approval of plan by CoC 2.48
59. Appeal against approval of the Resolution Plan 2.50
CH 03 – RESOLUTION STRATEGIES
60. What is Corporate Restructuring? 3.1
61. External Restructuring 3.2
62. Internal Restructuring 3.3
63. Debt Restructuring 3.4
64. Equity Restructuring 3.5

65. Resolution Measures under IBC, 2016 3.6
66. Sale Of Assets Under Insolvency And Bankruptcy Code, 2016 3.8
67. Sale of Assets 3.9
68. Sale of Assets As a Going Concern 3.10
69. Contents of Asset Sale Report 3.11
CH 04 – FASTTRACK CORPORATE INSOLVENCY RESOLUTION PROCESS

70. Who can file an application for a Fast Track CIRP 4.1
71. Time Limits for Fast Track CIRP 4.2
72. Manner of Initiating fast Track CIRP 4.3
73. Important Definitions 4.4
74. Eligibility of Resolution Professionals 4.5
75. Extortionate Credit Transaction 4.6
76. Public Announcement 4.7
77. Claims by Operational Creditors 4.8

78. Claims by Financial Creditors 4.9
79. Claims by Workmen and Employees 4.10
80. Claims by Other Creditors 4.11
81. Manner of Submission of Claims 4.12
82. Submission of Proof of Claims 4.13
83. Verification of Claims 4.14
84. Debt in Foreign Currency 4.14
85. Committee with Operational Creditors 4.15
86. Filings by IRP 4.16
87. Modalities of Meeting 4.17
88. Contents of Notice for Meeting 4.18
89. Duty of RP to exercise due care and diligence 4.20
90. Registered Valuer 4.21
91. Transfer of debt due to Creditors 4.22

92. Sale of Assets outside the Ordinary Course of Business 4.23
93. Fast Track Process Cost 4.24
94. Fair Value and Liquidation Value 4.26
95. Information Memorandum 4.27
96. Invitation to Resolution Plans 4.28
97. Resolution Plans 4.29
98. Mandatory Contents of Resolution Plan 4.31
99. Approval of Resolution Plan 4.32
100. Extension of Fast Track Process Period 4.33
CH 05 – LIQUIDATION OF CORPORATE PERSONS

101. When can Liquidation be initiated? 5.1
102. Appointment of Liquidator 5.3
103. Public Announcement 5.5
104. Reporting by the Liquidator 5.6

105. Preliminary Report 5.7
106. Progress report 5.8
107. Asset Memorandum 5.9
108. Asset Sale Report 5.9
109. Powers and Duties of a Liquidator 5.10
110. Liquidation Estate 5.11
111. Power of Liquidator to Access Information 5.12
112. Consolidation of claims 5.13
113. Verification of claims 5.15
114. Admission / Rejection of claims 5.16
115. Appeal against the Liquidator’s Decision 5.17
116. List of Stakeholders 5.18
117. Stakeholders’ Consultation Committee 5.20
118. Preferential Transactions 5.22

119. Undervalued Transactions 5.23
120. Transactions Defrauding Creditors 5.24
122. Options available to Secured Creditors 5.26
123. Priority of Claims 5.27
124. Sale of the Corporate Debtor as a Going Concern 5.28
125. Dissolution of the Corporate Debtor 5.29
CH 06 – VOLUNTARY LIQUIDATION
126. Who can initiate Voluntary Liquidation? 6.1
127. Reasons for Voluntary Liquidation 6.2
128. Conditions For Voluntary Liquidation 6.3
129. Broad Steps Involved In The Voluntary Liquidation 6.6
130. IBBI (Voluntary Liquidation Process) Regulations, 2017 6.8
131. Appointment of Liquidator 6.10

132. Public Announcement by Liquidator 6.11
133. Reports to be submitted by the Liquidator 6.12
134. Preliminary Report 6.13
135. Proof of Security Interest 6.14
136. Claims 6.15
137. Proceeds of Liquidation and Distribution of Proceeds 6.17
138. Final Report 6.18
139. Flowchart of the Process 6.19
CH 07 - ADJUDICATION AND APPEALS FOR CORPORATE PERSONS

140. Adjudicating Authority 7.1
141. Hierarchy of Appeals 7.2
142. Grounds for filing Appeal 7.3
143. Grounds for filing appeal 7.4
144. NCLT Benches and their Jurisdictions 7.5

145. Gujarat Urja Vikas Nigam Case 7.8
146. Expeditious Disposal of Applications 7.9
147. Fraudulent or Malicious initiation of proceedings 7.10
148. Fraudulent Management of the Corporate Debtor during 7.13
PPIRP
149. The Insolvency and Bankruptcy (Application to Adjudicating 7.14
Authority) Rules, 2016
150. Application Forms 7.15
151. Application by Financial Creditor 7.16
152. Demand Notice by Operational Creditors 7.18
153. Application by Operational Creditor 7.19
154. Application by Corporate Applicant 7.21
155. Withdrawal of Application 7.22
156. Appointment of IRP 7.23
157. Filing of Application and Application fees 7.24
CH 08 – PRE PACKAGED INSOLVENCY REOSLUTION PROCESS

158. Benefits of PPIRP 8.1
159. Eligibility to initiate PPIRP 8.2
160. What are MSMEs 8.3
161. Steps involved in initiating PPIRP 8.4
162. Documents along with Notice to Financial Creditors 8.5
163. Duties of IP prior to submission of Application 8.6
164. Application to NCLT for initiation of PPIRP 8.8
165. Time Limit for PPIRP 8.9
166. Acceptance of Application 8.10
167. Moratorium and Public Announcement 8.11
168. Duties and Powers of RP 8.12
169. Steps after Acceptance of Application 8.14
170. Committee of Creditors 8.16
171. Management of Corporate Debtor during PPIRP 8.18

172. Consideration and Approval of Resolution Plan 8.20
173. Approval of Resolution Plan by NCLT 8.21
174. Requirements of Resolution Plan 8.22
175. Appeals against order of NCLT 8.26
176. Differences between CIRP and PPIRP 8.27
177. Swiss Challenge 8.28
CH 09 – SECURITIZATION AND DEBT RECOVERY

178. Why Securitisation? 9.1
179. Process of Securitisation 9.2
180. Legal and Regulatory Framework 9.3
181. Key features of SARFAESI Act,2002 9.4
182. Constitutional Validity of the SARFAESI Act, 2002 9.5
183. Asset Reconstruction Company 9.6
184. Registration of ARC 9.7

185. Cancellation of Registration of ARC 9.8
186. Acquisition of Financial Asset 9.9
187. Discharge of the Obligation of the Obligor 9.10
188. Measures for Asset Reconstruction 9.11
189. Enforcement of Security Interest 9.13
190. Process of Enforcement of Security Interest 9.14
191. Manner and Effect of Takeover 9.17
192. Grievance Redressal 9.18
193. Right to Lodge Caveat 9.19
194. Central Registry 9.20
195. Non Applicability of the Act 9.21
196. Recovery of Debt due to Banks and Financial Institutions Act, 9.22
1993
197. Authorities under the RDDBFI Act, 1993 (DRT and DRATs) 9.23
198. DRTs and DRATs 9.24

199. Powers of the Tribunals 9.25
200. Modes of Recovery 9.26
201. Other Modes of Recovery 9.28
202. DRT Jurisdiction 9.30
203. Appeal to DRAT 9.31
CH 10 – WINDING UP BY TRIBUNAL
204. Important Changes brought by IBC, 2016 10.1
205. Grounds on which a Company can be wound up 10.2
206. Who May File petition for winding up? 10.4
207. Powers of NCLT 10.5
208. Statement of Affairs of Company 10.6
209. Appointment of Liquidators 10.7
210. Removal of Liquidator 10.9
211. Intimation for Winding Up 10.10

212. Functions of the Company Liquidator 10.11
213. Effects of Order of Liquidation 10.12
214. Financial Information 10.13
215. Directions of NCLT on the Report 10.15
216. Advisory Committee 10.16
217. Powers and Duties of Company Liquidators 10.17
218. Books to be kept by the Liquidator and its Audit 10.20
219. Arrest of Person trying to Abscond 10.21
220. Companies (Winding Up) Rules, 2020 10.22
221. Summary Procedure for Liquidation 10.23
CH 11 - INSOLVENCY RESOLUTION OF INDIVIDUAL AND PARTNERSHIP FIRMS

222. Application for Initiation of Individual/Firm Insolvency 11.1
Resolution Process
223. Persons Not Entitled to File Application 11.2
224. Excluded Debts 11.3

225. Interim Moratorium 11.4
226. Appointment of Resolution Professional 11.5
227. Replacement of RP 11.6
228. Submission of Report by Resolution Professional 11.7
229. Admission/Rejection of Application 11.8
230. Public Notice and Claims from Creditors 11.9
231. Moratorium 11.10
232. Repayment Plan 11.11
233. Meeting of Creditors 11.13
234. Rights of Secured Creditors 11.14
235. Report of Meeting of Creditors 11.15
236. Approval/ Rejection of Repayment Plan 11.16
237. Completion of Repayment Plan 11.17
238. Premature End of Repayment Plan 11.18

239. Discharge Order 11.19
CH 12 - BANKRUPTCY ORDER FOR INDIVIDUALS AND PARTNERSHIP FIRMS

240. What is Bankruptcy? 12.1
241. Application for Bankruptcy 12.2
242. Effects of filing of Application 12.4
243. Appointment of Bankruptcy Trustee 12.5
244. Bankruptcy Order 12.6
245. Meeting of Creditors 12.8
247. Disqualification of a Bankrupt 12.11
248. Restrictions on a Bankrupt 12.12
249. Modification or Recall of Bankruptcy Order 12.13
250. Relacement/ Resignation/ Vacancy of Bankruptcy Trustee 12.14
CH 13 - BANKRUPTCY FOR INDIVIDUALS AND PARTNERSHIP FIRMS

251. Functions of Bankruptcy Trustee 13.1
252. Duties of Bankrupt towards Trustee 13.2
253. Rights and Powers of Bankruptcy Trustee 13.3
254. Approval of Creditors for Certain Acts 13.4
255. Estate of Bankrupt 13.6
256. Restrictions on Disposition of Property 13.8
257. After Acquired Properties/ Onerous Properties / Leasehold 13.9
Rights
258. Challenge against Disclaimed Property 13.10
259. Undervalued Transaction 13.11
260. Preferential Transaction 13.12
262. Obligations under Contracts 13.14
263. Administration of the Estate of a Deceased Bankrupt 13.15
264. Proof of Debt 13.16

265. Mutual Dealings and Set Off 13.17
266. Distribution of Interim Dividend 13.18
267. Distribution of Property 13.19
268. Final Dividend 13.20
269. Priority of payment of debts 13.22
270. Appeal 13.23
CH 14 – FRESH START PROCESS

271. What is Fresh Start Process? 14.1
272. Eligibility for Fresh Start 14.2
273. “Qualifying Debt” and “Excluded Debts” 14.3
274. Application for Fresh Start Order 14.4
275. Information with Application 14.5
276. Resolution Professional 14.6
277. Admission/Rejection of the Application 14.7

278. Effect of Moratorium Period 14.9
279. Objections by Creditors 14.10
280. General Duties of the Debtor 14.11
281. Revocation of Fresh Start Order 14.12
283. Standard of Conduct 14.14
284. Flowchart – Fresh Start Process 14.15
CH 15 - PROFESSIONAL AND ETHICAL PRACTICES FOR INSOLVENCY PRACTITIONERS

285. Significance of Insolvency Professionals 15.1
286. Four Pillars of IBC 15.3
287. Regulatory Framework for IPs 15.4
288. Roles of Insolvency Professionals 15.5
289. Definitions 15.6
290. Related Provisions under IBC 15.7

291. Appointment and Tenure of Interim Resolution Professional 15.8
292. Management of Affairs of Corporate Debtor By IRP 15.11
293. Duties of IRP 15.13
294. Personnel to extend Co-operation 15.15
295. Management of Operations of Corporate Debtor 15.16
296. Appointment of RP 15.17
297. Meetings of CoC 15.18
298. Duties of RP 15.19
299. Replacement of RP 15.22
300. Enrolment and Registration of Insolvency Professional 15.23
301. Functions and Obligations of IPs 15.24
302. IBBI (Insolvency Professional) Regulations, 2016 15.25
303. Code of Conduct of Insolvency Professionals 15.26
304. Relationships and Disclosures by RPs 15.27
CH 16 – GROUP INSOLVENCY
305. What is Group Insolvency 16.1
306. Definition of the term Group 16.2
307. Methods of Dealing with Group Insolvency 16.3
308. Objectives Of UNCITRAL Model Law On Enterprise Group 16.4
Insolvency
309. Recommendations of Working Group on group Insolvency 16.5
310. Advantages of Group Insolvency 16.7
311. Challenges to Group Insolvency 16.8
312. Recommendations of CBRIC on Group Insolvency 16.9
CH 17 – CROSS BORDER INSOLVENCY

313. What is Cross Border Insolvency 17.1
314. Objectives of Cross Border Insolvency 17.2
315. UNCITRAL 17.3
316. Legislative Guide 17.4

317. Model Law 17.5
318. Elements of Model Law 17.6
319. Scope of Application of Model Law 17.7
320. Legislative Guide vs. Model Law 17.8
321. World Bank Principles 17.9
322. Provisions of Cross Border Transactions under IBC 17.12
323. Insolvency Law Committee on Cross Border Insolvency 17.13
Insolvency & Bankruptcy
Module II
Paper 7.5
Contents
Insolvency
Introductio and Companies Other
n Bankruptc Act, 2013 Topics
To IBC y Code,
2016
SARFAES RDDBFI
Act, Winding
I Act, Adjudicati
1993 Up by
on and
2002 the
Appeals
Tribunal
Definitions Cross Resoluti

Part II – Part III – Border
Group Professi
on
, Pillars of Companies and Individuals and Insolven Strategi
Insolven onal
IBC LLPs Firms cy Ethics
cy es
Fast Pre Insolvency Fresh

CIRP Track Packaged Resolution Start Bankruptcy
CIRP Process Process
IRP
Liquidati Voluntary
on Liquidation
Insolvency & Bankruptcy
Introduction to Insolvency and

Bankruptcy Code, 2016
1.1
What is Insolvency?
Is it any different from Bankruptcy?
1.2
Is a Of not being able Is a Formal Declaration
State
to pay of one’s
debts Legal in accordance with
the law of the land
Status
Insolvency Bankruptcy
Can be used in
Can be used in
reference of reference of
individuals as well individuals
individualsasand
well
as Corporates asfirms
Corporates
only
1.3
Liquidation
1. Liquidation means closure or winding up of a corporation or an
incorporated entity through legal process.
2. In liquidation process, the assets of the corporate body are sold and its
liabilities are discharged as a result of which, the company ceases to exist.
Insolvency
Unresolved Resolved
Bankruptcy Liquidation
(Individuals and Firms) (Corporates)
1.4
INSOLVENCY LAWS IN UK
 The Insolvency Law Reform Committee's 1932 Report recommended that
a uniform insolvency legislation should be adopted in the UK.
 The UK's Insolvency Act, passed in 1936, governs both kinds of
insolvency administrations, including corporate restructuring.
 The Insolvency Act, 1986 provides for five legal processes —

 Administration
 Company Voluntary Arrangement
 Scheme of Arrangement
 Receivership (including administrative receivership)
 Liquidation
 The Administration method was first introduced in 1986 and updated by

the Enterprise Act, 2002 to incorporate a streamlined approach allowing
the firm or (more frequently) its board to select an administrator without
the intervention of the Court.
1.5
 Administration offers companies a breathing space during which creditors are
restrained from taking action against them. During this period, an administrator
is appointed by a court to put forward proposals to deal with the company’s
financial difficulties.
 ‘Company voluntary arrangements’ (CVAs) – provides a way in which a

company in financial difficulty can come to a binding agreement with its
creditors.
 ‘Administrative receivership’ – permits the appointment of a receiver by

certain creditors (normally the holders of a floating charge) with the objective of
ensuring repayment of secured debts
 The Act explicitly established a ‘hierarchy of purposes’ for the administration process. The
primary duty of administrators was defined as rescuing the company as a going concern (a
duty that does not exist for an administrative receiver). Only if this is not practicable – or not
in the interests of creditors as a whole – is the administrator allowed to consider other
options, such as realizing the value of property in order to make a distribution to creditors.
1.6
US BANKRUPTCY LAWS
 American bankruptcy laws as the United States gained independence from

England in 1776, the English bankruptcy system served as a model for
bankruptcy laws in the English colonies in America and in the American
states.
 Early bankruptcy rules in America were exclusively accessible to merchants
and typically included imprisonment until debts were paid, property was
liquidated, or creditors agreed to the debtor's release.
 Each state independently passed the laws. They were contradictory and
prejudiced.
 The National Bankruptcy Act of 1898 was amended in 1938 to provide for
rehabilitation or reorganization of a debtor as an alternative to liquidation of
assets.
 Congress passed the Bankruptcy Reform Act of 1978 to ensure uniformity in
bankruptcy and debt enforcement laws.
1.7
Types of bankruptcy Cases under the
US Bankruptcy Code
Chapter 7:
liquidation
Chapter 15:
Parties of Chapter 9:
Types of
interest Adjustment of
involving more debt of
than one country Muncipality
bankruptcy
Chapter
13:
cases in USA Chapter 11:
Individua
ls with
Reorgan-
regular ization
income
Chapter 12:
family farmer or
fisherman
1.8
Concept and Evolution
of Insolvency Laws
1.9
Government Committees On Bankruptcy Reforms
Committee Year Recommendation

Tiwari Committee 1981 Enactment of the Sick Industrial Companies (Special
Provisions) Act, 1985, (SICA)
Narsimha Committee I 1991 Enactment of the Recovery of Debts Due to Banks and
Financial Institutions (RDDBFI) Act, 1993
Narsimha Committee II 1998 Enactment of Securitisation and Reconstruction of Financial

Assets and Enforcement of Security Interest Act
(SARFAESI), 2002
Justice Eradi Committee 1999 Recommended setting up of a National Company Law

Tribunal (NCLT)
J J Irani Committee 2005 Proposed significant changes to make the restructuring and
liquidation process speedier, efficient and effective and
accordingly amendments were made to (RDDBFI) Act, 1993
and (SARFAESI), 2002
Bankruptcy Law Reform 2014 Reviewed the existing bankruptcy and insolvency framework
Committee in the country and proposed the enactment of Insolvency and
Bankruptcy Code as a uniform and comprehensive
legislation on the subject
1.10
Interim Passed By Lok Passed By Rajya

Report Sabha Sabha
05 May’ 16 11 May’ 16
Feb 2015
Report of
Final President’s
the Joint
Report Assent
Committee
Nov 2015 28 May’ 16
28 April’ 16
Insolvency
Introduced in and
Lok Sabha Bill referred to
Joint Committee
Bankruptcy
Dec 2015
Code, 2016
1.11
WHY NEW LAW?
 There were multiple overlapping laws and adjudicating fora dealing with
financial failure and insolvency of companies and individuals.
 The framework did not provide the lenders an effective and timely way of recovery
or restructuring of defaulted assets and caused undue strain on the Indian credit
system.
 Individual bankruptcy and insolvency was dealt with under the Presidency Towns.
Insolvency Act, 1909, and the Provincial Insolvency Act, 1920, which are both about
a century old legislations.
 The liquidation of companies was handled under various laws and different
authorities.
 None of the laws provided for a strict time frame within which the process to
resolve insolvency was to be completed.
1.12
Insolvency and Bankruptcy Code, 2016
The Code deals 1) The law

with the consolidates all the
situation of previous laws
inability to pay relating to the
debts subject
2) The law provides for
procedure
The Code deals

with
Individuals and
firms as well The year of
enactment
1.13
Objectives of Insolvency and Bankruptcy Code, 2016
To provide for To establish an

To ensure Insolvency and To increase
a time bound
maximisation Bankruptcy availability of
insolvency
of value of Board of India credit
resolution
assets as a regulatory
mechanism
body
To balance the
interests of all the To consolidate and amend the
stakeholders laws relating to reorganisation
To promote
including and insolvency resolution of
entrepreneu
alteration in the corporate persons, partnership
-rship
order of priority of firms and individuals
payment of
Government dues
1.14
INSOLVENCY AND BANKRUPTCY CODE, 2016
Part I- Part V-
Preliminary Miscellaneous
Part III-
(Sec 1-3) Part IV- ( Sections
Insolvency
Regulations 224- 255)
Resolution
Part II- of Insolvency
and
Insolvency Professional
Bankruptcy
Resolution and s, Agencies
for
Liquidation for and
Individuals
Corporate Information
and
Persons Utilities
Partnership
(Sec 4-77) (Sec- 188-
Firms
223)
(Sec 78-187)
1.15
Applicability of the Code – Section 2
such other
body
incorporate
d under
Any any law for
Any other Any Personal
company partnershi the time
company Limited guarantors
incorporate p firms and being in
governed Liability to Individuals
d under the proprietors force, as
by any Partnershi corporate
Companies hip firms the Central
special Act p debtors
Act, 2013 Governmen
t may, by
notification
, specify in
this behalf
1.16
Insolvency
and
Bankruptcy
Board of
India
NCLT
Insolvency
Adjudicatory
Authorities Profession
al
Pillars
DRT
of IBC
Insolvency
Informatio Professional
n Utilities Agencies
1.17
Insolvency and Bankruptcy Board of India
• A Chairperson
• Three members not below the rank of joint
Secretary or equivalent, one of each to
represent the Ministry of Finance, the
Ministry of Corporate Affairs and Ministry Five years or till they attain the age of sixty-
of Law, ex-officio. five years, whichever is earlier, and they are
• One member to be nominated by the eligible for reappointment.
Reserve Bank of India, ex-officio.
• Five other members to be nominated by the
Central Government, of whom at least
three shall be the whole-time members
• Regulation of Information Utilities;

• Regulation of IPAs and IPs;
If the member – • Regulating all matters related to
• is an undischarged bankrupt as; insolvency and bankruptcy process.
• has become physically or mentally • Setting out eligibility requirements of IPs,
incapable of acting as a member; IPAs etc
• has been convicted of an offence, which in • Regulating entry, registration and exit of
the opinion of the Central Government insolvency intermediaries.
involves moral turpitude; • Making model bye laws for IPAs
• has, so abused his position as to render his • Setting out regulatory standards for IPs
continuation in office detrimental to the • make model bye-laws to be to adopted by
public interest. IPAs
1.18
Insolvency Professionals
A class of regulated but private professionals having minimum standards of
professional and ethical conduct.
Relevant Regulation –
IBBI (Insolvency Professional)
A resolution Regulations, 2016
professional has to –
Be a member of any
Code of Conduct of the Insolvency Professionals –
Insolvency
To take reasonable care and diligence while performing his
Professional Agency duties
(IPA) To comply with all requirements and terms and conditions
specified in the bye-laws of the insolvency professional agency of
Be registered as an which he is a member
Insolvency To allow the insolvency professional agency to inspect his records
Professional with the To submit a copy of the records of every proceeding before the
IBBI Adjudicating Authority to the Board as well as to the insolvency
professional agency of which he is a member
To perform his functions in such manner and subject to such
conditions as may be specified
1.19
Insolvency Professional Agencies are designated
to regulate Insolvency Professionals
The Insolvency
and Bankruptcy ICSI Insolvency
Board of India
(Model Bye-Laws Professional
and Governing Agency.
Board of
Insolvency Insolvency
Professional Agency
Professional
Agencies)
Insolvency of Institute of Cost
Regulations, 2016 Professional Accountants of
Agencies India.
The Insolvency Indian Institute of
and Bankruptcy
Board of India Insolvency
(Insolvency Professional of
Professional ICAI.
Agencies)
Regulations, 2016.
Functions of IPAs –
grant membership to persons who fulfill all requirements set out in
its byelaws on payment of membership fee
lay down standards of professional conduct for its members
monitor the performance of its members
safeguard the rights, privileges and interests of insolvency
professionals who are its members
suspend or cancel the membership of insolvency professionals who
are its members on the grounds set out in its bye-laws
redress the grievances of consumers against insolvency
professionals who are its members, and
publish information about its functions, list of its members,
performance of its members and such other information as may be
specified by regulations
1.20
THE INSOLVENCY ADJUDICATION PROCESS
Individual Insolvency of Insolvency of Limited Corporate

Insolvency Partnership Firm Liability Partnership Insolvency
Debt Recovery Tribunal National Company Law

Tribunal (NCLT) Adjudication
Adjudication Authority Authority
Appeal to Debt Recovery Appeal to National Company

Law Appellate Tribunal
Appellate Tribunal (DRAT) (NCLAT)
Appeal to Supreme
Court
1.21
I
The Insolvency and
Bankruptcy Board of
N
India has framed the F
IBBI (Information
Utilities) O
Regulations, 2017.
R
M
The purpose of such A
collection, collation,
authentication and
T
dissemination
financial
I
information of O
debtors is to
facilitate swift N
decision making in
the resolution The main duty of the Information
proceedings. Utilities (IUs) is to collect,
collate, authenticate and
disseminate financial
information. The purpose of such U
collection, collation,
authentication and dissemination
T
financial information of debtors
is to facilitate swift decision
I
making in the resolution L
proceedings.
I
T
Y
1.22
OBLIGATIONS OF INFORMATION UTILITY
(SECTION 214)
A. create and store financial information in a universally accessible format;
B. accept electronic submissions of financial information from persons who are under
obligations to submit financial information ;
C. accept, in specified form and manner, electronic. submissions of information from

persons who intend to submit such information;
D. meet such minimum service quality standards as may be specified by regulations;
E. get the information received from various persons authenticated by all concerned
parties before storing such information;
F. provide access to the financial information stored by it to any person who intends to
access such information in such manner as may be specified by regulations;
G. publish such statistical information as may be specified by regulations;
H. have inter-operatability with other information utilities.

Insolvency And BankruPtcy
Corporate Insolvency Resolution

Process
2.1
NCLT to ascertain Reject Insolvency
Application to Commencement
DEFAULT NCLT existence of Date (I.C.D.)
Debt due + payable but default

unpaid Accept CIRP
begins
Financial Operational Corporate Public

Creditor Creditors Applicant Moratorium Annoucement Appoint IRP
Section-7 Section 8&9 Section 10 Section 14 Section 15 Section 16
Latest 60 days
from I.C.D
Issue
7 days IRP to collect
invitation to Conduct 1st
Appoint RP Constitute CoC and verify
Expression of meeting of CoC
claims
Interest
Latest 95
days from
I.C.D
Submission of 10 days
RP to prepare Provisional list of Eligible Prospective
Expression of
info memo Interest Resolution Applicants
2.2
10 days Final list of
Eligible
Objections Resolution
Applicants
Provisional list of
Eligible Min 30 days
Prospective Give Information
memorandum+ RP to check
Resolution COC to check
Request for Submit eligibility
Applicants merits and
Resolution Plan + Resolution Plan feasibility &
select one plan
Evaluation Matrix viability
Atleast 15 days prior to

end of CIRP Period
Liquidation CIRP fails + Reject
Liquidation
order Moratorium
approved
passed end NCLT to check
legality
CIRP
RESOLUTION Approve
Successful +
PLAN
Moratorium
IMPLEMENTED
ends
Default- Section 3(12) 2.3
The term default means non-payment of

debt when whole or any part or
instalment of the amount of debt has
become due and payable and is not paid
by the debtor or the corporate debtor,
as the case may be.
2.4
Rs. 1,00,00,000
Persons who may initiate Corporate 2.5
Insolvency Resolution Process -

• Section 6 on the Insolvency and Bankruptcy Code, 2016
provides that in case of a default, the following people are
entitled to initiate a CIRP -
financial creditor
operational creditor
corporate debtor itself
2.6
Operational Creditors Financial Creditors
Money borrowed against the payment

of interest
Government
Receivables sold or discounted other than
any receivables sold on non-recourse basis
Amount of any liability in respect of

Supplier any lease or hire purchase contract
Any forward sale or purchase agreement,
having the commercial effect of a
Employees
borrowing
Any derivative transaction
The amount of any liability in respect

of any of the guarantee or indemnity
An allottee under a real estate project

2.7
Within 14 days NCLT to ascertain the

Application to
Default existence of default
the NCLT
1. Record of Default
as recorded with
Along with the following documents -
the Information Satisfied

Utility that default Not
2. Name of the has Satisfied
resolution occurred
professional
proposed to act as
an interim
resolution
Admit Reject
professional
3. Any other
information as
required by the
Board. Communicate within 7 days
2.8
Important Points -
Financial creditors who

An application under are allottees under a real A financial creditor or any
section 7 shall be filed estate project shall be file other person on behalf of
jointly by not less than jointly by not less than the financial creditor, as
one hundred of such one hundred of such may be notified by the
creditors in the same class allottees under the same Central Government, may
or not less than ten per real estate project or not also file an application for
cent. of the total number less than ten per cent of initiating corporate
of such creditors in the the total number of such insolvency resolution
same class, whichever is allottees under the same process against a
less. real estate project, corporate debtor
whichever is less.
Existence of
Corporate Debtor to
dispute 2.9
bring to the notice of the
operational creditor
Within Proof of
10 days Repayment
Default Demand Notice
Failure to show the above
NCLT to ascertain the Within 14 days Application to 1. Demand Notice

existence of default the NCLT 2. An affidavit
stating that there is
Along with copies of the no dispute;
following documents - 3. A certificate from
the financial
Satisfied institutions
that default Not maintaining
has Satisfied accounts
occurred confirming that
there is no
payment of the
unpaid
operational debt;
Admit Reject 4. Any other proof
confirming that
there is no
payment
Communicate within 7 days
2.10
Within 14 days NCLT to ascertain the

Application to
Default existence of default
the NCLT
1. Books of account
and such other
Along with the following documents -
documents Satisfied
2. Name of the that default Not
resolution has Satisfied
professional occurred
proposed to act as
an interim
resolution
professional
Admit Reject
3. Resolution passed
by shareholder
approving filing of
the application.
Communicate within 7 days
2.11
A member or partner of the

corporate debtor who is authorised
to make an application for the
Corporate Debtor
corporate insolvency resolution
process under the constitutional
document of the corporate debtor;
Corporate Applicant
An individual who is in charge of A person who has the control, and

managing the operations and supervision over the financial affairs
resources of the corporate debtor; of the corporate debtor
2.12
Suspension of Initiation of Corporate
Insolvency Resolution Process
• Section 10A states that no application for
initiation of CIRP shall be filed for any default
arising on or after 25th March, 2020 for a period
of six months or upto a period of one year.
• No application shall ever be filed for initiation of
corporate insolvency resolution process of a
corporate debtor for the said default occurring
during the said period
• This was a necessary measure due to the COVID-
19 pandemic and the difficulty in finding
adequate number of resolution applicants.
2.13
A corporate debtor having

A corporate debtor undergoing a completed corporate insolvency
corporate insolvency resolution resolution process twelve months
process preceding the date of making of
the application
Persons NOT
Entitled to make
Application
Sec 11
A corporate debtor or a financial

creditor who has violated any of
A corporate debtor in respect of
the terms of resolution plan
whom a liquidation order has
which was approved twelve
been made.
months before the date of making
of an application
2.14
• Time Limit
Section 12
• 180 Days
• One Time
Extension? • Max 90 days
• 66% votes
Overall • 330 Days
Limit
Section Withdrawal
90% Votes
12A of CIRP
2.15
If the Application
gets Accepted –
(Section 13)
Public Appointment of
Moratorium
Announcement IRP
Section 14
Section 15 Section 16
2.16
Content Of Public Announcement 2.17
Section 15
Name of the authority with which the corporate debtor is registered
Name and address of the corporate debtor
Last date for submission of claims
Details of the IRP
Details of the [penalty to be levied for false claims
Date on which the corporate insolvency resolution process shall close

2.18
Section 17 – End of Debtor in Possession Regime 2.19
The management of the affairs of the corporate debtor shall vest in the IRP
The powers of the BOD to be exercised by the IRP
The officers and managers of the corporate debtor shall report to the IRP
The officers and managers shall provide access to all documents and records
The financial institutions maintaining accounts of the corporate debtor shall

act on the instructions of the IRP
2.20
collect all information relating to the assets, finances and operations of

the corporate debtor
receive and collate all the claims submitted by creditors
file the information collected with the information utility, if necessary
monitor the assets of the corporate debtor and manage its operations
constitute a committee of creditors

2.21
Personnel to extend co-operation

Section 19 imposes an obligation on the
a) Personnel
b) Promoters of the corporate debtor
to extend all assistance and cooperation required by the Interim

Resolution Professional in the management of the affairs of the
corporate debtor.
Where the personnel of the corporate debtor do not extend

cooperation or assistance to the interim resolution professional,
the IRP may apply to the NCLT for an order. The NCLT may, by
order, direct the person to comply with the instructions of IRP.
Management of Affairs of the Corporate 2.22
Debtor as a Going Concern (Section 20)
To appoint accountants, legal or other professionals as may be necessary
To enter into contracts on behalf of the corporate debtor
To amend or modify the contracts or transactions which were previously

entered into
To raise interim finance
to issue instructions to personnel of the corporate debtor
To take all such other actions as may be necessary

What is Interim Finance?
2.23
• “Interim finance" means any financial debt raised by the resolution

professional during the insolvency resolution process period.
• Any amount raised as interim finance and the costs incurred in

raising such finance is included in the “insolvency resolution
process costs”.
• Interim Resolution Professional has the authority to raise interim

finance provided that no security interest shall be created over any
encumbered property of the corporate debtor without the prior
consent of the creditors whose debt is secured over such
encumbered property.
2.24
Section 21
Committee
of
Creditors
Section 24 Section
Meeting of 25A
Committee Rights and
of Creditors duties of
authorised
Regulatory
provisions
relating to
committee
of creditors
Certain
provisions Section 28
under The Approval of
Insolvency and committee of
Bankruptcy
Board of India creditors for
2.25
Constitution of Committee of
Creditors
Financial Creditors in proportion to the

financial debt owed by the Corporate Debtor
But, if
No Financial All Financial Creditors

creditor exists are Related Parties
Certain Operational Creditors to form the

Committee of Creditors
2.26
Committee of Creditors
Formed by Operational creditors
One One representative

representative 18 largest elected by all
elected by all Operational employees
workmen Creditors by
Value
2.27
 That a financial creditor who is a related party of the Corporate debtor shall not get
any right of representation, participation or voting in a meeting of the committee of
creditors.
 That the above bar shall not apply to a financial creditor, regulated by a financial
sector regulator, if it is a related party of the corporate debtor solely on account of
conversion or substitution of debt into equity shares or instruments convertible into
equity shares, prior to the insolvency commencement date.
 That where multiple creditors are a part of a Consortium, each such financial creditor
shall be part of the committee of creditors and their voting share shall be
determined on the basis of the financial debts owed to them.
 That where a person is both, a financial creditor as well as an operational creditor,
their right to vote in the Committee of Creditors shall be in proportion to the extent
of the financial debt owed by the Corporate debtor to them.
 Where no agent or trustee is appointed for a class of creditors as mentioned above,
the IRP shall make an application to the NCLT to appoint a person as a representative
of such class of people. The remuneration of such an agent/trustee shall be a part of
the CIRP cost.
 The decisions of the Committee of Creditors shall be taken by a vote of minimum
51% of voting shares.
 The Committee may require the production of any financial information by the
Resolution Professional and the RP is bound to provide such information to them
within 7 days
On appointment of the authorized representative, 2.28
the IRP shall:
The IRP shall select the IP, who is the (a) provide the list of creditors in each class to the
choice of the highest number of financial respective authorised representative.
creditors to act as the authorised
(b) provide an updated list of creditors in each
representative of the creditors of the class to the respective authorised representative
respective class and shall apply to the NCLT as and when the list is updated.
for appointment of the authorizsed
(c) provide electronic means of communication
representatives within two days of the between the authorised representative and the
verification of claims creditors in the class
Committee with
only Creditors in
Class
The authorised representative shall be entitled to

Voting share of creditor in a class shall the following fees for every meeting attended by
be in proportion to the financial debt him –
which includes an interest at the rate No. of Creditors Fees
of eight per cent per annum unless a 10-100 INR 15000
different rate has been agreed to 101-1000 INR 20000
between the parties. Above 1000 INR 25000
2.29
The right to participate and vote in meetings of the
committee of creditors on behalf of the financial creditor
he represents in accordance with the prior voting
instructions of such creditors obtained through physical or
electronic means.
The duty of the authorised representative to

circulate the agenda and minutes of the
meeting of the committee of creditors to the
Rights and financial creditor he represents
Duties of
Authorised
Representative The duty to not act against the
interest of the financial creditor he
(Section 25A) represents and shall always act in
accordance with their prior
instructions
The duty to vote on behalf of all the financial creditors

he represents in accordance with the decision taken by
a vote of more than fifty per cent of the voting share of
the financial creditors he represents, who have cast
their vote
2.30
(a) authorise the trustee or agent to act
on his behalf in the committee of
creditors to the extent of his voting
share;
When a
single (b) represent himself in the committee
of creditors to the extent of his voting
trustee share;
or agent
(c) appoint an insolvency professional
acts for (other than the resolution professional)
at his own cost to represent himself in
all the committee of creditors to the extent
financial of his voting share; or
creditors (d) exercise his right to vote to the

extent of his voting share with one or
more financial creditors jointly or
severally
2.31
When to Conduct the meetings of the Committee of Creditors?
A) When the Resolution Professional considers necessary, or

B) On A request is made by committee representing 33% of voting rights
Quorum of the Meetings of the Committee of Creditors?
Quorum = members representing at least 33% of the voting rights present either in
person or by video conferencing or other audio and visual means.
If the quorum is not present, the meeting shall automatically stand adjourned at the
same time and place on the next day.
• The committee of creditors may meet in person or by such other electronic

means.
• All meetings shall be conducted by the resolution professional.
• Notice of the meeting shall be given to the members of committee of creditors,
the members of the suspended Board of Directors or the partners of the corporate
persons, and the operational creditors or their representatives if the amount of
their aggregate dues is not less than 10% of the debt.
• The directors, partners and one representative of operational creditors may attend
the meetings of committee of creditors, but shall not have any right to vote.
2.32
Notice of the Meeting

Contents
Time the venue, the time and date of the
A meeting of the committee shall be called meeting and of the option available to
by giving not less than five days’ notice in them to participate through video
writing to every participant. conferencing or other audio and visual
means;
The committee may reduce the notice
period from five days to such other period a list of the matters to be discussed at the
of not less than twenty-four hours, as it meeting;
deems fit. a list of the issues to be voted upon at the
However, if there is any authorised meeting;
representative, the committee may reduce copies of all documents relevant to the
the period to not less than forty-eight matters to be discussed and the issues to
hours be voted upon at the meeting.
Section 28 – Certain Actions requiring 66% approval by the CoC 2.33
a) To raise any interim finance in excess of the amount as may be decided by the
committee of creditors in their meeting;
b) To create any security interest over the assets of the corporate debtor;
c) To change the capital structure of the corporate debtor, including by way of
issuance of additional securities, creating a new class of securities or buying back
or redemption of issued securities in case the corporate debtor is a company;
d) To record any change in the ownership interest of the corporate debtor;
e) To give instructions to financial institutions maintaining accounts of the
corporate debtor for a debit transaction from any such accounts in excess of the
amount as may be decided by the committee of creditors in their meeting;
f) To undertake any related party transaction;
g) To amend any constitutional documents of the corporate debtor;
h) To delegate its authority to any other person;
i) To dispose of or permit the disposal of shares of any shareholder of the
corporate debtor or their nominees to third parties;
j) To make any change in the management of the corporate debtor or its
subsidiary;
k) To transfer rights or financial debts or operational debts under material contracts
otherwise than in the ordinary course of business
2.34
At the first meeting, to be conducted within 1 week from the constitution
CoC to communicate the decision to IRP, Corporate Debtor and NCLT
Replacement to be confirmed by NCLT and IBBI

2.35
Eligibility of Resolution Professional
Regulation 3 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution

Process for Corporate Persons) Regulations, 2016
If the Resolution professional, and all partners and directors of the insolvency
professional entity of which he/she is a partner or director, are independent of the
corporate debtor
Person is independent if he –
 is eligible to be appointed as an independent director on the board of the
corporate debtor under section 149 of the Companies Act, 2013
 is not a related party of the corporate debtor
 is not an employee or proprietor or a partner:
(i) of a firm of auditors or secretarial auditors in practice or cost auditors of
the corporate debtor;
(ii) of a legal or a consulting firm, that has or had any transaction with the
corporate debtor amounting to five per cent or more of the gross turnover of such
firm, in the last three financial years
2.36
take immediate custody and control of all the assets of the corporate
debtor
• represent and act on behalf of the corporate debtor with third parties
raise interim finances subject to the approval of the committee of

creditors
• appoint accountants, legal or other professionals
maintain an updated list of claims
• convene and attend all meetings of the committee of creditors
prepare the information memorandum in accordance with section 29
• invite prospective resolution applicants

2.37
Replacement of Resolution Professional – Section 27
66% Approval from the Committee of Creditors
Name of the resolution Professional to be confirmed by the NCLT after

recommendation from the Board
2.38
Preparation of Information Memorandum– Section 29
The Resolution professional to prepare an information memorandum within

95th day of the ICD
Information
Memorandum To protect
to be given to To comply
any Not to share
such with
intellectual relevant
Propspective provisions of
property of information
Resolution law for the
Applicants the with third
time being in
who corporate parties
force
Undertake - debtor
2.39
Assets and liabilities with such description, as on the insolvency commencement date;
Contents of Information Memorandum
Latest annual financial statements;
Audited financial statements of the corporate debtor for the last two financial years and provisional
financial statements for the current financial year made up to a date not earlier than fourteen days
from the date of the application;
List of creditors containing the names of creditors, the amounts claimed by them, the amount of
their claims admitted and the security interest, if any;
Debts due from or to the corporate debtor with respect to related parties;
Details of guarantees given in relation to the debts of the corporate debtor by other persons;
Names and addresses of the members or partners holding at least one per cent stake in the corporate debtor.
What is Invitation to Expression 2.40
of Interest?
• EOI is a document describing requirements or specifications
and seeking information from potential investors/ bidders that
demonstrate their ability to meet those requirements.
• In the field of insolvency and bankruptcy, EOIs are invited from
investors or consortium of investors (also known as bidders)
meeting the specified eligibility criteria in terms of financial
and technical capabilities to submit resolution plans for the
Corporate Debtor undergoing corporate insolvency resolution
process or fast track insolvency resolution process under the
provisions of the Code
The Invitation is to be published-
2.41
• in one English and one regional language newspaper with
wide circulation at the location of the registered office
RP to issue invitation to EOI not later • on the website, if any, designated by the Board for the
than 60th day from the ICD. purpose;
• on the website, if any, of the corporate debtor
Contents of detailed invitation –

Contents of Form G –
• criteria for prospective resolution applicants, as approved by the
• Sate where the detailed invitation for expression of interest committee
can be downloaded or obtained from, as the case may be; and • ineligibility norms under section 29A to the extent applicable for
• provide the last date for submission of expression of interest prospective resolution applicants;
which shall not be less than fifteen days from the date of issue • such basic information about the corporate debtor as may be required
of detailed invitation by a prospective resolution applicant for expression of interest; and
• Statement regarding no requirement of payment of any fee or any
non-refundable deposit for submission of expression of interest.
Attachments with EOI –

• an undertaking that it meets the criteria specified by the committee along with relevant records
• an undertaking that it does not suffer from any ineligibility under section 29A along with
relevant records
• an undertaking that it shall intimate the RP forthwith if it becomes ineligible at any time during
the CIRP
• an undertaking that every information and records provided is true and correct and discovery of
any false information or record at any time will render the applicant ineligible to submit
resolution plan, forfeit any refundable deposit, and attract penal action; and
• an undertaking to maintain confidentiality of the information shared
2.42
RP to issue a Any RP to issue the RP to issue the

provisional list prospective final list of information
memorandum,
of eligible resolution prospective evaluation matrix and a
prospective applicant may resolution request for resolution
resolution raise an applicants plans, within five days of
applicants objection to within ten days the date of issue of the
provisional list
within ten days such a list with of the last date to –
of the last date supporting for receipt of • every prospective
for submission documents objections, resolution applicant in
the provisional list; and
of expression within five • every prospective
of interest days from the resolution applicant
date of issue of who has contested the
the provisional decision of the
resolution professional
list against its non-inclusion
in the provisional list.
2.43
What is a Resolution Plan?

A ‘resolution plan’ means a plan proposed by resolution applicant
for insolvency resolution of the corporate debtor as a going concern
in accordance with Part II
Who is a Resolution Applicant?

A “resolution applicant” means a person, who individually or jointly
with any other person, submits a resolution plan to the resolution
professional pursuant to the invitation to resolution plan
Who cannot be a Resolution Applicant? – Section 29A 2.44
An undischarged insolvent
A wilful defaulter
At the time of submission of the resolution plan has an account classified

as non-performing asset which is atleast one year old
Is disqualified to act as a director under the Companies Act, 2013:
Is prohibited by the Securities and Exchange Board of India from trading in

securities market
Has been convicted for any offence punishable with imprisonment – (i) for
two years or more under any Act specified under the Twelfth Schedule; or
(ii) for seven years or more under any law for the time being in force:
Who cannot be a Resolution Applicant? – Section 29A 2.45
has been a promoter or in the management or control of a corporate

debtor in which a preferential transaction, undervalued transaction,
extortionate credit transaction or fraudulent transaction has taken place
and in respect of which an order has been made by the NCLT
has executed a guarantee in favour of a creditor in respect of a

corporate debtor against which an application for insolvency
resolution made by such creditor has been admitted;
is subject to any disability, corresponding to the above clauses, under

any law in a jurisdiction outside India;
Has a connected person not eligible as above.

2.46
The amount payable under a resolution plan
– A statement as to how it has
• to the financial creditors, who have a right dealt with the interests of all
to vote and did not vote in favour of the stakeholders, including
resolution plan, shall be paid in priority over
financial creditors who voted in favour of the financial creditors and
plan; and operational creditors
• to the operational creditors shall be paid in
priority over financial creditors
Mandatory
Contents of
Resolution Plan
Demonstrate that:
• it addresses the cause of default;
A statement giving details if the
resolution applicant or any of its • it is feasible and viable;
related parties has failed to • it has provisions for its effective
implementation;
implement or contributed to the
failure of implementation of any • it has provisions for approvals required and
the timeline for the same; and
other resolution plan approved by
• the resolution applicant has the capability
the NCLT at any time in the past. to implement the resolution plan.
2.47
Submission of Resolution Plan – Section 30
Resolution plan is required to be accompanied with an affidavit by the

resolution applicant stating that he is eligible under section 29A of the Code.
Resolution
Professional The
to check The payment The payment
The
implementatio
of insolvency of the debts of n and
that the resolution operational
management
supervision of
of the affairs
plan process costs creditors the resolution
plan
provides
for-
2.48
CoC to approve the plan – Section 30 (4)
Committee of creditors may approve a resolution plan by a vote of not less

than sixty-six percent of voting share of the financial creditors, after
considering its feasibility and viability, and such other requirements as may be
specified by the Board
Approval of Plan by NCLT – Section 31
If the Resolution Plan conforms with the requirements of

section 30, NCLT may approve the plan.
If the NCLT is not satisfied, they may reject the plan.

Approval of Resolution Plan by the Committee 2.49
of Creditors
The committee shall:

• evaluate the resolution plans as per evaluation matrix;
• record its deliberations on the feasibility and viability of each resolution plan; and
• vote on all such resolution plans simultaneously
Where two or more

Where two or more Where none of the
Where only resolution plans are
resolution plans resolution plans
one resolution putto vote
receive equal votes, receives requisite
plan is put to simultaneously, the
but not less than votes, the committees
resolution plan,
vote, it shall which receives the
requisite votes, the hall again vote on the
be considered committee shall resolution plan that
highest votes, but
approved if it approve any one of received the highest
not less than
them, as per the tie- votes, subject to the
receives requisite votes, shall
breaker formula timelines under the
requisite votes be considered announced before voting Code
asapproved.
The RP shall endeavour to submit the resolution plan approved by the committee to the
Adjudicating Authority at least 15 days before the maximum period
2.50
Appeal – Section 32
That there has been material
That the approved
irregularity in exercise of the
resolution plan is in
powers by the resolution
contravention of the
professional during the
provisions of any law for the
corporate insolvency
time being in force
resolution period
That the debts owed to That the insolvency

operational creditors of the resolution process costs
corporate debtor have not have not been provided for
been provided for in the repayment in priority to all
resolution plan other debts
That the resolution plan

does not comply with any
other criteria specified by
the Board
Insolvency And Bankruptcy
Resolution Strategies
3.1
What is Corporate Restructuring?
Corporate Restructuring is an inorganic business strategy where one or

more aspects of a business are redesigned to improve commercial
efficiency, manage competition effectively, drive faster pace of growth,
ensure effective utilization of resources, and fulfilment of stakeholders’
expectations
EXTERNAL RESTRUCTURING 3.2
It consist of merger and amalgamation of one company with

another or demerger of one or more undertakings of a company
into another company, acquisition of controlling stake in a
company through purchase of majority stake in it, conversion of
debt into equity, etc. Some examples are –
Restructuring Restructuring Restructuring

through through through
Mergers, acquisition of conversion of
Amalgamations controlling debt for
and Demergers stake/ purchase issuance of
of shares securities
INTERNAL RESTRUCTURING 3.3
What is Organisational Restructuring ?
Organizational Restructuring may involve creation of new departments

to serve growing markets or downsizing or eliminating departments to
conserve overheads. This type of restructuring affects employees and
involves layoffs or collaboration with third parties to upgrade skills and
technical know-how
What is Financial Restructuring ?
Financial restructuring is the process of reorganizing the financial

structure, which primarily comprises of equity capital and debt capital.
3.4
Debt Restructuring
Restructuring
includes alteration of
repayment period,
repayable amount,
the process of
the amount of
reorganizing the Debt restructuring is
instalments, rate of
whole debt capital of more commonly used
interest, roll over of
the company in as a financial tool
credit facilities,
negotiation with than compared to
sanction of additional
bankers, creditors, equity restructuring.
credit facility,
vendors.
enhancement of
existing credit limits,
compromise
settlements
3.5
Equity Restructuring
Alteration of Share Reduction of Share
Capital – Capital - Buy-Back –
Section 61 to 64 read Section 66 of the Companies Act, 2013
with Section 13 and Companies Act, 2013 Companies (Share
14 of the Companies Rule 2 to 6 of the Capital and
Act, 2013 National Company Debentures) Rules,
Companies (Share Law Tribunal 2014.
Capital and (Procedure for Securities and
Debentures) Rules, Reduction of Share Exchange Board of
2014. Capital of Company) India (Buy-back of
National Company Rules, 2016 Securities)
Law Tribunal Rules, SEBI (LODR) Regulations, 2018.
2016 Regulations, 2015
RESOLUTION MEASURES UNDER 3.6
IBC, 2016 – REGULATION 37

 transfer of all or part of the assets of the corporate debtor
to one or more persons;
 sale of all or part of the assets whether subject to any
security interest or not;
 restructuring of the corporate debtor, by way of merger,
amalgamation and demerger;
 the substantial acquisition of shares of the corporate
debtor, or the merger or consolidation of the corporate
debtor with one or more persons;
 cancellation or delisting of any shares of the corporate
debtor, if applicable;
 satisfaction or modification of any security interest;
 curing or waiving of any breach of the terms of any debt
due from the corporate debtor;
 reduction in the amount payable to the creditors;
 extension of a maturity date or a change in interest rate or
other terms of a debt due from the corporate debtor;
RESOLUTION MEASURES UNDER 3.7
IBC, 2016 – REGULATION 37

 amendment of the constitutional documents of the
corporate debtor;
 issuance of securities of the corporate debtor, for cash,
property, securities, or in exchange for claims or
interests, or other appropriate purpose;
 change in portfolio of goods or services produced or
rendered by the corporate debtor;
 change in technology used by the corporate debtor;
 obtaining necessary approvals from the Central and
State Governments and other authorities;
 sale of one or more assets of corporate debtor to one or
more successful resolution applicants submitting
resolution plans for such assets; and manner of
dealing with remaining assets
3.8
SALE OF ASSETS UNDER

INSOLVENCY AND
BANKRUPTCY CODE, 2016
IBBI (Liquidation Process)

Regulations, 2016
3.9
SALE OF ASSETS [REGULATION 32]
 The liquidator may sell –

 an asset on a standalone basis;
 the assets in a slump sale;
 the assets in parcels;
 a set of assets collectively;
 the corporate debtor as a going concern; or
 the business(s) of the corporate debtor as a going concern
SALE OF ASSETS AS A GOING CONCERN 3.10
[REGULATION 32A]
 Where the committee of creditors has recommended sale
or where the liquidator is of the opinion that it maximise
the value of the corporate debtor, he shall endeavour to
first the business as a going concern.
 Where the committee of creditors has not identified the
assets and liabilities the liquidator shall identify and
group the assets and liabilities to be sold as a going
concern, in consultation with the consultation
committee.
 If the liquidator is unable to sell the corporate debtor or
its business within ninety days from the liquidation
commencement date, he shall proceed to sell the assets
of the corporate debtor via other methods of regulation
32.
3.11
CONTENTS OF ASSET SALE REPORT

[REGULATION 36]
 the realized value;

 cost of realization, if any;
 the manner and mode of sale;
 if the value realized is less than the value in the asset
memorandum, the reasons for the same;
 the person to whom the sale is made; and
 any other details of the sale.
FAST Track CIRP
FAST TRACK CORPORATE INSOLVENCY RESOLUTION
4.1
PROCESS
An application for fast track corporate An entity shall be considered as a

Startup:
insolvency resolution process may be (a) if it is incorporated as a private
made in respect of the following limited company or registered as a
partnership firm or a limited
corporate debtors: liability partnership in India; and
(b) up to seven years from the date of
(a) a small company; or its incorporation/ registration; and
(b) a startup (other than the (c) if its turnover for any of the
financial years since incorporation/
partnership firm) or registration has not exceeded
Rupees 25 crores; and
(c) an unlisted company with total (d) if it is working towards innovation,
assets, as reported in the financial development or improvement of
products or processes or services,
statement of the immediately or if it is a scalable business model
preceding financial year, not with a high potential of
employment generation or wealth
exceeding rupees one crore. creation.
4.2
Application for
• Fast Track Extension of Fast
Insolvency Process Track Insolvency
• The NCLT, if
shall be completed
satisfied that case
in 90 days
cannot be
• Application with completed in 90
NCLT if days, may order
instructed to do extension beyond
so by 75% voting 90 days but not
Time period for
share of exceeding 45 days
completion of
Fast Track
Committee of
Insolvency Creditors
Extension of
Fast Track
Insolvency
4.3
 As per Section 57 of the Code, an application for fast track

corporate insolvency resolution process may be filed by a
creditor or corporate debtor, along with-
 the proof of the existence of default as evidenced by records
available with an information utility or such other means as may
be specified by the Board; and
 such other information as may be specified by the Board to
establish that the corporate debtor is eligible for fast track
corporate insolvency resolution process. Manner of initiating
fast track corporate insolvency resolution process
IMPORTANT DEFINITIONS 4.4
“Dissenting Financial Creditor” means a financial creditor who voted

against the resolution plan or abstained from voting for the resolution plan,
approved by the committee.
“Fast Track Process” means the fast track insolvency resolution process
for corporate persons under Chapter IV of Part II of the Code.
“Fast Track Process Costs” means the costs in Regulation 30. “Fast
Track Process Period” means the period of ninety days beginning from the
fast track recommencement date and ending on the ninetieth day;
“Fast Track Commencement Date” means the date of admission of an
application by the adjudicating authority for initiating the fast track process
under Chapter IV of Part II of the Code.
Eligibility for Resolution Professional 4.5
If he, and all partners and directors of If he, or the insolvency professional
the insolvency professional entity of entity of which he is a partner or
which he is a partner or director are director, is NOT under a restraint
independent of the corporate debtor order of the Board
eligible to be appointed as an independent

director on the board of the corporate
not a related party of the corporate debtor
debtor under section 149 of the Companies
Act, 2013
Independent means
the person is
has not been an employee or proprietor or a partner of a legal or a consulting firm, which has or had any
– transaction with the corporate debtor amounting to
of a firm of auditors or company secretaries in ten per cent or more of the gross turnover of such
practice or cost auditors of the corporate debtor firm, at any time in the preceding three years.
Extortionate Credit Transaction (Regulation 5) 4.6
A transaction shall be
considered an extortionate
credit transaction under
section 50 (2) where the
terms :
a) Require the corporate

b) Are unconscionable under
debtor to make exorbitant
the principles of law relating
payments in respect of the
to contracts.
credit provided ; or
An insolvency professional shall make a 4.7
public announcement not later than three
days from the date of his appointment
The public announcement in Form A, shall be

- published in one english and one regional language
newspaper
- hosted on the website, if any, of the corporate debtor; and
- be hosted on the website, if any, designated by the Board
for the purpose.
The Public Announcement shall provide the

last date for submission of proofs of claim,
which shall be ten days from the date of
appointment of the interim resolution
professional.
CLAIMS BY OPERATIONAL CREDITORS 4.8
Operational creditors, other than workmen and employees must submit

proof of their claim to the IRP in person, by post or electronic means,
and submit supplementary documents or clarifications in support of their
claim before the committee, along with the following documents -
(a)the records available with an information utility, if any;
or
(b) other relevant documents, including –
• a contract for the supply of goods and services with
corporate debtor;
• an invoice demanding payment for the goods and
services supplied to the corporate debtor;
• an order of a court or tribunal that has adjudicated upon the
non payment of a debt, if any;
• financial accounts
CLAIMS BY FINANCIAL CREDITORS 4.9
Financial creditors must submit proof of their claim to the IRP in

electronic form, and submit supplementary documents or clarifications
in support of their claim before the committee, along with the following
documents -

or
• a financial contract supported by financial statements as evidence of the debt;
• a record evidencing that the amounts committed by the financial creditor to
the corporate debtor under a facility has been drawn by the corporate debtor;
• financial statements showing that the debt has not been repaid; or
• an order of a court or tribunal that has adjudicated upon the non-payment of
a debt, if any
CLAIMS BY WORKMEN AND EMPLOYEES 4.10
Financial creditors must submit proof of their claim to the IRP in person,
by post ot through electronic means, and submit supplementary
documents or clarifications in support of their claim before the
committee, along with the following documents -

or
• a proof of employment such as contract of employment for the period for
which such workman or employee is claiming dues;
• evidence of notice demanding payment of unpaid dues and any documentary
or other proof that payment has not been made; or
• an order of a court or tribunal that has adjudicated upon the non-payment of
a dues, if any.
Claims by Other Creditors (Regulation 9A) 4.11
1. Anyone claiming to be a creditor must provide Form F of the Schedule and
proof of their claim to the interim resolution professional or resolution
professional, unless they are exempt under Regulations 7, 8, or 9.
2. The following factors may be used to establish the validity of the creditor’s
claim mentioned in subsection (1):
(a) the records available with an information utility, if any; or

• a proof of employment such as contract of employment for the period for which such
workman or employee is claiming dues;
• evidence of notice demanding payment of unpaid dues and any documentary or other
proof that payment has not been made; or
• an order of a court or tribunal that has adjudicated upon the non-payment of a dues, if
any.
4.12
Manner of Submission of Claims

Operational Financial Workmen /
Creditors Creditors Employees
• Reg 7 • Reg 8 • Reg 9
• Form B • Form C • Form D
Representative of
Other Creditors
Workmen/Employees
• Reg 9 • Reg 9A
• Form E • Form F
Submission of Proof of
4.13
Claims (Regulation 12)
A creditor shall submit proof of his
claim on or before the last date
mentioned in the public
announcement. Where the creditor in sub-
regulation (2) is a financial
A creditor, who failed to submit creditor, it shall be included
proof of claim within the time in the committee from the
stipulated in the public date of admission of such
announcement, may submit proof claim.
of such claim to the interim
resolution professional or the
resolution professional, as the case
may be, till the approval of a
resolution plan by the committee.
VERIFICATION OF DETERMINATION OF 4.14
CLAIMS (REGULATION 13) AMOUNT OF CLAIM
(REGULATION 14)
The interim resolution Where the amount claimed by a
professional must verify all claims creditor is not precise or cannot be
within seven days from the last determined due to any contingency
or other reason, the interim
date of submission of claims and
resolution professional or the
maintain a list of creditors with resolution professional, as the case
names, amounts, and security may be, shall make the best estimate
interests. of the amount of the claim based on
the information available with him.
DEBT IN FOREIGN CURRENCY (REGULATION 15)
The claims denominated in foreign currency shall be valued in Indian

currency at the official exchange rate as on the fast
track commencement date
Committee with Only Operational Creditors (Regulation 16)
4.15
2. The following individuals shall

1.The make up the committee 3. Each member of
established pursuant to this the committee 4. A committee formed
committee under this regulation
must be regulation: - established in
accordance with this and its members shall
established in have the same rights,
line with this a) The top 18 operating creditors, rule shall be given
ranked by value, voting rights in powers, duties and
regulation obligations as a
when the proportion to the
b) One representative chosen by amount owed to each committee comprising
corporate financial creditors and
debtor has no all employees, other than those creditor or each
covered by clause (a), and representative's share its members, as the
financial case may be.
obligations or of the overall debt, as
when all of its c) One representative chosen by applicable.
creditors are all workers, other than those
related parties. covered by clause (a).
reditors;
Filings by the Interim Resolution Professional
(Regulation 17) 4.16
2.If the interim resolution professional

1. On or before the expiration of twenty – determines, based on the corporate
one days from the date of his appointment , debtor’s records and claims , that the fast
the interim resolution professional must track process is not applicable to the
submit a report to the adjucating authority corporate debtor, he must submit a
certifying the composition of the committee request to the adjudicating authority for
. an order converting the fast track process
to corporate insolvency resolution under
Chapter II of Part II of the code.
3. The process must follow the Insolvency

4. Within seven days of the report (s) being filed in and Bankrupcty Board of India (Insolvency
accordance with this Regulation , the interim Resolution Process for Corporate Persons)
resolution professional shall call the committee’s Regulations, 2016, if the adjucating
initial meeting . authority grants a request under sub –
regulation (2) and issues an order
converting fast track to corporate insolvency
resolution process.
4.17
When the RP considers necessary or when atleast 33% CoC
request for the same
Modalities of Meeting
Atleast 7 days’ notice to be sent, can be reduced to upto

24 hours by the CoC
Notice can be sent via electronic means
Notice to contain date, time and venue of the meeting
Members can attend the meeting through video conferencing

Contents of the Notice for Meeting (Regulation 21)
4.18
1. The notice must include all the information participants need to participate through video
conferencing or other audio and visual methods, as well as the location, the time and date of the
meeting, and the option available to them to do so.
2. The meeting notice must state that creditors may attend and cast votes either personally or through a
designated representative; however, they must notify the resolution professional in advance of the
meeting of the name of the designated representative who will attend and cast votes on their behalf.
3. The notice of the meeting must include an agenda that includes the following;
(i) a list of the matters to be discussed at the meeting;
(ii) a list of the topics that will be voted on at the meeting; and
(iii) copies of all documents that are pertinent to the topics that will be discussed and the topics that
will be voted on at the meeting.
4. The notice of the meeting shall

(a) specify the procedure and method for voting and the timetable, including the time period during
which the votes may be cast;
(b) provide the login ID and the details of a facility for generating passwords and for maintaining security
and casting an electronic vote in a secure manner; and
(c) provide the contact information of the person who will answer questions related to the voting.
4.19
Resolution Professional to act as the Chairperson, take roll calls at the commencement
of the meeting
Modalities of Meeting
Quorum – People having atleast 33% voting rights either in person or through
video conferencing
If the required quorum is not resent, the meeting shall automatically stand
adjourned at the same time and place on the next day
Minutes of the Meeting to be circulated to the members within 48 hours of

the conclusion of the meeting,
RP is required to seek a vote from the members of the committee who did not
participate in the meeting or did not vote at the meeting, if any, within 24 hours
from the circulation of the minutes
Once a vote on a resolution is cast by a member of the committee, such

member shall not be allowed to change it subsequently
4.20
The Resolution Professional must exercise due and reasonable care to:
(a) to safeguard the integrity of the meeting by ensuring sufficient security and identification
procedures;
(b) to ensure availability of proper video conferencing or other audio and visual equipment or
facilities for providing transmission of the communications for effective participation of the
participants at the meeting;
(c) to record proceedings and prepare the minutes of the meeting;
(d) to store for safekeeping and marking the physical recording(s) or other electronic
recording mechanism as part of the records of the corporate debtor;
(e) to ensure that no person other than the intended participants attends or has access to the
proceedings of the meeting through video conferencing or other audio and visual means; and
(f) to ensure that participants attending the meeting through audio and visual means are able
to hear and see, if applicable, the other participants clearly during the course of the meeting:
4.21
Registered Valuer (Regulation 26)

Ineligible persons –
a relative of the resolution
professional;
To be appointed Is required to a related party of the corporate
debtor;
by the RP within determine the fair
an auditor of the corporate
value and the debtor at any time during the five
7 days of their liquidation value of years preceding the insolvency
appointment the corporate debtor
commencement date;
a partner or director of the
insolvency professional entity of
which the resolution professional
is a partner or director.
4.22
Transfer of Debt Due to
Creditors (Regulation 27)
1. Both parties must inform the

interim resolution professional
or the resolution professional,
2. Within two days of any
as applicable, of the terms of
resulting change in the
any assignment or transfer and
committee, the resolution
the name of the assignee or
professional shall notify each
transferee in the event that a
creditor and the adjudicating
creditor assigns or transfers the
authority.
debt due to such creditor to any
other person during the fast
track process period.
4.23
1. If the resolution professional believes that a sale is required for a
greater realization of value given the facts and circumstances of the
case, he may sell any unencumbered assets of the corporate debtor
other than in the normal course of business, upto 10% of all claims
accepted by the resolution professionals.
Sale of Assets Outside the Ordinary

Course of Business (Regulation 28)
3. Regardless of the terms of the corporate

debtor’s constitution, shareholders
2. The committee’s consent is necessary agreement , joint venture agreement , or any
before any asset sales made pursuant to other similar document, a bona fide
this regulation. purchaser of assets sold under this Regulation
shall have a free and marketable title to such
assets.
Fast Track Process Cost (Regulation 30) 4.24
• Interim Finance
• Resolution Professional Fees
1.
• Cost incurred by the RP in running the business of the

Corporate Debtor
2. • costs incurred by the Government to facilitate the process
• Amount due to suppliers of Essential Goods

• other costs directly relating to the fast track process and
3. approved by the committee.
4.25
Essential Supply IRP Cost RP Cost

• Regulation 31 • Regulation 32 • Regulation 33
• Electricity • To be fixed by the • To be fixed by the RP

Applicant
• Water
• If the applicant fails,
• Telecommunication to be fixed by the
NCLT
• IT services
Fair Value and LiquidationValue (Regulation 34) 4.26
 1. Following a physical inspection of the company's inventory and fixed

assets, the registered valuer shall provide the resolution professional with an
estimate of the fair value and the liquidation value of the assets of the
corporate debtor.
 2. After receiving resolution plans in accordance with

the Code and these regulations, the resolution
professional shall provide the fair value and the  3. The fair value and
liquidation value to each member of the committee in liquidation value must remain
electronic form, upon receipt of an undertaking from confidential, according to the
the member to the effect that such member shall resolution professional and
maintain confidentiality of the fair value and the registered valuer.
liquidation value and shall not use such values to cause
a disproportionate gain or disproportionate loss to
itself or any other party.
To be prepared by the RP and given to each member within 2 weeks of appointment 4.27
Shall contain information like –
Assets and liabilities with such description, as on the insolvency commencement date
the latest annual financial statements
a list of creditors and the amounts claimed by them
the number of workers and employees and liabilities of the corporate debtor towards them;
the names and addresses of the members or partners holding at least one per cent stake
Information Memorandum (Regulation 35)

Invitation of Resolution Plans (Regulation 35A)
4.28
1.The resolution professional 2. If the evaluation matrix is not 3. With the committee's
must send invitations to included in the invitation, the permission and within the time
prospective resolution resolution professional must frames specified in sub-
applicants, along with an provide it to the potential regulation (1) or (2), as
evaluation matrix, at least applicants for a resolution at applicable, the resolution
fifteen days before the deadline least eight days before the professional may change the
for submitting resolution plans. deadline for submitting invitation, the evaluation
resolution proposals, with the matrix, or both.
committee's agreement.
4. The deadlines outlined in this regulation shall not apply to 5. The resolution professional must
an ongoing fast track corporate insolvency resolution post brief information about the
process in the following situations: invitation in Form G of the Schedule
(a) where there are less than 22 days left to submit in two places: (a) on the corporate
resolution plans under subr egulation (1); debtor's website, if one exists; and
(b) where there are fewer than 11 days left to submit (b) on any websites the Board has
resolution plans under sub regulation (2). authorised for this purpose.
 The said Regulation was inserted by by Notification No. IBBI/2017-18/ GN/REG025, dated 7th
February, 2018.
Resolution Plan (Regulation 36)
4.29
 a) Transfer of all or part of assets of the corporate debtor to one or more persons;
 b) sale of all or part of the assets whether subject to any security interest or not;
 c) the substantial acquisition of shares of the corporate debtor, or the merger or

consolidation of the corporate debtor with one or more persons;
 d) satisfaction or modification of any security interest;
 e) curing or waiving of any breach of the terms of any debt due from the
corporate debtor;
 f) reduction in the amount payable to the creditors;

4.30
 g) extension of a maturity date or a change in interest rate or other terms of a debt
due from the corporate debtor;
 h) amendment of the constitutional documents of the corporate debtor;
 i) issuance of securities of the corporate debtor, for cash, property, securities, or in

exchange for claims or interests, or other appropriate purpose;
 j) change in portfolio of goods or services produced or rendered by the corporate

debtor;
 k) change in technology used by the corporate debtor; and
 l) obtaining necessary approvals from the Central and State Governments and other
authorities.
Resolution Plan – Mandatory Content 4.31
(Regulation 37)
1. Fast Track CIRP Cost a) the term of the plan
2. Debts Due to and its implementation
Operational Creditors schedule
to be paid in priority, b) the management and
details of the resolution
within 30 days of control of the business
applicant and other
approval of the corporate debtor
connected persons
3. Debts due to during its term;
Dissenting Financial c) adequate means for
Creditor to be paid in supervising its
priority implementation
4.32
Approval of Resolution Plan (Reg 38)
RP to submit the
resolution plan RP to send a copy of
The RP to submit to
approved by the the order of the
the committee all
committee to the Adjudicating Authority
resolution plans which
Adjudicating approving or rejecting
comply with the
Authority, at least 15 a resolution plan to the
requirements of the
days before the expiry participants and the
Code
of the maximum resolution applicant
period permitted
Extension of the Fast Track Process Period 4.33
(Regulation 39)
1. The committee is of the opinion that the fast track process

cannot be completed within the stipulated 90 days, it may
instruct the resolution professional to make an application to
the adjudicating authority under section 56 to extend the fast
track process period.
2. The resolution professional shall, on receiving an

instruction from the committee under this regulation, make
an application to the adjudicating authority for such extension
Insolvency and Bankruptcy
Liquidation on failure of CIRP
5.1
1. Where the Adjudicating
Authority does not receive a 2. Where the Adjudicating
resolution plan before the Authority rejects the resolution
expiry of Corporate Insolvency plan for non-compliance of
Resolution Process or Fast requirements under Section 31
Track Insolvency Process under of the Code
the Code
WHEN CAN LIQUIDATION BE

ORDERED
3. Where, at any time before

confirmation of resolution
plan, including at any time
4. Where the corporate debtor
before the preparation of the
contravenes the terms of the
information memorandum, the
resolution plan
committee of creditors resolve
to liquidate the corporate
debtor
5.2
5.3
*
5.4
 Powers to vest in liquidator – On the appointment of a liquidator pursuant

to section 34, all authority formerly held by the board of directors, key
managerial personnel, and partners of the corporate debtor, as applicable,
shall cease to exist and shall be vested in the liquidator, according to
section 34(2).
 Personnel of corporate debtor to extend all assistance and cooperation

to the liquidator –The provisions of section 19 shall apply in relation to the
voluntary liquidation process as they apply in relation to the liquidation
process, with references to the liquidator being substituted for references
to the interim resolution professional, according to section 34(3), which
requires the employees of the corporate debtor to provide the liquidator
with all assistance and cooperation that may be required by him in
managing the affairs of the corporate debtor.
 Replacement of resolution professional- The replacement of the

resolution professional is provided for in subsection (4) of section 34.
PUBLIC ANNOUNCEMENT BY LIQUIDATOR 5.5
 The Liquidator shall cause Public Announcement to be published via following mediums:
• any other location where, in the opinion of the liquidator, the corporate debtor
undertakes significant business operations; in one English and one regional language
newspaper with broad circulation at the location of the corporate debtor's registered
office and principal office, if any;
• on the website, if any, of the corporate debtor; and
• on the website, if any, designated by the Board for this purpose
 Fees for conduct of Liquidation - The fee payable to the liquidator must
be in accordance with the decision taken by the Committee of Creditors.
In cases where the Committee of Creditors has not set a fee for the
liquidator, the Consultation Committee may do so at its first meeting.
Consultation Committee means Stakeholders Consultation Committee.
REPORTING 5.6
(iii) Upon receipt of the

following information, the
liquidator must also make
the aforementioned reports
• Preliminary and minutes available to a
Report (ii) For eight years
stakeholder in either
• Asset physical or electronic form:
following the
Memorandum • an application in writing;
corporate debtor's
• costs of making such
• Progress Report dissolution, the
reports and minutes
• Asset Sale Report liquidator must keep
available to it; and
• Minutes of both a physical and an
• an undertaking from the
consultation with electronic copy of the
stakeholder that it shall
aforementioned
stakeholders maintain confidentiality
reports and minutes.
• Final Report of such reports and
prior to minutes and shall not use
dissolution these to cause an undue
gain or undue loss to
itself or any other person
Preliminary Report
5.7
According to Regulation 13 of the liquidation Regulation , the liquidator must
present the corporate person with a Preliminary Report within 75 days of the
liquidation commencement date that includes information regarding;
a. the capital structure of the corporate person;
b. the estimates of its assets and liabilities as on the liquidation commencement

date based on the books of the corporate person;
c. Whether he intends to make any futher inquiry in to any matter relating to the
promotion , formation or failure of the corporate person or the conduct of the
business thereof; and
d. The proposed plan of action for carrying out the liquidation, including the
timeline within which the proposes to carry it out and the estimated liquidation
costs.
5.8
 Progress Report
Time Period for submission of Progress Report: The liquidator must provide the Adjudicating
Authority and the Board with progress reports in accordance with Regulation 15(1) of the
Liquidation Regulations.
• The First Progress Report within fifteen days after the end of the quarter in which he is
appointed.
• The subsequent Progress Report within fifteen days after the end of every quarter during
which he acts as liquidator.
Content of the Progress Report:As per Regulation 15(2) of the Liquidation Regulations, a
Progress Report shall provide all the following information relevant to liquidation:
• Appointment, tenure of appointment and cessation of appointment of professionals;
• Statement indicating progress in liquidation; h Details of fee or remuneration;
• Developments in any material litigation, by or against the corporate debtor;
• Filing of and developments in applications for avoidance of transactions and;
• changes, if any, in estimated liquidation costs;
A Progress Report must include an account kept by the liquidator that details his receipts and
payments for the quarter as well as the total amount of his receipts and payments since the
start of the liquidation, in accordance with Regulation 15(3) of the Liquidation Regulations.
 Asset Memorandum 5.9
According to Regulation 34 of the Liquidation Regulation, the Asset Memorandum

prepared by the Liquidator shall contain the following details:
• value of the asset, valued in accordance with Regulation 35 of the Liquidation
Regulations;
• value of the assets or business, valued in accordance with Regulation 35 of the
Liquidation Regulations;
• intended manner and mode of sale of assets or business and reasons for the same;
• expected amount of realization from sale; and
• any other information that may be relevant for the sale of the asset.
 Asset Sale Report
• realized value;
• cost of realization;
• manner and mode of sale;
• if the value realized is less than the value in the asset
memorandum, the reasons for the same;
• the person to whom the sale is made; and
• any other details of the sale.
* Powers and Duties of a 5.10
(Section35) Liquidator
to draw, accept, make and endorse any negotiable instruments in the name and
on behalf of the corporate debtor
to carry on the business of the corporate debtor for its beneficial

liquidation
to verify claims of all the creditors
to evaluate the assets and property of the corporate debtor
to investigate the financial affairs of the corporate debtor to determine

undervalued or preferential transaction
to invite and settle claims of creditors and claimants and distribute proceeds in
accordance with the provisions of this Code
5.11
What Included ? What Excluded?
tangible assets, whether movable or assets owned by a third party which are in
immovable possession of the corporate debtor
personal assets of any shareholder or partner of a

intangible assets corporate debtor
assets subject to the determination of assets of any Indian or foreign subsidiary of the
ownership by the court or authority corporate debtor
those assets of the corporate debtor in all sums due to any workmen or employee from
respect of which a secured creditor has the provident fund, the pension fund and the
relinquished security interest gratuity fund
assets over which the corporate debtor

has ownership rights, as evidenced in the Assets held under Bailment Contracts
balance sheet
all proceeds of liquidation as and when

they are realised.
 POWERS OF LIQUIDATOR TO ACCESS INFORMATION 5.12
• Power to access any information systems
(a) an information utility;
(b) credit information systems regulated under any law for the time being in force;
(c) any agency of the Central, State or Local Government including any registration
authorities;
(d) information systems for financial and non-financial liabilities regulated under any law for
the time being
(e) information systems for securities and assets posted as security interest regulated under
any law for the time being in force;
(f) any database maintained by the Board; and
(g) any other source as may be specified by the Board.

5.13
Time Limit for collection of claims?
Within a period of 30 days from the date of the commencement of the

liquidation process.
Withdrawal or variation of claims
Within a period of 14 days from the submission of such claims.

5.14
How do financial creditors submit their claims?
By providing a record of such claim with an information utility.
However, where the information relating to the claim is not recorded

in the information utility, the claim maybe submitted along with
supporting documents required to prove the claim.
How do Operational creditors submit their claims?
In such form and in such manner and along with such supporting
documents required to prove the claim as may be specified by the
Board.
5.15
* The liquidator shall verify the claims submitted

* within such time as specified by the Board.
* The liquidator may require any creditor or the
corporate debtor or any other person
* to produce any other document or evidence
* which he thinks necessary for the purpose of
verifying the whole or any part of the claim.
*
Admission / Rejection of claims – Section 40 5.16
The liquidator may admit the claims after proper

verification
If the liquidator rejects the claim, they shall record

the reasons for doing so in writing.
The decision to accept/ reject the claims must be

communicated to the claimant within 7 days
The liquidator shall determine the value of claims

admitted
DETERMINATION OF VALUATION OF CLAIMS
Section 41 provides that the liquidator shall determine the value of claims admitted
under section 40 in such manner as may be specified by the Insolvency and
Bankruptcy Board of India.
5.17
Appeal
against
the
Liquidator’s
decision
Section 42
5.18
LIST OF STAKEHOLDERS
 The liquidator shall file the list of

stakeholders with the Adjudicating
Authority within forty-five days from the
 On the basis of proofs of claims presented last date for receipt of the claims. The
and accepted in accordance with these list of stakeholders, as modified from
Regulations, the liquidator shall compile a time to time, shall be:
list of stakeholders, referencing:  available for inspection by the persons
 amounts of claim admitted who submitted proofs of claim;
 extent to which the debts or dues are  available for inspection by members,
secured or unsecured, if applicable partners, directors and guarantors of the
 details of the stakeholders, and he corporate debtor;
proofs admitted or rejected in part, and  displayed on the website, if any, of the
the proofs wholly rejected. corporate debtor; and
 filed on the electronic platform of the
Board for dissemination on its website.
Financial creditor, 5.19
Liquidator to receive
operational creditor or Creditor may withdraw or
claims within 30 days
creditor (partly financial vary its claim within 14 days
from liquidation c o m m
and partly operational) of its submission
e n c e m e n t date
may submit their claims
Liquidator shall communicate

Liquidator to verify the The liquidator may, after
his decision of admission or
claims received within 30 verification of claims,
rejection of claim within 7
days from the last date either admit or reject the
days of such admission or
of receipt of claims claim, in whole or in part
rejection
Creditor may appeal to Adjudicating

Authority against the decision of the
Liquidator shall determine
liquidator accepting or rejecting the
the value of claims admitted
claims within 14 days of receipt of such
decision
STAKEHOLDERS CONSULTATION COMMITTEE 5.20
 Scope of Stakeholders
 Chairman of
Consultation Committee:
Stakeholders
 Constitution of The Stakeholders Consultation
Consultation
Stakeholders Committee should advise the
Committee:
Consultation Liquidator on the following
The liquidator shall preside
Committee: issues:
over meetings of the
In accordance with • compensation of
Stakeholders Consultation
Regulation 31A of the professionals hired by the
Committee and record
Liquidation Regulations, Liquidator;
minutes of the
the liquidator shall, within • method of sale, pre-bid
proceedings. The first
sixty days of the requirements, reserve
meeting of the
liquidation price, marketing plan, and
Stakeholders Consultation
commencement date, auction process;
Committee must be
establish a Stakeholders • fees of the liquidator;
scheduled by the liquidator
Consultation Committee • valuation;
no later than seven days
consisting of all of the • method in which
after the start of the
corporate debtor's proceedings in respect of
liquidation. As necessary,
creditors based on the list preferential transactions,
he may also schedule extra
of stakeholders. undervalued transaction,
meetings in response to
extortionate credit
requests from one or more
transaction, or fraudulent
consultation committee
or wrongful trading, if any,
members.
shall be conducted.
5.21
5.22
Preferential Transactions
Section 43
Exception? Orders ?
require any property transferred in
What? connection with the giving of the
Transfer of properties or any Transactions done in good preference to be vested in the
faith and for value corporate debtor;
interest thereof given during
the relevant time to a person require any property to be so vested
if it represents the application either
for the benefit of a creditor, of the proceeds of sale of property so
surety or guarantor on account Relevant Time? transferred or of money so
of antecedent debt or other transferred;
liabilities For a related party (other release or discharge of any security
interest created by the corporate
Such Transfer having the than by reason only of being debtor;
effect of putting such creditor, an employee) – 2 years require any person to pay such sums
surety or guarantor in a better preceding the insolvency in respect of benefits received by him
position than the position commencement date from the corporate debtor, as the
which they would have been For a person other than a
NCLT may direct;
in had the transfer not been direct for providing security or charge
related party – 1 year
made preceding the insolvency
on any property for the discharge of
any financial debt or operational debt
commencement date under the order;
5.23
Undervalued Transactions
Section 45
Orders ?
require any property
What?
transferred as part of the
a gift to a person; Relevant Time? transaction, to be vested in
a transaction with a person the corporate debtor;
which involves the transfer of For a related party (other release or discharge any
one or more assets by the than by reason only of being security interest granted by
corporate debtor for a an employee) – 2 years the corporate debtor;
consideration the value of preceding the insolvency require any person to pay
which is significantly less than commencement date certain sums, in respect of
the value of the consideration
For a person other than a benefits received by such
provided by the corporate
related party – 1 year person, to the liquidator or
debtor, given that the
preceding the insolvency the resolution professional;
transaction had not been
entered into in the ordinary commencement date require the payment of such
course of business. consideration for the
transaction as may be
determined.
5.24
Transactions Defrauding Creditors
Section 49
Orders ?
What? restoring the position
transactions entered into as it existed before such
with the intention of transaction
prejudicing the interests of as if the transaction had
a person who has made or not been entered into; and
may make a claim against
the corporate debtor protecting the interests of
persons who are victims of
such transactions.
5.25
Extortionate Credit Transactions
Section 50
Orders ?
restore the position as it existed
prior to such transaction;
set aside the debt created on
account of the extortionate
What? Relevant Time? credit transaction
modify the terms of the
transaction;
Not defined in the 2 years preceding the require any person who is, or
Code; left for the IBBI Insolvency Commencement was, a party to the transaction
to decide. Date to repay any amount received by
such person; or
require any security interest
that was created as part of the
extortionate credit transaction
to be relinquished.
5.26
Options
Available
To
Secured
Creditors
* 5.27
the insolvency resolution process costs and the liquidation costs in full;
the following debts shall rank equally between and among the following
workmen’s dues for the period of 24 months preceding the liquidation commencement date; and
debts owed to a secured creditor in the event such secured creditor has relinquished security
wages and any unpaid dues owed to employees other than workmen for the period of twelve
months preceding the liquidation commencement date
financial debts owed to unsecured creditors;
the following dues shall rank equally between and among the following: -
•any amount due to the Central Government and the State Government in respect of the whole or any part of the period of two years preceding the liquidation
commencement date;
•debts owed to a secured creditor for any amount unpaid following the enforcement of security interest;
any remaining debts and dues

SALE OF CORPORATE DEBTOR AS A GOING CONCERN 5.28
(a) an asset on a standalone basis;
(b) the assets in a slump sale
(c) a set of assets collectively;
(d) the assets in parcels;
(e) the corporate debtor as a going concern; or
(f) the business(s) of the corporate debtor as a going concern

5.29
Dissolution of Corporate Debtor

After the affairs of the corporate
debtor have been wound up and its
assets are completely liquidated, the
liquidator shall make an application to
the NCLT for the dissolution of the
corporate debtor
NCLT shall order that the corporate

debtor shall be dissolved from the date
of that order and the corporate debtor
shall be dissolved accordingly.
A copy of such order shall be filed

with the RoC within 7 days of
passing of such an order
Voluntary Liquidation
6.1
WHO MAY INIIATE VOLUNTARY
LIQUIDATION PROCEEDINGS
Who may initiate voluntary liquidation

proceedings?
As per Section 59(1) of the Code, a corporate
person who intends to liquidate itself
voluntarily and has not committed any default
may initiate voluntary liquidation proceedings
under the provisions of Chapter V of Part II of
the Code
6.2
Reasons for Voluntary Liquidation of Companies:
Not carrying
Commercially Running into
business No revenue
unviable losses
operations
Promoters unable to Purpose for which

manage affairs of the company was formed Contract termination
company accomplished
6.3
CONDITIONS FOR VOLUNTARY
LIQUIDATION
within four weeks of a
declaration under sub-clause (a),
there shall be –
i. a special resolution of the
A declaration from majority of members of the company in a
the directors of the company the declaration shall be general meeting requiring the
verified by an affidavit stating accompanied with the following company to be liquidated
that – documents: voluntarily and appointing an
1. they have made a full inquiry i. audited financial statements insolvency professional to act as
into the affairs of the company and record of business the liquidator; or
and they have formed an operations of the company for ii. a resolution of the members
opinion that either the company the previous two years or for of the company in a general
has no debt or that it will be the period since its meeting requiring the company
able to pay its debts in full from incorporation, whichever is to be liquidated voluntarily as a
the proceeds of assets to be later; result of expiry of the period of
sold in the voluntary liquidation; ii. a report of the valuation of its duration, if any, fixed by its
and the assets of the company, if any articles or on the occurrence of
2. the company is not being prepared by a registered valuer; any event in respect of which
liquidated to defraud any person the articles provide that the
company shall be dissolved, as
the case may be and appointing
an insolvency professional to act
as the liquidator.
6.4
When does a corporate person require approval of creditors for voluntary
liquidation process?
As per the proviso to Section 59(3) of the Code, if the company owes any debt to any
person, then creditors representing two-thirds in value of the debt to the company shall
approve the resolution passed at the general meeting, within seven days of such resolution
 Requirement of notification - According to subsection (4), the company must notify

the Registrar of Companies and the Board within seven days of the resolution under
subsection (3) to liquidate the company or, as the case may be, the subsequent approval
by the creditors.
 Date of Commencement of voluntary liquidation proceedings – Subsection (5)

states that the voluntary liquidation procedures for a corporation shall be regarded to
have started on the date the special resolution under sub-clause (c) of sub-section (3)
was passed, subject to the consent of the creditors under sub-section (3).
 Provisions to apply – With any amendments that may be required, the provisions of
sections 35 to 53 of Chapter III and Chapter VII shall apply to voluntary liquidation
procedures for corporate entities.[Section 59(6)]
 Application to Adjudicating Authority –According to subsection (7) of section 59,

the liquidator must submit an application to the adjudicating body for the dissolution of
the corporate entity when its affairs have been fully wound up and its assets fully
liquidated.
6.5
 Order by Adjudicating Authority - On the basis of an application submitted by the

liquidator pursuant to subsection (7), the Adjudicating Authority shall issue an order
directing the corporate debtor to be dissolved as of the date of the order, and the
company debtor shall be dissolved as a result of the order. [section 59(8)]
As a result, after the corporate debtor's affairs have been wound up and all of its assets
have been liquidated, the liquidator must apply to the adjudicating authority for the
corporate debtor's dissolution, and the adjudicating authority will then dissolve the
corporate debtor by order.
 Copy of Order –Within fourteen days of the order's date, a copy of any order made
under to subsection (8) must be sent to the organisation with which the corporate
person is registered.Article 59(9)
BROAD STEPS INVOLVED IN THE VOLUNTARY LIQUIDATION 6.6
Passing of special
resolution for approving
Submission of the proposal of voluntary Public Announcement
Declaration(s) to ROC, liquidation and inviting claims of all
stating that the appointment of liquidator, stakeholders, within five
company will be able within four weeks of the days of such approval, in
to pay its dues and is aforesaid declaration(s). If newspaper as well as on
not being liquidated to a corporate person owes website of the corporate
defraud any person; debts, approval of two- person;
third majority creditors
would also be required;
Preparation of
Preliminary Report Verification of claims,
about the capital within thirty days form
Intimation to the the last date for receipt of
structure, estimates of
ROC and the Board claims and preparation of
assets and liabilities,
about the approval, list of stakeholders, within
proposed plan of action
within seven days of forty-five days from the
etc., and submission of
such approval last date for receipt of
the same to a corporate
person within forty-five claims;
days of such Approval;
6.7
Opening of a bank
account in the name
Sale of assets, Distribution of the
of the corporate
recovery of monies proceeds from
person followed by
due to corporate realization within six
the words ‘in
person, realization of months from the
voluntary liquidation’,
uncalled capital or receipt of the
in a scheduled bank,
unpaid capital amount to the
for the receipt of all
contribution; stakeholders;
moneys due to the
corporate person;
Submission of Final Report by Submission of NCLT order

the liquidator to the corporate
regarding the dissolution, to
person, ROC and the Board
and application to the National the concerned ROC within
Company Law Tribunal (NCLT) fourteen days of the receipt
for the dissolution; of order.
 INSOLVENCY AND BANKRUPTCY BOARD OF INDIA 6.8
(VOLUNTARY LIQUIDATION PROCESS) REGULATIONS,
2017
On April 1st, 2017, the Insolvency and Bankruptcy Board of India (Voluntary Liquidation
Process) Regulations, 2017 (the "VL Regulations") took effect. The voluntary liquidation of
corporate persons pursuant to Chapter V of Part II of the 2016 Insolvency and Bankruptcy
Code shall be governed by these regulations. Below are some of the key clauses discussed:
 Initiation of Liquidation
1. According to Regulation 3 of the VL

Regulations, a corporate person's
liquidation proceedings must satisfy
the following requirements, without 2. Within seven days of the resolution
affecting Section 59(2) of the Code, or the subsequent approval by the
namely: creditors, as applicable, the corporate
(a) a declaration from majority of person shall notify the registrar and
(b) the declaration under sub-clause the Board about the resolution under
(a) shall be accompanied with the subparagraph (1) to liquidate the
following documents, namely: corporate person.
(c) within four weeks of a
declaration under sub-clause (a),
there shall be:
6.9
4. Each debt of the corporate person
3. A corporate person's liquidation as of that date must be listed in the
proceedings are assumed to have statement required by sub-regulation
started on the date the resolution (1)(a) or section 59(3)(a), which must
under sub-clause (c) of sub-regulation also say that the corporate person will
(1) was passed, subject to the approval be able to pay all of its debts in full
of the creditors under sub-regulation from the profits of assets to be sold in
(1). the liquidation.
EFFECT OF LIQUIDATION (Regulation

4 of VL Regulations)
1. The corporate person shall from the liquidation
commencement date cease to carry on its business
except as far as required for the beneficial winding
up of its business. 2. Notwithstanding the provisions
of sub-section (1), the corporate person shall
continue to exist until it is dissolved under section
59(8).
6.10
APPOINTMENT OF LIQUIDATOR
An insolvency professional shall be eligible to be appointed as a
liquidator if he, and every partner or director of the insolvency
professional entity of which he is a partner or director is
independent of the corporate person.
An insolvency professional shall not be eligible to be appointed as

a liquidator if he, or the insolvency professional entity of which
he is a partner or director is under a restraint order of the
Board.
A liquidator shall disclose the existence of any pecuniary or

personal relationship with the concerned corporate person or
any of its stakeholders as soon as he becomes aware of it, to the
Board and the registrar
An insolvency professional shall not continue as a liquidator if the

insolvency professional entity of which he is a director or partner,
or any other partner or director of such insolvency professional
entity represents any other stakeholder in the same liquidation.
6.11
Public Announcement by Liquidator
Regulation 14 of the VL Regulations contains provisions relating to making public

announcements of the voluntary liquidation process of the corporate debtor. It states
that the liquidator shall make public announcements in Form A of the VL Regulations,
calling upon the claims from the stakeholders within five days of the commencement
date of the liquidation.
If there is a registered office and/or principal office for the corporate person, as
applicable, as well as any other location where, in the liquidator's opinion, the
corporate person conducts significant business operations, such public announcement
shall be published in one English and one regional language newspaper with wide
circulation in those locations.
6.12
Preliminary Report Annual Status Report
Reports to be
submitted by
the Liquidator
Minutes of
Consultation with Final Report
Stakeholders
Preliminary Report 6.13
The capital structure of the corporate

person;
The estimate of its assets and liabilities

as on the liquidation commencement
date based on the books of the
corporate person:
Whether he intends to make any

future inquiry in to any matter realting
to the promotion , formation or failure
of the corporate person or the conduct
of the business thereof ; and
The proposed plan of action for

carrying out the liquidation , including
the timeline within which he proposes
to carry it out and the estimated
liquidation costs.
Proof of Security Interest 6.14
the records available in an information utility;
certificate of registration of charge issued by the Registrar of

Companies;
proof of registration of charge with the Central Registry of Securitisation

Asset Reconstruction and Security Interest of India; or
other relevant documents which adequately establish the security interest.

When will the person who is seeking to prove debt against corporate 6.15
debtor shall produce bills of exchange, promissory note and other
negotiable instrument?
As per Regulation 21 of IBBI (Voluntary Liquidation Process) Regulations, 2017

where a person seeks to prove a debt in respect of a bill of exchange, promissory
note or other negotiable instrument or security of a like nature for which the
corporate person is liable, such bill of exchange, note, instrument or security, shall
be produced before the liquidator before the claim is admitted.
 Substantiation of claims - In accordance with Regulation 22 of the VL

Regulations, the liquidator may request additional information from a claimant to
substantiate all or a portion of the claim.
 Determination of amount of claim -In accordance with Regulation 24 of the VL

Regulations, the liquidator shall make the best estimate of the amount of the claim
based on consultation with the claimant and the corporate person and the
information at his disposal when the amount claimed by a claimant is not precise due
to any contingency or other reason.
6.16
 Verification of claims - In accordance with VL Regulation 29:1. In accordance with

Section 40 of the Code, the liquidator must verify all claims received within thirty days
of the deadline for claims submission. He or she may then accept or reject the claim,
in whole or in part, depending on the circumstances.2. In accordance with Section 42
of the Code, a creditor may file an appeal against the liquidator's judgement with the
adjudicating authority.
 Manner of sale - According to Regulation 31 of the VL Regulations, the liquidator

may appraise and sell the corporate person's assets in accordance with the corporate
person's approval and any applicable statutory requirements.
In Viyes Consultancy (P.) Ltd. vs. Registrar of Companies, NCLT held that when
no claims were received pursuant to public announcement made by the liquidator and
all the compliances were duly made under Section 59, the Tribunal held the company to
be liquidated.
6.17
PROCEEDS OF LIQUIDATION
AND DISTRIBUTION OF
PROCEEDS
In the event of the
liquidation process
continuing for more
than twelve months,
the liquidator shall
The liquidator shall hold a meeting of the
The liquidator shall
endeavor to complete contributories of the
distribute the
The liquidation costs the liquidation corporate person
proceeds from
shall be deducted process of the within fifteen days
realization within six
before such corporate person from the end of the
months from the
distribution is made within twelve months twelve months from
receipt of the amount
from the liquidation the liquidation
to the stakeholders
commencement date. commencement date,
and at the end every
succeeding twelve
months till dissolution
of the corporate
person
6.18
FINAL REPORT
On completion of the liquidation process, the liquidator shall prepare the
Final Report consisting of –
a. audited accounts of the liquidation, showing receipts and payments

pertaining to liquidation since the liquidation commencement date;
b. a statement demonstrating that:

• the assets of the corporate person has been disposed of;
• the debt of the corporate person has been discharged to the
satisfaction of the creditors;
• no litigation is pending against the corporate person or sufficient
provision has been made to meet the obligations arising from any
pending litigation.
a. a sale statement in respect of all assets containing details with respect to

their realized value, cost of realization, the manner and mode of sale, an
explanation for the shortfall, if the value realized is less than the value
assigned by the registered valuer in the report of the valuation of assets
etc.
FLOWCHART – VOLUNTARY LIQUIDATION PROCESS 6.19
• To approve Voluntary Liquidation.

• To approve declaration of Solvency.
Convening a Board • For appointment of Liquidator and registered
Meeting valuer (subject to shareholder’s approval).
• To approve notice of EGM considering voluntary
liquidation.
Filing declaration of solvency with

ROC, verified by an affidavit to be • To be accompanied by latest two years audited
provided by majority of directors/ financial statements or for a period since
designated partners (T) incorporation as the case may be.
• Report of valuation of the company if any by
registered valuer.
Sending notice of EGM (to be

held within 4 weeks of filing
declaration of solvency)
• To approve voluntary liquidation.

Convening EGM (T+28) (i.e.
• To appoint liquidator and fix his remuneration.
voluntary liquidation
commencement date)
6.20
Approval from creditors • To be made:
representing 2/3rd of value of 1. In English and Regional daily (T+28+5);
debt (T+28+7) 2. On the website of corporate debtor;
3.At public.and@ibbi.gov.in.
• To be made within 5 days from the date of his
appointment.
• To specify the last date of claim which shall be
To make a public announcement in
30 days from liquidation commencement date.
FORM A (T+28+5)
Intimation of resolution to IBBI

and ROC (T+28+7)
Opening of bank account followed • For receiving realization amount to pay

by the words: In liquidation liquidation cost.
6.21
Receipt of claims and preparing a • Last date within 30 days from insolvency
list of stakeholders (T+30) commencement date.
Submission of Preliminary Report • Within 45 days from voluntary liquidation

(T+45) commencement date.
Within six months from the receipt of amount to

Distribution of assets
stakeholders.
Within 12 months from liquidation process

Completion of liquidation within
commencement date (In the event of continuing
270/90 days , as the case may be
for more than 12 months hold a meeting within 15
days from the end of 12 months).
• Liquidator shall apply to NCLT for an order to

Unclaimed proceeds of liquidation
pay into the Companies Liquidation Account in
or undistributed assets
the public account of India any unclaimed
proceeds on the date of order of dissolution
• Any retained amount by the liquidator paid in
the companies liquidation account along with an
interest @12%p.a.
6.22
Submission of final report to ROC,
IBBI and NCLT
Application to NCLT for

dissolution of corporate person
Copy of order to be submitted

to the authority with which the Within 14 days from the date of such order.
corporate person is registered
Adjudication and Appeals for

Corporate Persons
7.1
Adjudicating Authority – NCLT

Section 60
State Bank of India v/s.
D.S Rajendra Kumar-
If CIRP of corporate M/s. Fortune Plastech
Sanjeev Shriya v/s.
debtor has been v/s. M/s. Avni Energy
State Bank of India –
initiated before NCLT, Solutions Private
wo parallel proceeding Limited –
then insolvency
against the corporate
resolution process of The petition has to be
debtor and the
personal guarantor of filed with the NCLT
personal guarantor
the corporate debtor within whose
cannot go
can be initiated before jurisdiction the
simultaneously in two
same NCLT Bench registered office of the
different jurisdictions
instead of Debt company comes
Recovery Tribunal
(“DRT”)
7.2
Jurisdiction of NCLT
Any claim made by or
any application or against the corporate
proceeding by or debtor or corporate
person, including claims
against the by or against any of its
corporate debtor or subsidiaries situated in
corporate person; India ; and
any question of priorities or any

question of law or facts , arising
out of or in relation to the
insolvency resolution or
liquidation proceedings of the
corporate debtor or corporate
person under this Code.
7.3
Appellate Appeal to the

Authority – NCLAT Supreme Court
Section 61 Section 62
• To be filed within 30 • To be filed within 45
days. The NCLAT may days. The NCLAT may
give an extension of give an extension of
15 days if they deem 15 days if they deem
fit. fit.
Grounds for filing an Appeal against an 7.4
order approving a resolution plan The approved resolution plan is in contravention of the
provisions of any law for the time being in force;
There has been material irregularity in exercise of the

under Section 31
powers by the resolution professional during the

corporate insolvency resolution period
The debts owed to operational creditors of the

corporate debtor have not been provided for in the
resolution plan in the manner specified by the IBBI
The insolvency resolution process costs have not been

provided for repayment in priority to all other debts;
The resolution plan does not comply with any other criteria
specified by the Board.
* NCLT BENCHES & THEIR JURISDICTION 7.5
Sr. No. Name of bench Location Territorial jurisdiction

of the bench
1. a) National Company Law New Delhi 1. Union territory of
Tribunal, Principal Bench. Delhi.
b) National Company Law
Tribunal, New Delhi Bench
2. National Company Law Ahmedabad 1. State of Gujarat.
Tribunal, Ahmedabad 2. Union territory of
Bench Dadra and Nagar
Haveli.
3. Union territory of
Daman and Diu
3. National Company Law allahabad 1. State of Uttar
Tribunal, Allahabad Pradesh.
Bench. 2. State of
Uttarakhand.
4. National Company Law Bengaluru . 1. State of Karnataka.
Tribunal, Bengaluru
Bench.
5. National Company Law Chandigarh 7.6
1. State of Himachal Pradesh.
Tribunal, Chandigarh 2. State of Jammu and
Bench Kashmir. 3. State of Punjab.
4. Union territory of
Chandigarh. 5. State of
Haryana.
6. National Company Law Chennai 1. State of Tamil Nadu. 2.
Tribunal, Chennai Bench Union territory of Puducherry
7. National Company Law Cuttack 1. State of Chattisgarh

Tribunal, Cuttack Bench. 2. State of Odisha
8. National Company Law Guwahati 1. State of Arunachal

Tribunal, Guwahati Pradesh.
Bench. 2. State of Assam.
3. State of Manipur.
4. State of Mizoram.
5. State of Meghalaya.
6. State of Nagaland.
7. State of Sikkim.
8. State of Tripura
9. National Company Law Hyderabad Hyderabad
Tribunal, Hyderabad
Bench.
10. National Company Law Jaipur 1. State of Rajasthan. 7.7
Tribunal, Jaipur Bench.
11. National Company Law Kolkata 1. State of Bihar. 2. State

Tribunal, Kolkata Bench. of Jharkhand. 3. State of
West Bengal. 4. Union
territory of Andaman and
Nicobar islands.
12. National Company Law Mumbai 1. State of Goa.
Tribunal, Mumbai Bench. 2. State of Maharashtra
Mumbai
13. National Company Law Kochi 1. State of Kerala

Tribunal, Kochi Bench. 2. Union territory of
Lakshadweep
14. National Company Law Indore 1. State of Madhya Pradesh

Tribunal, Indore Bench.
15. National Company Law Amravati 1. State of Andhra Pradesh

Tribunal, Amravati Bench.
i. NCLT/NCLAT can exercise jurisdiction under section 60(5)(c) of the
Code to stay termination of contracts solely on account of CIRP being
initiated against the CD. 7.8
ii. NCLT has the jurisdiction to adjudicate disputes, which arise solely
from or which relate to the insolvency of the CD; however, in doing so,
In case of the NCLT and NCLAT must ensure that they do not usurp the legitimate
Gujarat Urja jurisdiction of other courts and tribunals.
Vikas Nigam
Ltd. Vs. Amit iii. RP can approach the NCLT for adjudication of disputes that are
related to the insolvency resolution process. However, for adjudication
Gupta & Ors.
of disputes out of the insolvency, the RP must approach the competent
[Civil Appeal authority.
No. 9241 of
2019] SC iv. NCLT cannot do what the Code consciously did not provide it the
order dt. power to do.
08.03.2021,
v. The jurisdiction of the NCLT cannot be invoked in matters where a
Court held termination may take place on grounds unrelated to the insolvency of
that the CD.
vi. It cannot even be invoked in the event of a legitimate termination

of a contract based on an ipso facto clause, if such termination will not
have the effect of making certain the death of the CD.
vii. NCLT to be cautious in setting aside valid contractual terminations

which would merely dilute the value of the CD, and not push it to its
corporate death.
7.9
CIVIL COURT NOT TO HAVE JURISDICTION
Section 63 of the Insolvency and Bankruptcy Code, 2016 provides that
no civil court or authority shall have jurisdiction to entertain any suit or
proceedings in respect of any matter on which NCLT/NCLAT has
jurisdiction under this Code.
Section 64 of the insolvency and Bankruptcy Code, 2016 provides that where an
application is not disposed of or order is not passed within the timelines
specified, then NCLT/NCLAT shall record the reasons for not doing so and the
President of NCLT or Chairperson of NCLAT, after taking into account the
reasons so recorded, extend the period specified in the Insolvency and
Bankruptcy Code, 2016 but not exceeding ten days.
*
7.10
Fraudulent or malicious initiation of
proceedings
Section 65
if any person
if any person
initiates the
initiates voluntary Unigreen Global
insolvency resolution
liquidation Private Limited v/s.
process or liquidation
proceedings with the Punjab National Bank
proceedings
intent to defraud any –
fraudulently or with
person- Principles of Natural
malicious intent–
a penalty which shall Justice have to be
a penalty which shall
not be less than One followed while
not be less than One
Lakh Rupees, but passing an order
Lakh Rupees, but
may extend to One under this section
may extend to One
Crore Rupees
Crore Rupees
7.11
What Action can be taken for fraudulent trading or wrongful trading?
As per Section 66 of the Code, If during the corporate insolvency resolution process or a
liquidation process, it is found that any business of the corporate debtor has been carried on
with intent to defraud creditors of the corporate debtor or for any fraudulent purpose, the
Adjudicating Authority may on the application of the resolution professional pass an order
that any persons who were knowingly parties to the carrying on of the business in such
manner shall be liable to make such contributions to the assets of the corporate debtor as it
may deem fit.
 In case of, Axis Bank Ltd. vs. Anuj Jain [CA (AT) (Ins.) No. 243 of 2018 and Ors.]
NCLAT order dt. 01.08.2019, the AA had allowed the application under sections
66, 43 and 45 of the Code and ordered that the mortgaged properties be vested
with the CD. On appeal, the NCLAT noted that the mortgages were made in
favour of the banks and financial institutions by the CD in the ordinary course
of business. Further, in absence of any contrary evidence to show that they
were made to defraud the creditors of the CD or for any fraudulent purpose, it
set aside the order of the AA.
7.12
Section 67 of the Insolvency and Bankruptcy Code, 2016 provides that where the
Adjudicating Authority passes an order under sub-section (1) or subsection (2) of
section 66, as the case may be, it may give such further directions as it may
deem appropriate for giving effect to the order, and in particular, the
Adjudicating Authority may
(a) provide for the liability of any

person under the order to be a charge
on any debt or obligation due from the (b) from time to time, make
corporate debtor to him, or on any such further directions as
mortgage or charge or any interest in a may be necessary for
mortgage or charge on assets of the enforcing any charge
corporate debtor held by or vested in imposed under this section.
him, or any person on his behalf, or any
person claiming as assignee from or
through the person liable or any person
acting on his behalf; and
7.13
FRAUDULENT MANAGEMENT OF CORPORATE DEBTOR DURING PRE-
PACKAGED INSOLVENCY RESOLUTION PROCESS
Section 67A of the Insolvency and Bankruptcy Code, 2016 inserted by way of
the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2021
provides that when an officer of the corporate debtor manages its affairs
with the intent to defraud the corporate debtor’s creditors or for any other
fraudulent purpose on or after the pre-packaged insolvency commencement
date, AA may upon application by the resolution professional, pass an order
imposing upon any such officer a penalty that shall not be less than one
lakh rupees but may extend to one crore rupees.
7.14
*
7.15
Application by financial creditor (Rule 4) – Form I
Interim resolution professional (Rule 9) – Form 2
Demand notice by operational creditor (Rule 5) – Form 3 along with a copy

of Invoice in Form 4
Application by Operational creditor (Rule 6) – Form 5
Application by Corporate Applicant (Rule 7) – Form 6
Withdrawal of application (Rule 8)
Filling of application and application fee (Rule 10)

7.16
Application by financial creditor (Rule 4)
A financial creditor If the applicant The applicant must If financial

must submit Form 1 described in rule immediately send a creditors
along with the (1) is the assignee copy of the submit the
documents and or transferee of a application application
records specified in financial contract, submitted to the jointly , they
the Insolvency and the application adjudicating may
Bankruptcy Board of must be authority to trhe designate
India's Insolvency accompanised by a corporate debtor’s one of them
Resolution Process copy of the registered office to represent
for Corporate assignment or through registered them .
Persons) Regulations, transfer agreement or expenditure
2016 in order to as well as any mail.
begin the corporate other pertinent
insolvency resolution paperwork to
process against a support the
corporate debtor assignment or
under Section 7 of transfer .
the Code.
7.17
In the matter of Dena Bank (now Bank of Baroda) Vs. C.

Shivakumar Reddy and Anr., Supreme Court held that since a
Financial Creditor is required to apply under Section 7 of the Code in
Form 1, the Financial Creditor can only fill in particulars as specified
in the various columns of the Form. There is no scope for elaborate
pleadings. An application to the Adjudicating Authority under Section
7 of the Code in the prescribed form, cannot therefore, be compared
with the plaint in a suit Supreme Court also held that an application
under Section 7 of the Code would not be barred by limitation on the
ground that it had been filed beyond a period of three years from the
date of declaration of the loan account of the Corporate Debtor as
Non-Performing Asset, if there were an acknowledgement of the debt
by the Corporate Debtor before expiry of the period of limitation of
three years, in which case the period of limitation would get
extended by a further period of three years.
Demand notice by operational creditor (Rule 5)
7.18
2. The demand notice or the
1. An operational creditor copy of the invoice
demanding payment referred
3. A copy of demand
shall deliver to the
corporate debtor, the to in sub- section (2) of notice or invoice
following documents, section 8 of the Code, may be demanding payment
namely.- delivered to the corporate served under this rule by
debtor, an operational creditor
a. at the registered office by shall also be filed with an
a. a demand notice in information utility, if any.
hand, registered post or speed
Form 3; or
post with acknowledgement
due; or
a. b. a copy of an invoice
b. by electronic mail service to
attached with a notice
a whole time director or
in Form 4.
designated partner or key
managerial personnel, if any, of
the corporate debtor.
What is meant by a Demand Notice? Can a Demand Notice by an operational creditor be

issued in any form?
Demand Notice means a notice served by an operational creditor to the corporate debtor demanding
payment of the operational debt in respect of which the default has occurred. No, the Demand Notice has
to be issued in Form No. 3 or a copy of an invoice attached with a notice in Form 4 as provided in the
Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016.
7.19
Application by operational creditor (Rule 6)
1. An operational creditor must

submit a form along with the
records and documents 2. The applicant under rule (1)
specified in the Insolvency and must send a copy of the
Bankruptcy Board of India application submitted to the
(Insolvency Resolution Process adjudicating authority right
for Corporate Persons) away by registered or express
Regulations, 2016, in order to mail to the corporate debtor's
initiate the corporate registered office.
insolvency resolution process
against a corporate debtor
under section 9 of the Code.
7.20
 In JK Jute Mill Mazdoor Morcha vs. Juggilal Kamlapat Jute Mills Company Ltd. & Ors.
[Civil Appeal No. 20978 of 2017] SC order dt. 30.04.2019 it was held that the trade
union collectively represents its members who are workers, to whom dues may be owed
by the employer, which are debts owed for services rendered by each individual
workman. If each workman files a separate cause of action, the fact that a joint
petition could be filed under rule 6 of AA Rules would be ignored.
 What is the process for making an

application by Operational creditor?
An operational creditor must submit Form 5 along with the documents and records
specified in the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations,
2016, in order to request the start of the corporate insolvency resolution process
against a corporate debtor under Section 9 of the Code. Before submitting the
application to the adjudicating authority, the applicant must serve a copy of the
application to the Board and the corporate debtor's registered office by hand,
registered mail, expedited mail, or electronic means.
Application by Corporate Applicant (Rule 7) 7.21
1. A corporate applicant must submit Form 6

along with the documents and records 2. The applicant under rule (1) must
specified in the Insolvency and Bankruptcy provide a copy of the application submitted
Board of India (Insolvency Resolution Process to the adjudicating authority as soon as
for Corporate Persons) Regulations, 2016, in possible to the corporate debtor's
order to begin the corporate insolvency registered office through registered or
resolution process against a corporate expedited mail.
debtor under Section 10 of the Code.
 What is the process for making an application by corporate applicant?
A corporate applicant must submit Form 6 along with the documents and records
specified in the IBBI (Insolvency Resolution Process for Corporate Persons)
Regulations, 2016, in order to initiate the corporate insolvency resolution process
against a corporate debtor under Section 10 of the Code.
7.22
Withdrawal of application (Rule 8)
The Adjudicating Authority may permit withdrawal of the application made

under rules 4, 6 or 7, as the case may be, on a request made by the applicant
before its admission.
 In case of, Lokhandwala Kataria Construction Pvt. Ltd. vs. Nisus Finance and
Investment Managers LLP [Civil Appeal no. 9279 of 2017] SC order dt.
24.07.2017 In the appeal before SC, a question as to whether, in view of rule 8
of the AA Rules, the NCLAT could utilise the inherent power under rule 11 of
the National Company Law Appellate Tribunal Rules, 2016, to allow
compromise before it by the parties after admission of the matter. The SC
upheld the views of NCLAT that after admission, inherent power could not be
utilised. However, by using its power under Article 142 of the Constitution,
allowed the consent terms.
7.23
The applicant shall obtain a written
communication in Form 2 from the
insolvency professional for appointment as
an interim resolution professional and
enclose it with the application made
pursuant to Rules 4, 6 or 7, as applicable,
whenever he is required to propose or
proposes to appoint an insolvency
Interim Resolution resolution professional.
Professional (Rule 9)
A certificate attesting to the proposed

insolvency professional's eligibility for
appointment as a resolution professional in
accordance with the Insolvency and Bankruptcy
Board of India (Insolvency Resolution Process for
Corporate Persons) Regulations, 2016, must be
submitted with the application required by sub-
rule (1).
Filing of application and application fee 7.24
(Rule 10)
1. The application made 4. As soon as this option becomes

under subsection (1) of available and in accordance with
Section 7, subsection (1) the Adjudicating Authority's
of Section 9, or 2. Any applicant guidelines, the application and
subsection (1) of Section under these rules any supporting papers must be
10 of the Code shall be must notify the submitted electronically:To the
filed before the adjudicating 3. The fee listed extent that such a facility is not
adjudicating authority in authority of any in the Schedule yet available, the applicant may
accordance with Rules 20, winding-up petition must be included submit the supporting
21, 22, 23, 24, and 26 of filed against the with the documents—including any that
Part III of the National corporate debtor as application. are bulky—in electronic form, in
Company Law Tribunal soon as they scanned, legible portable
Rules, 2016, until such become aware of document format, on a data
time as the rules of it. storage device that is acceptable
procedure for conduct of to the adjudicating authority,
proceedings under the such as a compact disc or a USB
Code are notified. flash drive.
 On March 14, 2019, the government made changes to the Insolvency and Bankruptcy
(Application to Adjudicating Authority) Rules, 2016 to the forms to make it possible to
request the start of a fast track CIRP and to require the submission of information about
the corporate debtor necessary to determine whether a fast track is available for its
resolution.
Pre packaged insolvency resolution

process
Part II
08.1
Benefits of pre - pack insolvency resolution process
 It consolidates the benefit of both formal and informal proceedings

of resolution, thus broadening the options for stakeholders
 It enables faster resolution as the corporate debtor can prepare a

settlement plan or resolution plan with the creditors before going
to NCLT
 Reduced burden on NCLT due to out of court settlements
 With the suspension of CIRP until March 2021, pre-pack has

come as a relief to promoters and corporate debtors
 It allows the corporate debtor retain control till a settlement is

reached with the creditors
18.1
08.2
18.2
Eligibility to initiate PPIRP
Corporate Debtor must be a Micro, Small or Medium enterprise

as per the MSME Act, 2006
Must not have undergone CIRP or PPIRP during the 3

years preceding the initiation date
Must not be undergoing CIRP
Must not have a liquidation order passed against it
Should be eligible to submit resolution plan as per section 29A

of the IBC
Corporate debtors eligible for pre-packaged insolvency resolution 08.3
process (Section 54A)
MSME Threshold
Class Capital Investment in Cap in Turnover Applicability of Pre-

Plant and Machinery (crore) pack
or Equipment (Crore)
Micro Enterprise 1 crore 5 crores ✓
Small Enterprise 10 crores 50 crores ✓
Medium 50 crores 250 crores ✓
Enterprise
What is the minimum default amount for pre-pack cases?

The Ministry of Corporate Affairs vide its notification dated April 09, 2021 specified ten
lakh rupees as the minimum amount of default for the matters relating to the pre-
packaged insolvency resolution process of corporate debtor.
18.2
08.4
Financial creditors • Such financial creditors must not be
to propose name parties related to the corporate
of an IP to be
appointed as RP debtor
Financial creditors • At least 66% by

to approve such
proposal value
• Application will be filed within 90

days
Declaration by • PPIRP not to defraud anybody
directors • Name of IP approved by financial
creditors
Special resolution
by members
approving filing
ofapplicaiton
Resolution by
financial creditors
approving filing
ofapplicaiton
Documents along with Notice to Financial 08.5
Creditors
(a) the declaration referred to inclause (f) of sub-section (2);
(b) the special resolution or resolution referred to in clause (g) of sub section (2);
(c) a base resolution plan which conforms to the requirements

referred to in section 54k, and such other conditions as may be
specified; and
(d) such other information and documents as may be specified.

Duties of IP prior to submission
18.3
08.6
of Application (Section 54B)

 prepare a report confirming whether the corporate debtor
meets the requirements of section 54A, and the base
resolution plan conforms to the requirements referred to
Code
 file such reports and other documents, with IBBI

08.7
When will the duties of insolvency professional under Section 54B (1) of the Code
cease?
Section 54B(2) provides the following circumstances:
(a) If the corporate debtor fails to file an application for initiating prepackaged insolvency resolution
process within the time period as stated under the declaration referred to in clause (f) of subsection
(2) of section 54A; or
(b) the application for initiating prepackaged insolvency resolution process is admitted or rejected by the
Adjudicating Authority, as the case may be.
As per Section 5(23C) of the Code, Pre-Packaged Insolvency Resolution Process Costs means:
 the amount of any interim finance and the costs incurred in raising such finance;
 the fees payable to any person acting as a resolution professional and any expenses
incurred by him for conducting the pre-packaged insolvency resolution process during the
pre-packaged insolvency resolution process period, subject to sub-section (6) of section 54F;
 any costs incurred by the resolution professional in running the business of the corporate
debtor as a going concern pursuant to an order under sub-section (2) of section 54J;
 any costs incurred at the expense of the Government to facilitate the pre-packaged
insolvency resolution process; and
 any other costs as may be specified.
08.8
18.4
Application to be filed with the

following documents to NCLT
Declaration
regarding non
Declaration,
Name and existence of
Special
written any
Resolution
consent of IP preferential, Books of
and Approval
to be fraudulent, Accounts
of financial
appointed as undervalued
creditors to
RP or extortionate
initiate PPIRP
credit
transactions
18.5
08.9
• Either accepting or
rejecting the application
NCLT to • Within 14 days of
Pass order submission of the
application
Time Limit • 120 days from the date

of acceptance of
for application
completion • Approved resolution
plan to be submitted to
of PPIRP NCLT within 90 days
18.6
08.10
On Acceptance of
Moratorium
Application
Appointment of
Resolution Professional
Public announcement
inviting claims
Declaration of moratorium and public announcement during pre-packaged
insolvency resolution process (Section 54E) 08.11
(1) On the pre-packaged insolvency commencement date, the Adjudicating Authority shall, along
with the order of admission under section 54C -
(a) establish a moratorium for the purposes specified in subsection (1) read with subsection
(3) of Section 14, which shall apply mutatis mutandis to actions under this Chapter;
(b) appoint a Resolution Professional -
(i) as named in the application, if no disciplinary process against him is pending; or
(ii) based on the Board's advice, if any disciplinary procedure against the insolvency
professional identified in the application is pending.
(c) cause the resolution professional to make a Public Announcement of the start of
the prepackaged insolvency resolution procedure, in the form and manner specified,
immediately after his appointment.
(2) The moratorium order is effective from the date it is issued until the end of the
prepackaged insolvency resolution procedure period.
08.12
Duties of Resolution Professional
[Section 54F(2)] Powers of Resolution Professional
(a) confirm the list of claims [Section 54F(3)]
submitted by the corporate debtor (a) access all books of accounts,
under section 54G, in such records and information available
manner as may be specified; with the corporate debtor;
(b) inform creditors regarding their (b) access the electronic records of
claims as confirmed under clause the corporate debtor from an
(a), in such manner as may be information utility having financial
specified; information of the corporate
(c) maintain an updated list of debtor;
claims, in such manner as may (c) access the books of accounts,
be specified; records and other relevant
(d) monitor management of the documents of the corporate debtor
affairs of the corporate debtor; available with government
authorities, statutory auditors,
(e) inform the committee of creditors accountants and such other
in the event of breach of any of persons as may be specified;
the obligations of the Board of (d) attend meetings of members,
Directors or partners, as the case Board of Directors and committee
may be, of the corporate debtor, of directors, or partners, as the
under the provisions of this case may be, of the corporate
chapter and the rules and debtor;
regulations made thereunder;
(e) appoint accountants, legal or other 08.13
professionals in such manner as may be
specified;
(f) collect all information relating to the
(f) constitute the committee of
assets, finances and operations of the
creditors and convene and attend all
corporate debtor for determining the
its meetings;
financial position of the corporate debtor
and the existence of any transactions that
(g) prepare the information
may be within the scope of provisions
memorandum on the basis of the
relating to avoidance of transactions under
preliminary information memorandum
Chapter III or fraudulent or wrongful trading
submitted under section 54G and any
under Chapter VI, including information
other relevant information, in such
relating to:(i) business operations for the
form and manner as may be
previous two years from the date of
specified;
prepackaged insolvency commencement
date;
(h) file applications for avoidance of
(ii) financial and operational payments for
transactions under Chapter III or
the previous two years from the date of pre-
fraudulent or wrongful trading under
packaged insolvency commencement date;
Chapter VI, if any; and
(iii) list of assets and liabilities as on the
initiation date; and
(i) such other duties as may be
(iv) such other matters as may be specified;
specified.
(g) take such other actions in such manner
as may be specified.
 Corporate debtor to submit the following documents with the
RP within 2 days of acceptance of application – 08.14
 Base Resolution Plan
 List of claims
 Preliminary Information Memorandum
 The management of the affairs of the corporate debtor shall

continue to vest in the Board of Directors or the partners of
the corporate debtor.
 If the committee of creditors by a vote of not less than sixty-six per cent
of the voting shares, resolves to vest the management of the corporate
debtor with the resolution professional, the resolution professional will be
required to make an application for this purpose to the NCLT.
 The RP to constitute a committee of creditors, based on the

list of claims confirmed.
08.15
(2) Where any person has suffered any loss or harm as a result of the corporate
debtor's omission of any material information or inclusion of any misleading
information in the list of claims or preliminary information memorandum, every person
who –
(a) is a promoter, director, or (b) has authorised the corporate debtor to

partner of the corporate debtor at submit the list of claims or the preliminary
the time the list of claims or information memorandum, shall, without
preliminary information prejudice to section 77A, be obliged to pay
memorandum is submitted by the compensation to any person who has
corporate debtor; or suffered such loss or damage.
(3) No one shall be held accountable under subsection (2) if the list of claims or
preliminary information memorandum was supplied by the corporate debtor without his
knowledge or agreement.
Committee of Creditors (Section 54I)
08.16
(1) Within seven days of the pre-packaged insolvency commencement

date, the resolution professional shall form a committee of creditors based
on the list of claims confirmed under clause (a) of sub-section (2) of
section 54F:Provided, however, that the composition of the committee of
creditors may be changed in accordance with the updated list of claims,
and that any such change shall not impact the validity of any previous
decision of the committee of creditors.
(2) The first meeting of the committee of creditors must be held within
seven days of the committee's formation.
(3) The provisions of section 21, save sub-section (1), apply mutatis
mutandis to the committee of creditors established under this Chapter:
Provided, however, that references to "resolution professional" in sub-
sections (9) and (10) of section 21 must be understood as references to
"corporate debtor or the resolution professional" for the purposes of this
sub-section.
08.17
 According to Regulation 3 of the PPIRP Regulations, all mandatory meetings

may be held in either physical or electronic mode, or in a combination of both.
To the greatest extent practicable, all communications regarding such meetings
must be made electronically.
 Committee with only one creditor in class: The committee shall only include the
authorised agent if the corporate debtor has only creditors in a class and no
additional financial creditors who are not connected parties of the corporate
debtor, according to Regulation 24 of the PPIRP Regulations.
Committee with only operational creditors: According to Regulation 25 of the

PPIRP Regulations, if the corporate debtor has no financial debt or all financial
creditors are related parties, the committee shall be made up of operational
creditors who are not related to the corporate debtor, as follows:
a) the ten largest operational creditors by value, and if there are fewer than ten operational
creditors, the committee shall include all such operational creditors;
b) one representative elected by all workers excluding those covered by article (a); and
c) one representative elected by all employees other than those employees included under
clause(a).
Vesting management of corporate debtor with resolution 08.18
professional (Section 54J)
Section 54J(3) states that, despite everything else in this chapter, the requirements of:
Section 14 (moratorium) subsections (2) and (2A);
(a) Section 17 (IRP management of corporate debtor's affairs);
(c) Section 18 (Duties of IRP) clauses (e) to (g);
(d) Sections 19 and 20 (Personnel should cooperate with IRP and manage corporate debtor's
operations as a going concern);
(e) Section 25 sub-section (1) (Duty of RP to maintain and defend corporate debtor's assets);
clauses (a) to (c) and clause (k) of sub-section (2) of section 25 (responsibilities of the RP);
and
(g) Section 28 (Approval of COC for certain acts) shall apply to the proceedings under this
chapter, mutatis mutandis, from the date of the order under paragraph (2) until the pre-
packaged insolvency resolution process time ewxpires.
08.19
 Section 54J(2) of the Code states that on an application made under sub-
section (1), if the Adjudicating Authority is of the opinion thatthe belief that
during the pre-packaged procedure for resolving insolvency —
(a) the corporate debtor's affairs have been conducted fraudulently; or

(b) It shall pass an order vesting administration of the corporate debtor in the
resolution professional if there has been gross mismanagement of the
corporate debtor's affairs.
 A corporate debtor is forbidden from operating its business unlawfully or in a way that is
damaging to the interests of its borrowers under Regulation 50 of the PPIRP
Regulations. Furthermore, the corporate debtor shall not take any of the following acts
without first getting the committee's approval:
a) a transaction exceeding a threshold set by the committee; and
b) any other topic that the committee determines is not covered by Section 28 of the
Code.
08.20
18.8
Consideration and Approval of Resolution Plan
CoCmay
choose to
revise or IfCoCchoos
approve the CoCto select
es to invite CoCto The better
Base the Best
prospective compare the plan to be
RP to Resolution resolution
resolution Base approved
present the Plan. plan
plans, RP to resolution with 66%
base amongst the
• TheCoCmay lay down plan with the votes and
resolution plans
also ask the RP criteria for Best submittedtoi
plan to to invite submitted by
prospective evaluation resolution NCLT for
theCoC eligible
resolution plans and invite plan approval
from eligible resolution
resolution
resolution applicants
applicants plans.
Consideration and approval of resolution plan (Section 54K) 08.21
The resolution professional must publish brief particulars of the invitation for resolution
proposals in Form P11 no later than 21 days after the pre-packaged insolvency
commencement date, according to Regulation 43 of the PPIRP Regulations. The Form P11
must mention where the invitation for resolution plans can be downloaded or acquired, as well
as the deadline for submitting resolution plans, which must be no less than 15 days from the
date of issuing of the invitation for resolution plans.
According to Section 5(2A), a Base Resolution Plan is one supplied by the corporate debtor under clause
(c) of sub-section (4) of Section 54A.
Preliminary Information Memorandum, as defined in Section 5(23A), is a memorandum provided by the

corporate debtor under clause (b) of paragraph (1) of Section 54G.A resolution plan must include all actions
necessary to optimise the value of the corporate debtor's assets during the prepackaged insolvency
resolution process, according to Regulation 44 of the PPIRP Regulations.
Requirements of resolution plan 08.22
A resolution applicant may submit a resolution plan to the resolution professional prepared on the basis of
the information memorandum, together with an affidavit stating that he is eligible under section 29A.
The resolution expert must review each resolution plan that he receives to ensure that each resolution plan -
(a) requires the payment of insolvency resolution process fees in a manner defined by the Board, prior
to the payment of the corporate debtor's other debts;
(b) provides for the payment of operational creditors' debts in the manner specified by the Board, which
shall not be less than-
(i) the amount to be paid to such creditors in the event of the corporate debtor's liquidation under
Section 53; or
(ii) the amount that would have been paid to such creditors if the amount to be distributed under the
resolution plan had been distributed in accordance with the order of priority in sub-section (1) of
section 53, whichever is greater, and provides for the payment of debts of financial creditors who do
not vote in favour of the resolution plan in such manner as the Board may specify, which shall not
be less than the amount to be paid to such creditors in accordance with the order of priority in sub-
section (1) of section 53,
(c) provides for the management of the corporate debtor's affairs following acceptance of the resolution
plan;
(d) The resolution plan's implementation and supervision;
(e) does not violate any provisions of the law in effect at the time;
(f) confirms to any other conditions imposed by the Board.

08.23
(1) Within two days of the prepackaged insolvency commencement date, the corporate debtor shall submit
to the resolution professional the base resolution plan referred to in clause (c) of sub-section (4) of section
54A, and the resolution professional shall present it to the committee of creditors.
(2) The committee of creditors may allow the corporate debtor to alter the base resolution plan prior to its
approval under subsection (4) or invitation of potential resolution applicants under subsection (5), as
applicable.
(3) The resolution plans and base resolution plans submitted under this section must meet the
requirements outlined in subsections (1) and (2) of Section 30, and the provisions of subsections (1), (2),
and (5) of Section 30 apply mutatis mutandis to the proceedings under this Chapter.
(4) The creditors' committee may adopt the basic resolution plan for submission to the Adjudicating
Authority if it does not jeopardise the corporate debtor's claims to operational creditors.
(5) If the committee of creditors does not approve the base resolution plan under subsection (4), or if the
base resolution plan jeopardises any claims owed by the corporate debtor to operational creditors, the
resolution professional shall invite prospective resolution applicants to submit a resolution plan or plans to
compete with the base resolution plan in the manner specified.
(6) The resolution applicants who submit resolution plans in response to the invitation under sub-section
(5) must meet the criteria established by the resolution professional with the approval of the committee of
creditors, taking into account the complexity and scale of operations of the corporate debtor's business, as
well as any other conditions that may be specified.
08.24
(7) The resolution professional shall provide to the resolution applicants:
(a) the basis for evaluating resolution plans for the purposes of sub-section (9), as approved by the
committee of creditors subject to such conditions as may be specified; and
(b) the relevant information referred to in section 29, which shall, mutatis mutandis, apply to the
proceedings under this chapter in the manner specified.
(8) The resolution professional shall propose to the committee of creditors, for its consideration, resolution
proposals that meet the conditions outlined in section 30 subsection (2).
(9) The committee of creditors shall analyse the resolution plans submitted by the resolution professional
and choose one of them.
(10) If the committee of creditors determines that the resolution plan selected under sub-section (9) is
significantly superior than the basic resolution plan based on such criteria as it may establish, such
resolution plan may be approved under sub-section (12):Provided, however, that the criteria established by
the committee of creditors under this subsection are subject to any constraints that may be stated.
(11) If the resolution plan selected under sub-section (9) is not approved or does not meet the requirements
of sub-section (10), it must compete with the base resolution plan in the manner and subject to the
conditions specified, and one of them must be approved under sub-section (12).
(12) The committee of creditors may adopt the resolution plan chosen for approval under sub-sections (10)
or (11), as applicable, for submission to the Adjudicating Authority:If the resolution plan chosen for approval
under sub-section (11) is not approved by the committee of creditors, the resolution professional must file an
application for termination of the pre-packaged insolvency resolution process in the form and manner
indicated.
18.9
08.25
Once NCLT If rejected, If theCoCfeels

receives the NCLT shall that the
Resolution pass the company
Plan, it has to following should
either approve orders – undergo CIRP
or reject the • Termination of instead of
same within PPIRP PPIRP, they
30 days • Initiation of may pass a
Liquidation resolution in
this regard
with 66%
votes and file
an application
with NCLT
08.26
Appeal against order under section 54L (Section 54M)
Any appeal against an order approving the resolution plan under sub-section
(1) of section 54L, shall be on the grounds laid down in sub-section (3) of
section 61.
What happens when the Adjudicating Authority has passed an order for
termination of pre-packaged insolvency resolution process pursuant to the
decision of COC?
According to Section 54N(4) of the Code, the Adjudicating Authority shall also pass
an order — (a) of corporate debtor liquidation; and
(b) declare that the pre-packaged insolvency resolution process costs, if any, shall
be included as part of the liquidation costs for the purposes of corporate debtor
liquidation.
Difference between Corporate Insolvency Resolution Process (CIRP) and Pre-Packaged
Insolvency Resolution Process (PPIRP)
08.27
Basis CIRP PPIRP
Legal Framework More in statute and less in Relatively less in statute and
Regulations more in Regulations
Threshold for initiating the Default above INR 1 Crore Default above INR 10 Lakhs
process
Initiation by FC, OC or CD CD with consent of majority of

unrelated FCs
Management of CD IP in possession with creditor in Debtor in possession with
controlc creditor in control
Invitation and collation of IRP to invite and collate the CD to submit list of claims to
claim claims RP and RP also to invite and
collate the claims
Information Memorandum Prepared by RP Draft prepared by CD and

finalised by RP
Process Resolution Cost Includes cost of running the Doesn’t include the cost of
operations of the corporate running the operations of the
debtor corporate debtor
08.28
Swiss Challenge May/not to be followed Swiss Challenge is

while calling resolution followed while calling the
plan resolution plan
Right of promoter to offer If eligible under Section 29A Promoters have first right to
resolution plan and promoter is at par with offer resolution plan subject
other resolution applicants to eligibility under Section
29A
Early closure of the process By withdrawal under Section Suo moto by CoC or with
12A or at the request of approval of 66% of voting
applicant share of members of CoC
present and voting
Consequence of the failure of Liquidation Closure or termination
the process
Role of RP and Adjudicating Relatively more Relatively less
Authority
Timeline of the process 180 days followed by 90 days 120 days

extension subject to
Adjudicating Authority
approval
SARFAESI Act, 2002
9.1
Why Securitisation?
Public at large is
Banks had to
also adversely
NPAs constitute take recourse to
affected because
a real economic the long legal
bank‘s main
cost to the route against the
source of funds
nation defaulting
are deposits
borrowers
placed by public
9.2
(Debtor)
Principal + Interest
Obligor
(Security) (Loan)
(Security
Receipts)
(Financial Qualified
Originator ARC
Asset) Buyers
(Creditor) (SPV) (Investor)
Process of Securitisation
2014-2016
1985 Sick Industrial Flexible structuring 9.3
2016 Insolvency
Companies (Special of Long-Term
and Bankruptcy
Provisions) Act Project Loans,
Code
(BIFR) Strategic Debt
Restructuring, S4A
1993 Recovery of 2018-2019

Debts Due to Banks 2014 Revitalizing Prudential
and Financial Distressed Asset in Framework for
Institutions Act the Economy Resolution of
(DRT) Stressed Assets
Legal Framework
2001 Corporate 2002 SARFAESI Act
Debt Restructuring (ARC) Regulatory Framework
9.4
Enables the
Reduces NPAs by
Regulates banks and
adopting
securitisation financial Provides for
measures for
and institutions to setting up of
recovery or
reconstruction of realise long-term asset
reconstruction
financial assets assets, manage reconstruction
without the
and enforcement problems of companies
intervention of
of security liquidity, asset
the court
liability mismatch
9.5
Mardia Chemicals v Union State of India
That the appeal

That there was no
That the provisions were
occasion to enact That no provision
mechanism for illusory because
such a draconian had been made
recovery did not the appeal was
legislation when to take into
provide for an not maintainable
there already account lenders
adjudicatory unless 75% of the
existed the liability
forum amount claimed
RDDBFI Act, 1993
was deposited
9.6
• Is a company incorporated under the

Companies Act
What? • Is registered with the RBI as an Asset

Reconstruction Company
• act as agent for the purpose of

recovering their dues
Objectives? • act as manager of the borrower‘s asset

• act as the receiver of properties of any
bank or financial institution
9.7
A certificate of registration from RBI

•that the ARC has not incurred losses in any of the 3 preceding financial
years Has net owned fund of
•that such ARC has made adequate arrangements for the purpose of not less than 2 crore
securitisation
•that the ARC shall be able to pay periodical returns and redeem
rupees or such other
investments higher amount as the
•that the directors of ARC have adequate professional experience Reserve Bank, may
•that none of its directors has ever been convicted of any offence involving
moral turpitude
specify
• that the sponsor of the ARC is a fit and proper person
•that the applicant has complied with prudential norms and guidelines as
specified by the RBI
Every asset reconstruction company, shall obtain prior approval of the reserve Bank for any substantial
change in its management including appointment of any director on the board of directors of the ARC or
managing director or chief executive officer thereof or change of location of its registered office or change
in its name.
The decision of the Reserve Bank, whether the change in management of an ARC is a substantial change in
its management or not, shall be final.
“substantial change in management” means the change in the management by way of transfer of shares or
change affecting the sponsorship in the company by way of transfer of shares or amalgamation or transfer
of the business of the company
9.8
ceased to carry on the business of securitisation or asset reconstruction
ceased to receive or hold any investment from a qualified buyer
Cancellation of Certificate
failed to comply with any conditions subject to which the certificate
of registration had been granted to it
(Section 4)
at any time failed to fulfill any of the conditions referred to section
3
failed to comply with any direction issued by the Reserve Bank
Failed to maintain accounts in accordance with the requirements of any

law or any direction or order issued by the Reserve Bank
Failed to submit or offer for inspection its books of account or other relevant
documents when so demanded by the Reserve Bank
9.9
The ARCs may acquire On acquisition, such

The bank or financial
such assets by- ARC shall be deemed
institution shall give a
•issuing a debenture or to be the lender and
notice of acquisition
bond or any other security all the rights and
in the nature of debenture of financial assets by
liabilities of such
•entering into an agreement any ARC to the
bank/financial
with such bank or financial concerned obligor
institution institution shall vest
who shall make
in the ARC in relation
further payment to
to such financial
the concerned ARC
assets.
9.10
The bank or financial institution may, if it

considers appropriate, give a notice of
The obligor shall make payment to the
acquisition of financial assets by any asset
concerned asset reconstruction company
reconstruction company, to the concerned
obligor.
DISCHARGE OF
OBLIGATION OF THE
OBLIGOR
Where no notice of acquisition of financial

asset) is given by any bank or financial
institution, any money or other properties Such payment or property which shall
subsequently received by the bank or forthwith be made over or delivered to
financial institution, shall constitute such asset reconstruction company
monies or properties held in trust for the
benefit of and on behalf of the ARC
9.11
Measures for Asset Reconstruction
(Section 9)
By By
By take over By sale or By enforcement conversion
By
of lease of a rescheduling of security of any
settlement of
management part or of payment interest in portion of
dues payable
of the whole of the of debts accordance debt into
by the
business of business of payable by with the shares of a
borrower
the borrower the borrower the borrower provisions of borrower
this Act company
13.10
9.12
The ARC may raise funds from the qualified buyers by issuing security receipts
or by formulating schemes for acquiring financial assets
The ARCs shall keep and maintain separate and distinct accounts in
respect of each such scheme for every financial asset acquired
No security receipt issued by the ARC or any subsequent transfer of it

by the receipt holder shall require any compulsory registration
Any dispute relating to securitisation or reconstruction or non-payment

of any amount shall be compulsorily settled by way of arbitration
RBI shall have powers to determine policies and issue directions , call for
statement and information or carry out audit and inspection
9.13
13.11
9.14
13.12
Classification of the asset as a Non performing Asset under the RBI guidelines
Demand Notice to the borrower, in writing, seeking discharge of liability within 60 days
The Notice shall contain the details of the amount payable by the borrower, the intention to enforce
security on non payment and the secured assets intended to be enforced in the event of non-payment
The borrower may make any representation / objection to the lender with respect to the demand
notice.
The lender has to decide upon the objection and communicate the same to the borrower within 15 days
of the receipt of the representation / objection
No decision taken by the lender under this section shall be brought in question in any court of law
If the borrower repays the amount within the specified time period of 60 days, no right to take any action lies with
the lender.
9.15
13.13
If the borrower fails to repay any part of the
amount within the period of 60 days, the
borrower may
appoint any require any
person to person from
manage the whom any
take
take over the secured assets money is due
possession of
management of the possession or may become
the secured
the business of of which has due to the
assets of the
the borrower been taken borrower, to
borrower
over by the pay such
secured money the
creditor lender. h
9.16
13.14
Section 14 gives the

secured creditor/
lender the right to If the financial
If the asset taken over
seek help and assistance had been
under this section is
If any amount is left assistance from the obtained jointly from
made subject to an
due after taking the Chief Metropolitan more than 1 lender,
auction, the lender
abovementioned Magistrate or the then such security
shall not make any
action, the lender shall district Magistrate for interest shall be
bids in the first round,
file a recovery suit in taking over the enforced only by
however, they are
the DRT. possession and taking consent of
eligible to make bids
control of a secured atleast 60% of such
in subsequent rounds.
asset I accordance lenders by value.
with the provisions of
this Act
9.17
All the
Once the debts
directors of
All their rights are realised in
A Notice the company /
and powers full, the secured No
needs to be administrator
shall vest with creditor is compensation
published in of other forms
the people required to for loss of
an English and of businesses
appointed in restore the office of such
a Vernacular shall be
their place by management of directors
Newspaper deemed to
the lender such
have vacated
businesses.
their offices
9.18
13.16
Grievance Redressal
Section 17
If the DRT finds that the actions
taken by the secured creditor
were unjustified and illegal, it
Any party aggrieved by any
may –
decision given by the DRT on an
Any borrower, aggrieved by the i. declare the recourse taken by
application filed under this
action taken by the secured the secured creditor as invalid; section may appeal to the Debt
creditor/lender under section 13
ii. restore the possession of Recovery Appellate Tribunal
may make an application against
within 30 days from the date of
the same with the DRT within 45 secured assets or management
of secured assets to the receipt of the order after
days of such action being taken
borrower; and depositing 50% of the disputed
amount
iii. pass such other direction as
it may consider appropriate and
necessary
9.19
Any person by whom the caveat has
The secured creditor or any person
been lodged shall serve notice of the
claiming a right to appear before the
caveat by registered post,
tribunal or the Court of District Judge
acknowledgement due, on the person
or the Appellate Tribunal or the High
by whom the application has been or
Court, may lodge a caveat
is expected to be made
Right to lodge
Caveat
Where a caveat has been lodged, the

Such caveat shall not remain in force
Tribunal or the District Judge or the
after the expiry of the period of
Appellate Tribunal or the High Court,
ninety days from the date on which it
as the case may be, shall serve a
was lodged unless an application or
notice of application or appeal filed
appeal has been made before the
by the applicant or the appellant on
expiry of the said period
the caveator.
9.20
13.17
Central Registry
Section 20
reconstruction
securitisation of financial assets of financial
assets
creation of every any

security transaction modification
interest thereof therein
• lien on any goods, money or security 9.21
13.18
• rights of unpaid seller

4 • a pledge of movables
•creation of any security in any aircraft

•creation of security interest in any vessel
3 •security interest created in agricultural land
•properties not liable to attachment

•case in which the amount due is less than 20% of the principal amount and
interest
2 •security interest for securing repayment of any financial asset not exceeding 1
Lakh rupees
Non Applicability of the Act

9.22
Recovery of debt due to banks

and financial institutions act,
1993
AUTHORITIES UNDER THIS ACT
9.23
10.1
DEBT RECOVERY TRIBUNALS (DRT) DEBT RECOVERY APPELLATE TRIBUNAL (DRAT)
(33DRTs) (5 DRATs)
DEBT RECOVERY TRIBUNAL – COMPOSITION DRAT – COMPOSITION

DRT shall consist of one person only, to be called the DRAT shall consist of one person lo be called as the
Presiding Officer. Chairperson of the appellate Tribunal.
Any person who has been, or is qualified to be, a District Any person, who is or has been or is qualified to be, a judge
judge may be appointed as the presiding officer. of a HIGH Court; or has been a member of the Indian Legal
service, and has held a post in Grade I of that Service for at
Presiding Officer shall hold office for a term of five years or
least three years; or has held office as the presiding officer
until he attains the age of sixty-five years, whichever is
of a Tribunal for at least three years, shall be qualified for
earlier.
appointment as the presiding officer of an Appellate
Each Debts Recovery Tribunal has two Recovery officers. Tribunal.
The work amongst the Recovery Officers is allocated by the
The Presiding Officer of an appellate Tribunal shall hold
Presiding Officer.
office for a term of five years or until he attains the age of
seventy years whichever is earlier.
9.24
10.2
DRTs DRATs
•39 •5
•DRT-I Ahmedabad, DRT-II Ahmedabad, DRT •DRAT Allahabad, DRAT
Allahabad, DRT Aurangabad, DRT Bangalore, DRT-I Chennai, DRAT Delhi,
Chandigarh, DRT-II Chandigarh, DRT-1 Chennai, DRAT Kolkata, DRAT
DRT-2 Chennai, DRT Coimbatore, DRT Cuttak, DRT Mumbai.
Ernakulam, DRT Guwahati, DRT Hyderabad, DRT
Jabalpur, DRT Jaipur, DRT-1 Kolkata, DRT2 Kolkata,
DRT-3 Kolkata, DRT Lucknow, DRT-1 Mumbai, DRT-
2 Mumbai, DRT-3 Mumbai, DRT Nagpur, DRT-1 New
Delhi, DRT-2 New Delhi, DRT-3 New Delhi, DRT
Patna, DRT Pune, DRT Visakhapatnam, DRT Ranchi,
DRT Madurai
9.25
10.5
 Under the Code of Civil Procedure 1908, while trying a suit, in respect of the
following matters namely;-
◦ a) summoning and enforcing the attendance of any person and examining him on oath;
◦ b) requiring the discovery and production of documents;
◦ c) receiving evidence on affidavits;
◦ d) issuing commissions for the examination of witnesses or documents;
◦ e) reviewing its decisions;
◦ f) dismissing an application for default or deciding it ex parte;
◦ g) setting aside any order of dismissal of any application for default or any order passed by it
ex parte;
◦ h) any other matter which may be prescribed
 The DRT and DRAT shall be deemed to be a Civil Court for the following
purposes:-
◦ 1. Sec. 195 of Criminal Procedure Code, 1973 which deals with contempt of lawful authority of
public servants; and
◦ 2. Chapter XXVI of Criminal procedure code, 1973 which deals with offences affecting the
administration of Justice.
9.26
10.6
 Section 25 state sthat the Recovery Officer shall

on receipt of the copy of the certificate under
Section 19 proceed to recover the amount of debt
specified in the certificate by one or more of the
following modes, namely:-
◦ a) attachment and sale of the movable or immovable
property of the defendant;
◦ b) taking possession of property over which security
interest is created or any other property of the defendant
and appointing receiver for such property and to sell the
same
◦ c) arrest of the defendant and his detention in prison;
◦ d) appointing a receiver for the management of the
movable or immovable properties of the defendant
◦ e) any other mode of recovery as may be prescribed by
the Central Government
9.27
attachment and
sale of the
movable or
immovable
property of the taking possession of
any other mode of defendant; property over which
recovery as may be security interest is created
prescribed by the or any other property of
Central Government. the defendant and
Modes of appointing receiver for
recovery such property and to sell
the same;
appointing a receiver
arrest of the defendant
for the management of
and his detention in
the movable or
prison;
immovable properties
of the defendant;
Other modes of recovery 9.28
i) The Recovery Officer may, at any time or from time to time, by written
notice, require any person from whom money is due or may become due to
the defendant, or any person who holds or may subsequently hold money
for or on behalf of the defendant, to pay to the Recovery Officer either
immediately upon the money becoming due or being held, or within the
time specified in the notice, if not before the money becomes due or is
held, so much of the money as is sufficient.
ii) A notice under this sub-section may be issued to any person who holds or
may subsequently hold any money for or on behalf of the defendant jointly
with any other person, and the shares of the joint holders in such amount
shall be presumed to be equal until the contrary is proven.
iii) A copy of the notification shall be sent to the defendant at his last known
address and, in the case of a joint account, to all joint holders at their last
known addresses to the Recovery Officer.
iv) Except as otherwise provided in this sub-section, every person to whom

a notice is issued under this sub-section shall be bound to comply with
such notice, and, in particular, where any such notice is issued to a post
office, bank, financial institution, or insurer, no pass book, deposit receipt,
policy, or other document shall be required to be produced for the purpose
of any entry, endorsement, or the like to be made before the payment is
made.
9.29
v) Any claim emerging after the date of the notice in relation to any property
in relation to which a notice under this sub-section has been given shall be
void as against any demand stated in the notice.
vi) If a person to whom a notice under this sub-section is sent objects to it

by making an oath that the sum demanded or a portion of it is not due to
the defendant or that he does not hold any money for or on behalf of the
defendant, nothing in this sub-section shall be deemed to require such
person to pay any such sum or portion thereof, but if it is discovered that
such statement was false in any material particular, such person shall be
punished.
vii) The Recovery Officer may alter or withdraw any notice issued under this
section at any time or from time to time, or extend the time for making any
payment required under such notice.
9.30
10.3
DRT Jurisdiction
TERRITORIAL LIMITS:-
The DRT can entertain
PECUNIARY LIMITS:- complaints if any of the
The DRT can entertain defendants ordinarily resides or
complaints only where the carries on business or personally
amount of debt due to any bank works for gain or has a branch
or financial institution is Rs. 20 office; or the cause of action
lakhs or more. arises within the local limits of
its jurisdiction.
9.31
10.4
Appeal to DRAT
Any person,
Such appeal shall
aggrieved by an
not be entertained
order made by
On receipt of an by the Appellate
Debt Recovery The appeal to
appeal, DRAT may Tribunal unless
Tribunal may prefer DRAT shall be filed
confirm, modify or such person has
an appeal to Debt within a period of
set aside the order deposited with the
Recovery appellate 30 days from the
appealed against, Appellate Tribunal
Tribunal. However, date of receiving
after giving an 50% of the amount
on appeal shall lie the copy of the
opportunity of of debt so due
to DRAT from an order of DRT.
being heard from him as
order made by DRT
determined by the
with the consent of
Tribunl
parties.
Winding Up by the NCLT
10.1
IMPORTANT CHANGES BROUGHT ABOUT BY THE INSOLVENCY AND
BANKRUPTCY CODE, 2016
"Winding up" - Neither the Companies Act of 2013 nor the Companies Act of 1956 specified the
term "winding up." Section 2 of theThe Companies Act of 1956. The following is the definition of
"winding up":
Voluntary winding up - Sections 304 to 323 of the Companies Act, 2013, dealing to voluntary
winding up, have been excluded by the Insolvency and Bankruptcy Code, 2016. Voluntary liquidation
is presently governed by Section 59 of the Insolvency and Bankruptcy Code of 2016, as amended by
the IBBI (Voluntary Liquidation Process) Regulations of 2017.
Inability to pay debts - Section 271 of the Companies Act, 2013 has been replaced by the Insolvency
and Bankruptcy Code, 2016. Section 271 of the Companies Act of 2013, before to its replacement by
the Insolvency and Bankruptcy Code of 2016, offered the following seven grounds for tribunal
winding up:
10.2
Section 271 of Companies Act, 2013 (before substitution by IBC)
a) If the company cannot pay its debts; b) If the company has resolved by special resolution to
be wound up by the tribunal;
c) if the company has violated India's
sovereignty and integrity, the security of the d) If the Tribunal has ordered the company to be
state, friendly relations with other states, wound up under Chapter XIX;
public order, decency, or morality;
e) If, on the basis of an application made by f) if the company failed to file its financial statements
the registrar or any other person authorised or annual returns with the Registrar for the previous
by the Central Government by notification five consecutive financial years; or
under this Act, the Tribunal determines that
the company's affairs have been conducted
fraudulently, that the company was formed g) If the Tribunal believes that winding up the
for fraudulent and unlawful purposes, or company is just and equitable.
that the persons involved in the formation
or management of its affairs have been guilty
of fraud, misfeasance, or misconduct in
connection therewith, the company is
declared insolvent.
Section 271 of Companies Act, 2013 (after substitution by IBC) 10.3
a) If the b) If the company c) If, on the basis of an

application made by the
company has has acted against the Registrar or any other person
resolved by interests of India's authorised by the Central
sovereignty and Government by notification
special integrity, security,
under this Act, the Tribunal
determines that the company's
resolution to be cordial relations affairs were conducted
wound up by with foreign states, fraudulently, that the company
was formed for fraudulent and
the Tribunal; public order, unlawful purposes, or that the
decency, or persons involved in the
d) if the company formation or management of its
morality;
failed to file its affairs were guilty of fraud,
financial statements or g) If the Tribunal misfeasance, or misconduct in
annual returns with connection therewith, and that it
determines that it is just
the Registrar for the is proper to dissolve the
and equitable to company,
previous five liquidate the company.
consecutive fiscal
years; or
10.4
any contributory or
the company
contributories
Who May
File?
any person authorised by

the Registrar the Central Government
in that behalf
10.5
dismiss it, with or make any interim order

without costs as it thinks fit
Powers of
NCLT
appoint a provisional make an order for the

liquidator of the company winding up of the
till the making of a company with or without
winding up order costs
10.6
FILING STATEMENT OF AFFAIRS OF THE
COMPANY (Section 274)
Where the Tribunal is satisfied that the winding up of the company

is to be made out, it can order the company to file objections and
its statement of affairs within 30 days of the order.
In case, where the Company fails to file the statement of affairs,
the tribunal shall forfeit the right of the company to oppose the
petition and right of such directors and officers of the company as
found responsible for such non-compliance
Every director or officer who is in default can be punished with
imprisonment for a term which may extend to six months or with
fine which shall not be less than twenty-five thousand rupees but
which may extend to five lakh rupees, or with both.
COMPANY LIQUIDATORS AND THEIR APPOINTMENTS 10.7
 [Section 275(1)
When the order of winding up is passed by the Tribunal, it will appoint an Official Liquidator or a
liquidator from the panel kept under subsection as the firm liquidator for the purposes of winding up
a firm.
 Section 275(2)
The Insolvency and Bankruptcy Code, 2016 registered insolvency professionals will be chosen by the
Tribunal to serve as the provisional liquidator or the Company liquidator, as applicable.
 "Company Liquidator"
refers to an individual
 Section 275(3) designated by the Tribunal
to serve as the Company
In the event that the Tribunal appoints a provisional liquidator, liquidator in compliance
the Tribunal may restrict and limit his authority in the order with section 275's
that appoints him or it, or in a later decision; in all other guidelines for winding up a
cases, however, he will have the same authority as a liquidator. company under this Act.
[Chapter 2(23)]
 [Section 275(5) 10.8
The terms and circumstances of appointing a provisional liquidator or corporate liquidator, as well as
the fees that must be paid to them, will be determined by the Tribunal based on the nature of the work
that has to be done, the liquidator's qualifications, experience, and the size of the firm.
 Section 275(6)
Upon being appointed as a provisional liquidator or company liquidator, as applicable, the liquidator is
required to disclose any conflicts of interest or lack of independence regarding their appointment to the
Tribunal within seven days of their appointment date. This obligation will persist for the duration of
their appointment.
 Section 275(7)
In issuing a winding up order, the Tribunal may designate a temporary liquidator, if any, designated
under to clause (c) of sub-section (1) of section 273 as the Company liquidator to oversee the
company's winding up proceedings.
10.9
Removal of Liquidators
conflict of
professional
interest or
incompetence inability to act
lack of
or failure to as provisional
independence
exercise due liquidator or
fraud or during the
misconduct care and as the case
misfeasance term of his
diligence in may be,
appointment
performance Company
that would
of the powers Liquidator
justify
and functions
removal
10.10
NCLT to intimate RoC about the Roc to make an endorsement to

initiation of liquidation within 7 that effect in his records relating to
days of making the liquidation the company and notify the same in
order the Official Gazette
Intimation for
Winding Up
Within 3 weeks from the date of of

Such order to be deemed to be a winding up order, the liquidator to
notice of discharge to the officers, make an application to the NCLT
employees and workmen of the for constitution of a winding up
company committee to assist and monitor
the progress of liquidation
10.11
v) Sale of assets
iv) Review of vi) Finalisation
audit reports of list of
and accounts of creditors and
the company contributories;
iii) Recovery of property, vii) compromise,

cash or any other assets o
the company including
abandonment and
beneits derived therefrom settlement of
claims
ii) Examination
viii) Payment of
of the
dividends, if
statement of
any; and
affairs
Functions ix) Any other
of function, as the
i) Taking over Company tribunal may
assets Liquidator direct from
time to time.
10.12
No suit or other legal proceeding shall be proceeded with, by or against the company, except
with the leave of the tribunal and subject to such terms as the tribunal may impose.
Liquidator to submit, within sixty days from the order, to the Tribunal, a report
containing particulars related to the financial information of the company.
The liquidator to include in his report the manner in which the company was promoted or formed
and whether in his opinion any fraud has been committed by any person in its promotion or
formation or by any officer of the company in relation to the company since the formation
Liquidator to make a report on the viability of the business of the company or the steps
which, in his opinion, are necessary for maximising the value of the assets of the company
The Tribunal, on consideration of the report of the Liquidator, to fix a time limit within which
the entire proceedings shall be completed and the company be dissolved:
10.13
a) the kind and specifics of the business's assets, such as their location
and worth; separately state any cash balances that the business may
have on hand or in a bank, as well as any negotiable securities that it
may own.With the understanding that registered valuers will
provide the asset appraisal for this purpose;
Financial
b) The whole capital raised, subscribed for, and paid in full;
Information
to be given c) the company's current and prospective liabilities, including the
in the report names, addresses, and occupations of its creditors, specifying the
prepared by quantities of secured and unsecured debts separately, and in the case
of secured debts, the specifics of the securities granted, whether by
the the company or an officer thereof, their value, and the dates on
Company which they were granted;
Liquidator
d) the sum of all outstanding debts owed to the company, together
with the names, residences, and jobs of those owing the money and
the expected amount of recovery;
e) any warranties offered by the business;

10.14
f) a list of contributors, together with any amounts owed and information about any
outstanding calls;
h) information on any ongoing agreements, joint ventures, or collaborations;
i) information on any holding and subsidiary companies;
j) specifics of lawsuits brought by or against the business; and
k) any additional data that the company liquidator or the tribunal deems relevant to
include
10.15
DIRECTIONS OF TRIBUNAL ON REPORT OF COMPANY LIQUIDATOR
The Tribunal shall, on consideration of the report of the Company Liquidator, fix a
time limit within which the entire proceedings shall be completed and the company
be dissolved
The Tribunal may order sale of the company as a going concern or its assets or
part thereof
It may appoint a sale committee comprising such creditors, promoters and

officers of the company as the Tribunal may decide to assist the Company
Liquidator in sale
It may order for investigation under section 210, and on consideration of the report of such
investigation it may pass order and give directions under sections 339 to 342 or direct the Company
Liquidator to file a criminal complaint against persons who were involved in the commission of fraud
10.16
The NCLT may, while passing an order

The advisory committee appointed by
of winding up of a company, direct that
the Tribunal to consist of not more than
there shall be, an advisory committee to
twelve members, being creditors and
advise the Company liquidator and to
contributories of the company
report to the NCLT
Advisory Committee
The liquidator to convene a meeting of

creditors and contributories of the
company within thirty days from the
The meeting of advisory committee to
date of order of winding up for enabling
be chaired by the Company liquidator
the NCLT to determine the persons
who may be members of the advisory
committee.
POWERS AND DUTIES OF COMPANY 10.17
LIQUIDATOR
Section 290 of the Companies Act, 2013 lays down that subject to directions by the Tribunal, if any, in this
regard, the Company liquidator, in a winding up of a company by the Tribunal, shall have the power –
(a) to carry on the company's business to the extent necessary for the company's beneficial winding up;
(b) to perform all acts and execute all deeds, receipts, and other papers in the name and on behalf of the
company, and to use the company's seal as necessary;
(c) to sell the company's immovable and moveable property and actionable claims by public auction or private
contract, with the authority to transfer such property to any person or body corporate or sell it in pieces;
(d) to sell the entire company's undertaking as a continuing concern;
(e) to raise any funds required for the company's asset security;
(f) to bring or defend any civil or criminal suit, prosecution, or other legal process in the name and on behalf
of the firm;
10.18
(g) inviting and settling claims of creditors, employees, or any other claimant, and distributing sale
profits in line with the priorities established by this act;
(h) to examine the company's returns and documents stored in the Registrar's or any other
authority's files;
(i) to establish a contributory's rank and claim in the bankruptcy for any balance owed against his
estate, and to collect dividends for that balance as a distinct debt owed to the insolvent and in
proportion to the other separate creditors;
(j) to draught, accept, make, and endorse any negotiable instruments, such as checks, bills of
exchange, promissory notes, or handwritten notes, in the name and on behalf of the business, with
the same legal effect on the business as if the instruments had been made, accepted, endorsed, or
drawn by the business in the course of its operations;
(k) to obtain, in his official name, letters of administration to any deceased contributory, and to
carry out any other necessary action to obtain payment of any money owed from a contributory or
his estate that is not conveniently done in the company's name; in all such cases, the money owed
shall be deemed due to the Company liquidator in order to enable the Company liquidator to
obtain the letters of administration or recover the money;
(l) to designate a professional or seek professional aid in carrying out his obligations, 10.19
responsibilities, and duties; additionally, to designate an agent to handle any tasks that the
Company liquidator is unable to complete on his own in order to safeguard the Company's assets;
(m) to carry out any necessary actions, steps, or signatures, executions, and verifications on any
paper, deed, document, application, petition, affidavit, bond, or instrument, including
(i) company winding up;
(ii) asset distribution;
(iii) in carrying out his responsibilities and functions as Company liquidator; and
(n) to request from the Tribunal any orders or guidelines that could be required for the company's
wound up.
 Professional assistance to company liquidator

The Company liquidator may, with the sanction of the Tribunal, appoint one or more chartered
accountants or company secretaries or cost accountants or legal practitioners or such other
professionals on such terms and conditions, as may be necessary, to assist him in the performance
of his duties and functions under this Act. [Section 291(1)] Any person appointed under this
section shall disclose forthwith to the Tribunal in the prescribed form any conflict of interest or
lack of independence in respect of his appointment. [Section 291(2)]
Books To Be Kept By Liquidator 10.20
The Company Liquidator shall Audit Of Liquidator’s Accounts

keep proper books in such
manner, as may be prescribed, The Company Liquidator shall, Examination Of Promoters, Directors,
in which he shall cause entries at such times as may be
or minutes to be made of prescribed but not less than IPon the report of the
proceedings at meetings and of twice in each year during his Company stating that in his
such other matters as may be tenure of office, present to the opinion a fraud has been
prescribed. [Section 293(1)] Tribunal an account of the committed by any person in
receipts and payments as such the promotion, formation,
liquidator in the prescribed business or conduct of affairs
form in duplicate, which shall of the company since its
be verified by a declaration in formation, the Tribunal may,
such form and manner as may after considering the report,
be prescribed. [Section 294(2) direct that such person or
officer shall attend before the
Tribunal on a day appointed by
it for that purpose
Where an account relates to a Government company, the Company liquidator shall forward a copy
thereof – (a) to the Central Government, if that Government is a member of the Government
company; or (b) to any State Government, if that Government is a member of the Government
company; or (c) to the Central Government and any State Government, if both the Governments are
members of the Government company. [Section 294(5)
10.21
6.6
Arrest Of Person Trying To Leave India Or Abscond

Dissolution Of Company By Tribunal
The Tribunal, if satisfied that a contributory or a When the affairs of a company have been
person having property, accounts or papers of completely wound up, the Company Liquidator
the company in his possession is about to leave shall make an application to the Tribunal for
India or otherwise to abscond, or is about to dissolution of such company. [Section 302(1)]
remove or conceal any of his property, for the
purpose of evading payment of calls or of
avoiding examination respecting the affairs of
the company, the Tribunal may cause the
contributory to be detained until such time as
the Tribunal may order
10.22
COMPANIES (WINDING UP)

RULES, 2020
10.23
Companies accepting
Companies having total
deposit and having total
outstanding loan including
outstanding deposits upto
secured loan upto Rs.50 lacs
Rs.25 lacs
Summary
Procedure for
Liquidation
Companies having total Companies with paid-up

turnover upto Rs.50 Crores capital upto Rs.1 Crore
Insolvency AND BANKRUPCTY
Individual/firm Insolvency
PART III – IBC, 2016
11.1
11.2
if an
application
under this
Chapter has
been
admitted in
undergoing
an undergoing a undergoing a respect of the
an insolvency
undischarged fresh start bankruptcy debtor during
resolution
bankrupt; process process the period of
process
12 months
preceding the
date of
submission of
the
application
11.3
liability to pay
liability to pay fine maintenance to any
imposed by a court or person under any law
tribunal for the time being in
force
Excluded
Debts
liability to pay damages

for negligence,
liability in relation to a
nuisance or breach of a
student loan
statutory, contractual or
other legal obligation
11.4
Effects of Interim Moratorium
any pending legal action in respect of any debt shall be
deemed to have been stayed; and
the creditors shall not initiate any legal action or Interim
proceedings in respect of any debt.
Moratorium
Exclusion of certain transactions from Interim
Moratorium
Transactions as may be notified by the Central
Government in consultation with any financial sector
regulator.
During the interim
moratorium period
any pending legal
action or proceeding
in respect of any debt
shall be deemed to
have been stayed
Date of Commencement - Date of Termination- Date and the creditors of
Date of filing of the of admission of the the debtor shall not
application application
initiate any legal
action or proceedings
in respect of any
debt.
11.5
Appointment of RP
11.6
Replacement of RP
11.7
Recommending either acceptance or rejection of the

application
To submit this report within 10 days of appointment
Report to proper reasons behind the recommendation
If the RP finds that the debtor is eligible for a fresh start

process, may make recommendations to that effect
SUBMISSION OF REPORT BY RESOLUTION

PROFESSIONAL (SECTION 99)
11.8
DRT pass an order either accepting or

rejecting the application.
• within 14 days from the date of submission of the

report by the resolution professional
A copy of the said order, along with the

report of the resolution professional,
should be sent to the creditors
• within 7 days of the said order.
11.9
DRT to issue a public notice within 7 days of passing the order

admitting the application
claims to be invited from all creditors within 21 days of

such announcement
published in at least one English and one vernacular

newspaper
affixed in the premises of the Adjudicating Authority and on

the website of the Adjudicating Authority
the RP to prepare a list of creditors including all the creditors of

the debtor within 30 days of the public announcement.
PUBLIC NOTICE AND CLAIMS FROM

CREDITORS (SECTION 102)
11.10
Effects of moratorium –
any pending legal action or proceeding in respect of
any debt shall be deemed to have been stayed;
the creditors shall not initiate any legal action or
proceedings in respect of any debt; and
the debtor shall not transfer, alienate, encumber or
dispose of any of the assets or his legal right or
beneficial interest therein.
Moratori
um
Date of Termination -
Date on which an order
approving the repayment
Date of Commencement – plan is passed by the
Date on which the DRT OR at the expiry of
Application is admitted 180 days from the date
of admission of the
application, whichever is
earlier
11.11
The repayment plan

is prepared by the
is a plan that The creditors are not
debtor, in
contains terms as per involved in the
consultation with the
which the debtor preparation of the
resolution
agrees to repay his repayment plan
professional.
debts to his creditors
justification for
preparation of such
The plan should provision for
repayment plan and
contain provisions payment of fee to
reasons on the basis
made for the the resolution
of which the
following – professional
creditors may agree
upon the plan
11.12
Once the repayment plan is prepared, the Resolution Professional is

required to prepare a Report
within a period of 21 days from the last date of submission of claims
The report should contain points like -
whether the plan is in compliance with the provisions of any law

for the time being in force
whether the plan has a reasonable prospect of being approved

and implemented
whether there is a necessity of summoning a meeting of the

creditors to consider the repayment plan
if the meeting is to be conducted, the date, place and time of such

meeting
11.13
If the report of the
resolution professional Within a period of 14 – 28 Notice of the meeting –
suggests that a meeting of days of the report 14 Days Minimum
the creditors be conducted
Conduct of Meeting of
Creditors – Voting Rights –
no voting rights are given to the
the creditors may decide to determined by the amount of following creditors –
approve, modify or reject the debt owed to them
repayment
a person to whom a
a person who is not a
debt for an a person who is an
creditor mentioned in
unliquidated amount is associate of the debtor
the list of creditors
owed
11.14
Secured creditors are (a) the right to vote
entitled to participate in and exercised by the
vote in the meetings of the secured creditor is only
creditors, but must forfeit in respect of the

unsecured part of the
their right to enforce
debt; and
security during the period of
(b) the estimated value of
the repayment plan.
the unsecured part of
the debt.
RIGHTS OF SECURED CREDITORS IN

RELATION TO REPAYMENT PLAN
11.15
Report of Meeting of
Creditors
whether the repayment plan was approved or
rejected and if approved, the list the modifications, if
any
the resolutions which were proposed at the meeting

and the decision on such resolutions
list of the creditors who were present or represented

at the meeting, and the voting records of each
creditor for all meetings of the creditors
11.16
Order of Approval –
Repayment Plan
Completion of
Plan is binding on all On completion of the
the creditors repayment plan, the
shall forward the Within a period of 14
Order of Rejection – days from the date of
Debtor and the following documents to
the creditors – completion of the
creditors entitled to file repayment plan.
an application for •a notice stating that the
repayment plan has been
bankruptcy fully implemented
•a copy of a report
summarizing all receipts and
payments made in pursuance
of the repayment plan
•extent of the implementation
of such plan as compared
with the repayment plan
approved by the meeting of
the creditors.
Approval / Rejection of
Repayment Plan
11.17
Completion of Repayment
Plan
Resolution Professional to forward a report to the persons
who are bound by the repayment planwithin fourteen days
from the date of the completion of the repayment plan
report to have a summary of all receipts and payments

made in pursuance of the repayment plan
Report to also state the extent of the implementation of

such plan as compared with the repayment plan approved
by the meeting of the creditors.
11.18
Premature end of the

repayment plan means the
If such a situation occurs,
situation wherein a
the resolution professional
repayment plan does not get
shall prepare a report and
fully implemented within the
submit it to the DRT
period as mentioned in the
repayment plan
It is important to note that

NO EXTENSION OF TIME
is granted for
implementation of
repayment plan under Part
III of the IB Code, 2016.
11.19
Discharge order is an order

passed by the DRT recognizing
the fact that the debts have
been repaid. The discharge
orders are forwarded to the
Board for recording entries in
the register.
Resolution Professional to apply
to the DRT for a discharge order
in relation to the debts
mentioned in the repayment
plan
DISCHARGE ORDER
BANKRUPTCY ORDER FOR INDIVIDUAL

AND PARTNERSHIP FIRMS
What is Bankruptcy? 12.1
Bankruptcy is a legal procedure to give debt relief for

people whose circumstances are unlikely to change and
who have no hope of paying off their debts within a
reasonable time
Which is the Adjudicating Authority for bankruptcy Order?
Debt Recovery Tribunal and Appellate Authority for the

same is Debt Recovery Appellate Tribunal
Who can file an application for Bankruptcy?
The Debtor as well as the creditor(s)

12.2
Application by Debtor Application by Creditors

• Section 122 • Section 123
• To be accompanied with • To be accompanied with
• the records of insolvency • the records of insolvency
resolution process undertaken resolution process undertaken
• the statement of affairs of the • a copy of the order passed by
debtor as on the date of the the Adjudicating Authority
application for bankruptcy; permitting the creditor to apply
• a copy of the order passed by for bankruptcy
the Adjudicating Authority • details of the debts owed by the
permitting the debtor to apply debtor to the creditor
for bankruptcy
12.3
a) a statement by the
b) a statement by the
creditor having the right to
creditor stating that the
enforce the security that
application for bankruptcy
creditor shall in the event
is only in respect of the
of a bankruptcy order being
unsecured part of the debt
made, give up his security
and an estimated value of
for the benefit of all the
the unsecured part of the
creditors of the bankrupt;
debt.
or
If a secured creditor makes an application for bankruptcy and

submits a statement, the secured and unsecured parts of the debt
shall be treated as separate debts
*
12.4
Effects of filing of
Application (Section 124)
all actions
against the
Stay on
properties of
interim- pending legal
the debtor in
moratorium actions and
respect of his
shall initiation of
debts and such
commence fresh legal
moratorium
suits
shall cease to
have effect
12.5
Bankruptcy Trustee
Within 10 days
If applicant
proposes an IP
Appointment of
Bankruptcy
Within 10 days Trustee –
Section 125
If applicant
does not
propose an IP
12.6
Bankruptcy Order
Section 126 - Effects –
the estate of the bankrupt shall vest
in the bankruptcy
Section 126 the estate of the bankrupt shall be
Section 127
To be passed within divided among his creditors
shall continue
14 days of receiving a creditor of the bankrupt shall not:
to have effect
the confirmation or i. initiate any action against the
till the debtor
nomination of the
is discharged property of the bankrupt in respect
bankruptcy trustee of such debt;
ii. commence any suit or other legal
proceedings except with the leave of
the Adjudicating Authority.
12.7
Where a bankruptcy order is passed, the bankrupt shall submit his statement of
financial position to the bankruptcy trustee within seven days from the bankruptcy
commencement date.
DRT to send Notice to creditors as well as the public in general to

submit their claims
Important Points
Notice to be sent within 10 days of Bankruptcy Commencement

Date
The creditors shall register claims with the bankruptcy trustee within seven
days of the publication of the public notice
Notice to be published in an english newspaper, a verancular

newspaper, DRT’s premises and website
List of Creditors to be prepared within 14 days of the Bankruptcy

Commencement date
12.8
Bankruptcy trustee to issue a notice for calling a meeting of the
creditors, to every creditor of the bankrupt, within twenty-one days
from the bankruptcy commencement date
SUMMONING OF MEETING OF
The notices shall –

(a) state the date of the meeting, which shall not be later than twenty-one
days from the bankruptcy commencement date;
CREDITORS
(b) be accompanied with forms of proxy voting;

(c) specify the form and manner in which the proxy voting may take place.
Creditors not entitled to vote –

(a) creditors who are not mentioned in the list of creditors;
(b) creditors who are associates of the bankrupt
The following business shall be conducted in the meeting of the creditors:

a) the establishment of a committee of creditors;
b)any other business that the bankruptcy trustee thinks fit to be transacted.
VOTING RIGHTS OF CREDITORS
12.9
According to Section 135 of the Code, each creditor is entitled to vote on the resolutions at
the creditors' meeting in accordance with the voting share that has been allotted to him.
The voting share allotted to each creditor would be decided by the resolution professional
in accordance with the guidelines provided by the Insolvency and Bankruptcy Board of India.
Regarding a debt for an unliquidated sum, a creditor is not allowed to vote.
ADMINISTRATION AND DISTRIBUTION OF ESTATE OF BANKRUPT
According to Section 136 of the Code, the bankruptcy trustee is responsible for managing
and allocating the estate of the bankrupt in compliance with Chapter V (Voluntary
Liquidation) guidelines.
COMPLETION OF ADMINISTRATION
The bankruptcy trustee is required to report to the creditors' committee on the

management of the bankrupt's estate. Within seven days of receiving the report, the
committee of creditors must approve it in order to decide whether to discharge the
bankruptcy trustee in accordance with Section 148 of the Code.
*DISCHARGE ORDER 12.10
When shall the Bankruptcy Trustee apply for it?
On the expiry of one year from the bankruptcy commencement

date or within seven days of the approval of the committee of
creditors of the completion of administration of the estates of the
bankrupt
Effect of discharge ?
The Bankrupt is released from all the debts.

12.11
Disqualification of a Bankrupt
(Section 140)
From being
appointed or From being From being
acting as a elected to any elected or
From being
trustee or public office sitting or
appointed or
representative where the voting as a
acting as a
in respect of public servant appointment member of
any trust, to such office any local
estate or is by election; authority.
settlement
(d) Prior to entering into
(c) Be required any financial or
to inform his commercial transaction 12.12
of such value as may be
business prescribed, either
partners that he individually jointly,
inform all parties
is undergoing a involved in such
bankruptcy transaction that he is
undergoing a bankruptcy
process; process;
(b) Without the (e) Without the
previous sanction of previous sanction of
the bankruptcy the adjudicating
trustee, be authority, be
prohibited from incompetent to
creating any charge maintain any legal
on his estate or action or proceedings
taking any further in relation to the
debt; bankruptcy debts;
and
A Bankrupt
(a) Not act as (f) Not be
director of any from the
permitted to
company, or directly bankruptcy
or indirectly take travel overseas
commenceme
part in or be without the
concerned in the nt date shall
permission of
promotion, formation (Section
or management of a
the adjudicating
141):
company; authority.
12.13
The DRT can suo moto, or on an application, recall the
bankruptcy order if it is of the opinion that –
a) there exists an error apparent on the face of such order;
or
b) both the bankruptcy debts and the expenses of the
bankruptcy have, after the making of the bankruptcy order,
either been paid for or secured to the satisfaction of the
Adjudicating Author
*Modification or Recall
of Bankruptcy Order
RESIGNATION BY BANKRUPTCY TRUSTEE 12.14
According to After accepting the The bankruptcy trustee

Section 146 of the bankruptcy trustee's nominated on the day of
Code, a trustee for resignation, the adjudicating his appointment will get
bankruptcy may authority would designate a possession of the
step down if he replacement through the bankrupt's estate from
plans to stop Insolvency and Bankruptcy the substitute trustee.
working as an Board of India within seven The adjudicating
insolvency days. Following instruction authority may order the
professional, if from the adjudicating resigned bankruptcy
there is a conflict authority, the Insolvency and trustee to provide the
of interest, or if Bankruptcy Board of India new bankruptcy trustee
his personal must nominate a new with all information
circumstances bankruptcy trustee within 10 pertaining to the
change and make days. Within fourteen days of bankruptcy proceedings
it impossible for receiving the recommendation and to assist the new
him to continue from the Insolvency and bankruptcy trustee in
serving as a Bankruptcy Board of India, the any way that may be
trustee for Adjudicating Authority will necessary..
bankruptcy. name the bankruptcy trustee.
12.15
In such cases, DRT is required to direct the IBBI to suggest
or recommend the name of an insolvency professional who
can be appointed as the bankruptcy trustee.
Once the new bankruptcy trustee is appointed, the older

bankruptcy trustee is released from the office.
* Relacement/ Resignation/
Vacancy of Bankruptcy
Trustee
BANKRUPTCY ORDER FOR INDIVIDUAL

AND PARTNERSHIP FIRMS
Part II
FUNCTIONS OF BANKRUPTCY TRUSTEE
13.1
According to Section 149 of the Insolvency

and Bankruptcy Code, 2016 (‘the Code’), It may be noted that
the bankruptcy trustee shall perform the “bankruptcy trustee”
following functions in accordance with the means the insolvency
provisions of this Chapter professional appointed as
a trustee for the estate of
the bankrupt under
Section 125 or Section
(a) investigate the affairs of the bankrupt; 145 of the Code.
(b) realise the estate of the bankrupt; and
(c) distribute the estate of the bankrupt.
DUTIES OF BANKRUPT TOWARDS BANKRUPTCY TRUSTEE
13.2
(Section 150)
a) giving to the bankruptcy trustee the b) attending on the bankruptcy trustee

information of his affairs; at such times as may be required;
c) giving notice to the bankruptcy trustee of

any of the following events which have
occurred after the bankruptcy
commencement date, - d) doing all other things as may be
i) acquisition of any property by the
bankrupt;
prescribed
ii) devolution of any property upon the
bankrupt;
iii) increase in the income of the bankrupt
13.3
Rights Of Bankruptcy trustee Powers of Bankruptcy Trustee

• Section 151 • Section 152
• hold property of every description • sell any part of the estate of the bankrupt;
• make contracts • give receipts for any money received by
• sue and be sued; him;
• enter into engagements in respect of the • prove, rank, claim and draw a dividend in
estate of the bankrupt respect of debts due to the bankrupt
• employ persons to assist him • exercise the right of redemption in respect
• execute any power of attorney, deed or of any such property subject to the relevant
other instrument contract by giving notice to the said person
• do any other act which is necessary or • Deal with any property comprised in the
expedient for the purposes of or in estate of the bankrupt to which the
connection with the exercise of his rights bankrupt is beneficially entitled in the same
manner as he might have dealt with
APPROVAL OF CREDITORS FOR CERTAIN ACTS (Section 153)
13.4
(a) carry on any (b) bring, institute or (c) accept as consideration
business of the defend any legal for
bankrupt as far as action or proceedings the sale of any property
may be necessary for relating to the property a sum of money due at
winding it up comprised in the a future time subject to
beneficially; estate of the bankrupt; certain stipulations such as
security;
(d) mortgage or (e) where any right, (f) refer to arbitration or

pledge any property option or other power compromise on such
for the purpose of forms part of the estate terms as may be
raising money for the of the bankrupt, make agreed, any debts
payment of the debts payments or incur subsisting or supposed
of the bankrupt; liabilities with a view to to subsist between the
obtaining, for the bankrupt and any
benefit of the creditors, person who may have
any property which is incurred any liability to
the subject of such the bankrupt;
right, option or power;
13.5
(g) make (h) make compromise (i) appoint the bankrupt to
compromise or or other arrangement - (A) supervise the
other arrangement as he may deem management of the estate
as may be expedient with respect of the bankrupt or any part
considered to any claim arising of it; (B) carry on his
expedient, with the out of or incidental to business for the benefit of
creditors; the bankrupt’s estate; his creditors; (C) assist the
bankruptcy trustee in
administering the estate of
the bankrupt.
Vesting of estate of bankrupt in Bankruptcy Trustee

Section 154 of the Code states that the estate of the bankrupt shall vest in the
bankruptcy trustee immediately from the date of his appointment. The vesting
shall take effect without any conveyance, assignment or transfer.
Estate of Bankrupt 13.6
Section 155
Includes – Excludes-
all property belonging to or vested excluded assets;
in the bankrupt at the bankruptcy property held by the bankrupt on
commencement date; trust for any other person;
the capacity to exercise and to all sums due to any workman or
initiate proceedings for exercising employee from the provident fund,
all such as might have been the pension fund and the gratuity
exercised by the bankrupt for his fund;
own benefit
such assets as may be notified by
all property which by virtue of any the Central Government in
of the provisions of this Chapter is consultation with any financial
comprised in the estate. sector regulator.
13.7
Acquisition of control by Bankruptcy

Trustee
Delivery of property and documents to Section 157 - The bankruptcy trustee
Bankruptcy Trustee shall take possession and control of all
Section 156- the bankrupt, his banker or property, books, papers and other records
agent or any other person having relating to the estate of the bankrupt or
possession of any property, books, affairs of the bankrupt which belong to
papers or other records which bankruptcy him or are in his possession or under his
trustee is required to take possession for control.
the purposes of the bankruptcy process Where any part of the estate of the
shall deliver the said property and bankrupt consists of things in actionable
documents to the bankruptcy claims, they shall be deemed to have
been assigned to the bankruptcy trustee
without any notice of the assignment.
Restrictions on Disposition of 13.8
15.5
Property (Sec 158)
 Any disposition of property made by the debtor, during the
period between the date of filing of the application for
bankruptcy and the bankruptcy commencement date shall
be void.
 The term “property” means all the property of the debtor,

whether or not it is comprised in the estate of the
bankrupt, but shall not include property held by the debtor
in trust for any other person
 It is immaterial if the property was acquired in good faith,

for value and/or without the notice of the application
13.9
After Acquired Onerous Property of Disclaimer of

Property Bankrupt
• Section 160
Leaseholds
• Section 159
• Section 162
• Means any unprofitable
• Means any property which has contract or any other property
been acquired by or has comprised in the estate of the • Bankruptcy trustee not
devolved upon the bankrupt bankrupt which is unsaleable or
after the bankruptcy entitled to disclaim any
not readily saleable, or is such
commencement date that it may give rise to a claim
leasehold interest,
• Bankruptcy trustee to be unless a notice of
entitled to claim any after- disclaimer has been
• the bankruptcy trustee may, by
acquired property by giving a
notice to the bankrupt
giving notice to the bankrupt or served on every
any person interested in the interested person
• The bankruptcy trustee shall onerous property, disclaim any
not be entitled to claim from onerous property which forms a
any person who has acquired part of the estate of the
any right over after-acquired bankrupt.
property, in good faith, for
value and without notice of the
bankruptcy.
CHALLENGE AGAINST DISCLAIMED
13.10
PROPERTY (Section 163)
(a) any person who claims an interest in the disclaimed

property; or
(b) any person who is under any liability in respect of

the disclaimed property; or
(c) where the disclaimed property is a dwelling

house, any person who on the date of application
for bankruptcy was in occupation of or entitled to
occupy that dwelling house.
Undervalued Transaction 13.11
Section 164
What?
Orders of the DRT- gift to a person;
Declare an undervalued no consideration received
Should be entered into transaction void; it is in consideration of
during the period of two marriage
years ending on the filing require any property
of the application for transferred as a part of an it is for a consideration,
bankruptcy and caused undervalued transaction the value of which in
bankruptcy process to be to be vested with the money or money’s worth
triggered bankruptcy trustee is significantly less than
pass any other order it the value in money or
thinks fit money’s worth of the
consideration provided by
the bankrupt.
Preferential Transaction 13.12
Section 165
Orders of the DRT-
order declaring a transaction
giving preference void;
an order requiring any If the person is an associate
Should have been entered
property transferred in of the bankrupt, (otherwise
into by the bankrupt with the
respect of a transaction than by reason only of being
associate during the period of
giving preference to be his employee), at the time
two years ending on the date
vested with the bankruptcy when the preference was
of the application for
trustee given, it shall be presumed
bankruptcy and should have
that the bankrupt was
caused the bankruptcy any other order it thinks fit for influenced in his decision
process to be triggered. restoring the position to what under that sub- section.
it would have been if the
bankrupt had not entered into
the transaction giving
preference.
Extortionate Credit Transaction 13.13
Section 167
Orders of the DRT-
set aside the whole or part of
any debt created by the What?
transaction; transaction for or involving the
vary the terms of the provision of credit to the
transaction bankrupt by any person
Should be entered into during
the period of two years ending require any person who has (a) on terms requiring the
on the filing of the application been paid by the bankrupt bankrupt to make exorbitant
for bankruptcy under any transaction, to pay a payments in respect of the
sum to the bankruptcy trustee; credit provided; or
require any person to surrender (b) which is unconscionable
to the bankruptcy trustee any under the principles of law
property of the bankrupt held relating to contracts.
as security for the purposes of
the transaction
OBLIGATIONS UNDER CONTRACTS (SECTION 168)
13.14
1. If the bankrupt enters into a deal with someone before the bankruptcy
commencement date, this section will be applicable.
2. With the exception of the bankrupt under sub-section (1), any party to a
contract may apply to the adjudicating authority for one of the following:
(a) an order relieving the applicant or the bankrupt of their obligations under
the contract; or
(b) payment of damages by the party or the bankrupt for breach of contract
or other reasons.
3. Any damages that the bankrupt is required to pay as a result of an order

made under subsection (2)'s clause (b) must be proven as bankruptcy debt.
4. If a bankrupt and another person are parties to a contract under this

section jointly, the other party may file a lawsuit or be sued in relation to the
contract without the bankrupt's participation.
ADMINISTRATION OF ESTATE OF
13.15
DECEASED BANKRUPT (Section 170)
Since bankruptcy proceedings are civil in nature, these

proceedings survive the demise of bankrupt. As per
Section 169 of the Code, if a bankrupt dies, the
bankruptcy proceedings shall, continue as if he were alive.
The legal representative of the deceased bankrupt to
payment of the proper funeral and testamentary expenses
incurred by them.
Any surplus that remains in the hands of the bankruptcy
trustee after payment in full of all the debts due from the
deceased bankrupt, together with the costs, surplus shall
be paid to the legal representatives of the estate of the
deceased bankrupt.
PROOF OF DEBT
13.16
As per Section 171 of the Code the bankruptcy trustee shall give notice to each of
the creditors to submit proof of debt within fourteen days of preparing the list of
creditors under section 132.
The proof of debt shall –
(a) require the creditor to give full particulars of debt,

including the date on which the debt was contracted
and the value at which that person assesses it;
(b) require the creditor to give full particulars of the

security, including the date on which the security
was given and the value at which that person
assesses it;
In case the creditor is a decree holder against the bankrupt, a copy of the decree
shall be a valid proof of debt. Where a debt bears interest, that interest shall be
provable as part of the debt except in so far as it is owed in respect of any period
after the bankruptcy commencement date
Mutual Dealings and Set Off 13.17
(Section 173)
 where before the bankruptcy commencement
date, there have been mutual dealings between
the bankrupt and any creditor
 the bankruptcy trustee shall
 take an account of what is due from each party to the
other in respect of the mutual dealings and the sums
due from one party shall be set off against the sums due
from the other; and
 only the balance shall be provable as a bankruptcy debt
or as the amount payable to the bankruptcy trustee as
part of the estate of the bankrupt.
DISTRIBUTION OF INTERIM DIVIDEND (Section 174)
13.18
Whenever the bankruptcy trustee has sufficient funds in his hand, he may
declare and distribute interim dividend among the creditors in respect of the
bankruptcy debts which they have respectively proved. In the calculation and
distribution of the interim dividend, the bankruptcy trustee shall make provision
for –
any bankruptcy debts which appear to him to be due to persons who, by reason
of the distance of their place of residence, may not have had sufficient time to
tender and establish their debts; and
any bankruptcy debts which are subject of claims which have not yet been
determined;
disputed proofs and claims; and
expenses necessary for the administration of the estate of the bankrupt.

DISTRIBUTION OF PROPERTY
13.19
Section 175(1) - Any property in its existing form that cannot be easily or profitably
sold due to its unique nature or other special circumstances may be divided among
the creditors in accordance with its estimated value by the bankruptcy trustee, with
the committee of creditors' approval.
Section 175(2) - stipulates that the bankruptcy trustee must obtain consent under
sub-section (1) for every transaction, and that anyone interacting with the trustee in
good faith and for a fair price is not obliged to find out if the necessary approval under
sub-section (1) has been granted.
Section 175(3)-stipulates that in cases where the bankruptcy trustee has taken
action without the committee of creditors' consent, the committee may approve the
bankruptcy trustee's actions in order to let the trustee to pay for his expenses out of
the bankruptcy estate.
Section 175(4) - stipulates that under Section 175(3), the committee of creditors
cannot approve the bankruptcy trustee's action unless it is convinced that the trustee
acted urgently and promptly requested confirmation.
FINAL DIVIDEND (SECTION 176)
13.20
1. If the bankruptcy trustee has collected all of the bankrupt's assets, or as much of
them as, in his or her opinion, may be collected, he or she must notify the parties:
(a) of his intention to declare a final dividend; or (b) that no dividend or future
dividend shall be given.
2. The notification required by sub-section (1) must include all prescribed details
and stipulate a final date by which all claims against the bankrupt's estate must be
substantiated.
3. The final date mentioned in subsection (2) may be postponed by the

Adjudicating Authority upon the request of any party interested in the administration
of the bankrupt's estate.
4. Following the final date mentioned in sub-section (2), the bankruptcy trustee will:
a) use the bankrupt's estate to pay any outstanding bankruptcy-related expenses;
and
b) if he plans to declare a final dividend, declare and distribute it among the
creditors who have proven their debts, disregarding the claims of any other parties.
13.21
5. The bankrupt is entitled to any surplus that is left over after paying all of their
creditors in full, including interest, and all their bankruptcy-related fees.
6. Where a bankruptcy order has been passed in respect of one partner in a firm,
a creditor to whom the bankrupt is indebted jointly with the other partners in the
firm or any of them shall not receive any dividend out of the separate property of
the bankrupt until all the separate creditors have received the full amount of their
respective debts.
Priority of payment of debts
(Section 178)
13.22
 the costs and expenses incurred by the bankruptcy trustee for the
bankruptcy process in full
 (i) the workmen’s dues for the period of twenty-four months preceding the
bankruptcy commencement date; and (ii) debts owed to secured
creditors
 wages and any unpaid dues owed to employees, other than workmen, of
the bankrupt for the period of twelve months preceding the bankruptcy
commencement date;
 any amount due to the Central Government and the State in respect of
the whole or any part of the period of two years preceding the bankruptcy
commencement date
 all other debts and dues owed by the bankrupt including unsecured debts
13.23
Supreme court Debt Recovery

Debt Recovery
Appellate Tribunal
Tribunal (DRT)
(DRAT)
Within 45
days from the Within 30 days
order of DRAT
from the order of
(further period
not exceeding DRT (further
15 days) period not
exceeding 15
days)
Fresh Start Process
PART III – IBC, 2016
14.1
What is Fresh Start Process?
the eligible debtors are discharged from certain debts
within a specified threshold and can start afresh

without any liabilities
conceptualized for persons who owe relatively less

amount of money
and have little or no income or assets to repay their

debts.
14.2
the gross annual income of the debtor does not exceed Rs. 60,000
the aggregate value of the assets of the debtor does not exceed Rs. 20,000;
the aggregate value of the qualifying debts does not exceed Rs. 35000
they are not undischarged bankrupts
they do not own a dwelling unit, irrespective of whether it is encumbered or not
a fresh start process, insolvency resolution process or bankruptcy process is not

subsisting against them
no previous fresh start order had been made in relation to them in the preceding 12 months
of the date of the application for fresh start
14.3
Qualifying Debt Excluded Debt
Amount due, which includes interest or any

liability to pay fine imposed by a court or tribunal
other sum due and does not include
liability to pay damages for negligence, nuisance or

an excluded debt breach of a statutory, contractual or other legal
obligation
liability to pay maintenance to any person under

a debt to the extent it is secured
any law
any debt which has been incurred 3 months prior

to the date of the application for fresh start liability in relation to a student loan
process.
14.4
APPLICATION FOR FRESH START ORDER
Application
To be filed by the
Interim Moratorium
debtor either personally Information
or through a resolution Date of
professional Commencement – a list of all debts owed
date of filing of said by the debtor as on the
application date of the said
Date of Termination application
– date of admission or the interest payable on
rejection of the the debts and the rate
application thereof stipulated in
the contract;
a list of security held in
respect of any of the
debts
14.5
INFORMATION TO BE PROVIDED WITH THE APPLICATION
a) A list of all debts owed by the debtor as on the said

application;
b) The interest payable on the debts and the rate thereof
stipulated in the contract
c) A list of security held in respect of any of the debts
d) The financial information of the debtor and his immediate
family for up to two years prior to the date of the application
e) The particulars of the debtor’s personal details, as may be
prescribed;
f) The reasons for making the application;
g) The particulars of any legal proceeding which, to the debtor’s
knowledge has been commenced against him;
h) The confirmation that no previous fresh start order has been
made in respect of the qualifying debts of the debtor in the
preceding twelve months of the date of the application.
14.6
Appointment of Resolution Professional
The process of Examination by Resolution Professional

appointment of resolution
professional is the same To examine the Recommendation by the RP
as given in the process for application within 10
Resolution of days and submit a report After going through the
Individual/Firm to the DRT, either application and the
Insolvency recommending acceptance additional information, if
or rejection of the any, the resolution
application. professional shall make a
recommendation to the
DRT to either accept or
reject the application
14.7
THE RESOLUTION PROFESSIONAL SHALL REJECT
THE APPLICATION IN THE FOLLOWING CASES:
a) The debtor does not satisfy the

conditions specified under Section 80; or
b) The debts disclosed in the application

by the debtor are not qualifying debts; or
c) The debtor has deliberately made a

false representation or omission in the
application or with the respect to the
documets or information submitted.
ADMISSION OR REJECTION OF APPLICATION BY ADJUDICATING
AUTHORITY AND ITS EFFECT THEREOF 14.8
DRT to make a decision either

admitting or rejecting the
application made within fourteen
days of the day the Resolution
Professional submitted their
report
Order to specify the sums that

have been acknowledged by the
Within two days from DRT’s Resolution Professional as
decision, the creditors included qualifying debts for the
in the application to receive a purposes of the fresh start
copy of the order as well as a order, as well as any further
copy of the application. sums that are eligible for
discharge in the event that the
application is approved by DRT.
14.9
8.7
EFFECT OF MORATORIUM PERIOD
 The following are the effects of the initiation of a moratorium period –

 any pending legal action or legal proceeding in respect of any debt shall be deemed
to have been stayed;
 the creditors shall not initiate any legal action or proceedings in respect of any debt
 the debtor is barred from –
 acting as a director of any company, or directly or indirectly taking part in or be
concerned in the promotion, formation or management of a company;
 disposing of or alienating any of the assets;
 travelling outside India except with the permission of the Adjudicating Authority
 the debtor is further required to-

 inform his business partners that he is undergoing a fresh start process;
 inform prior to entering into any financial or commercial transaction of such
value as may be notified, either individually or jointly, that he is undergoing a
fresh start process;
 disclose the name under which he enters into business transactions, if it is different
from the name in the application admitted under section
14.10
Objections by Creditor
Any creditor, amount due to Application against Decision of RP

whom, gets discharged as a
must be filed within a period of
part of the fresh start order, 10 days from the date of the Replacement of RP
may file an objection with the decision taken by RP and on the
resolution application within following grounds only –
a period of 10 days from the Section 89 gives powers to
date of receipt of the order. the debtor and the creditors to
replace the resolution
•that no opportunity was professional. For this, an
The resolution professional given to to the debtor or the application is required to be
shall examine the objections creditor to make a
and either accept or reject the representation; filed by the person to the DRT
objections, within 10 days of •that the resolution
the date of the application professional colluded with
the other party in arriving at
the decision;
•that the resolution
professional did not comply
with the requirements of
section 86.
14.11
General Duties of the Debtor
a) To make available to the Resolution Professional all information

relating to his affairs, attend meetings and comply with the
requests of the Resolution Professional in relation to the fresh start
process.
b) to inform the Resolution Professional as soon as reasonably

possible of any material error or omission in relation to the
information or document supplied to the Resolution Professional or
any change in financial circumstances after the date of application,
where such change has an impact on the fresh start process.
14.12
REVOCATION OF FRESH START ORDER
Grounds
•if due to any change in the
Section 91 sets out the financial circumstances of the The DRT has to decide
grounds on which the debtor, the debtor becomes
ineligible for a fresh start upon the application
process; or within a period of 14
may submit an •non-compliance by the debtor days and a copy of the
application to the DRT of the restrictions imposed; or same should be
seeking revocation of •if the debtor has acted in a
provided to the IBBI for
its order made for mala fide manner and has
wilfully failed to comply with entering into their
initiation of the fresh the provisions of the Code. records.
start process
DISCHARGE ORDER 14.13
 Section 92 provides for a discharge order by DRT for discharge

of debtor from qualifying debts. RP shall prepare and submit
the final list at least 7 days prior to the end of moratorium
period.
The DRT’s order will provide the following-
Penalties of Intrest Any other

the qualifying including sums owed in
debts from the Penal interest respect of
date of from the date qualifying
application till of application debts from the
discharge till the date of date of order
order discharge till the date of
order discharging
order
14.14
STANDARD OF CONDUCT
Section 93 of the Insolvency and

Bankruptcy Code, 2016 provides
that the Resolution Professional
shall perform his functions and
duties in compliance with the
code of conduct provided under
Section 208.
FRESH START PROCESS 14.15
Inability of debtor to pay debt
Eligible to initiate fresh start process
Application to Debt Recovery Tribunal (DRT) with the relevant

information supported by affidavit either individually or through
Resolution Professional (Interim Moratorium starts)
Appointment of Resolution Professional
Examination of application by Resolution Professional and

submission of report to DRT with regard to acceptance or
rejection of application for fresh start process.
Order by DRT within 14 days of submission of report by Resolution 14.16
Professional
admission of rejection of
application application
Moratorium commences Interim Moratorium ceases
Objection (if any) by creditor within 10

days from the date of receipt of order by
way of an application to Resolution
Professional
Examination of objection(s) by Resolution

Professional
Application against decision(s) of Resolution

Professional by debtor or creditor to DRT within
10 days of decision of Resolution Professional
Order of DRT 14.17
Rejection of
Acceptance of
application
application
Forwarding of order to IBBI
Preparation of final list of qualifying debt by

Resolution Professional and submission of
list to DRT atleast 7 days before moratorium
period comes to an end.
Discharge Order by DRT

Professional and Ethical

Practices for Insolvency
Practitioners
15.1
INSOLVENCY
PROFESSIONAL
Insolvency
Corporate
Liquidation/ Resolution &
Insolvency
Voluntary bankruptcy for
Resolution
liquidation individuals and
Process
partnership firm
Interim
Resolution Resolution Bankruptcy
resolution Liquidator
professional Professional Trustee
professional
 The significance of the function of Insolvency Professional was explained in the
Banking Law Reform Committee (BLRC) Report- Volume 1, Rationale for the Code
as follows:
15.2
 Insolvency professionals play a vital role in the insolvency and bankruptcy
resolution process as envisaged by the Committee. As mentioned in the report -
insolvency and bankruptcy resolution under the Code will proceed in two phases,
for registered entities as well as for individuals.
The period of insolvency resolution, If a solution is not found within the stated time
during which insolvency is assessed frame, the process moves on to the second
and a solution is obtained within a phase, in which the entity is declared
certain time frame, is the first step of bankrupt. A registered entity enters
the insolvency and bankruptcy Liquidation at this moment, whereas an
process. individual undergoes bankruptcy resolution.
 An IP may hold any of the following roles

under the Code:
1. A resolution 2. Bankruptcy Trustee 3. A liquidator in the

professional (RP) who in a personal process of liquidating a
works to resolve bankruptcy proceeding; company.
insolvency for a
company or a person.
• Out of the four pillars of IBC,2016, the 15.3
first pillar of the IBC’s institutional
infrastructure is insolvency professionals
(IPs).
Informa • An IP is one of the most important

tion components of the IBC ecosystem.
utility
• An IP is a regulated and licensed
professional, responsible for managing
and overseeing the CIRP and/or the
Insolve Four Adjudic
liquidation process of the CD, and the
ncy ating
Professi
Pillars Authori resolution and bankruptcy process for
onals PF IBC ty partnerships and individuals.
• IPs form a crucial pillar on which the

entire edifice of the insolvency and
bankruptcy process rests.
IBBI
• The Disciplinary Committee set up by the
IBBI and the Insolvency Professional
Agencies also play a crucial role in
ensuring that the IPs adhere to ethical
standards and the Code of Conduct.
15.4
The Insolvency and Bankruptcy Code , 2016
Regulatory framework for

Insolvency Professionals The IBBI (Insolvency Resolution Process for
Corporate Persons) Regulations, 2016
The IBBI (Model Bye – Laws and Governing

Board of Insolvency Professional Agencies )
Regulations, 2016
The IBBI (Insolvency Professionals) Regulations,

2016
The IBBI (Grievance and Complaint Handling

Procedure) Regulations, 2017
The IBBI (Inspection and Investigation)

Regulations, 2017
ROLE OF INSOLVENCY PROFESSIONALS 15.5
As an Interim Chapter II (Part II of the Code)- Insolvency Resolution

Resolution Process of Corporate Persons
Professional
(IRP) Chapter IV (Part II of the Code)- Fast Track Corporate
As a Resolution Chapter II (Part II of the Code)- Insolvency Resolution Process of
Professional Corporate Persons
Chapter III-A (Part II of the Code) Pre-Packaged Insolvency

Resolution Process
Chapter IV (Part II of the Code)- Fast Track Corporate

As a Liquidator Chapter III (Part II of the Code)- Liquidation Process of
corporate persons
Chapter V (Part II of the Code)- Voluntary Liquidation Process

of corporate
As a Bankruptcy PART III of the Code-Insolvency Resolution And Bankruptcy For
Trustee Individuals And Partnership Firms
The Resolution Professional (RP) holds a central position in conducting the CIRP and his 15.6
role is vital to the efficient operation of the resolution process. The RP acts as a bridge
between the debtor and the creditor and plays a significant role in aligning the interests
of the CD with those of the creditors. The RP is appointed as an officer of the AA to
conduct the resolution process and is vested with various statutory duties and powers. It
is the RP who communicates with AA on behalf of CoC.
Definitions in the Insolvency and Bankruptcy Code, 2016:

Section 3(19): “Insolvency Professional” means a person enrolled under section 206
with an insolvency professional agency as its member and registered with the Board
as an insolvency professional under section 207.
Section 5(18): “Liquidator” means an insolvency professional appointed as a

liquidator in accordance with the provisions of Chapter III or Chapter V of Part II, as
the case may be.
Section 5(27): “Resolution Professional”, for the purposes of Part II, means an
insolvency professional appointed to conduct the corporate insolvency resolution
process and includes an interim-resolution professional.
Section 79(9): “Bankruptcy Trustee” means the insolvency professional appointed as

a trustee for the estate of the bankrupt under section 125.
Section 79(21): “Resolution Professional” means an insolvency professional

appointed under Part III as a resolution professional for conducting the fresh start
process or insolvency resolution process.
15.7
RELATED
PROVISIONS
UNDER IBC
Appointment and Tenure of Interim Resolution Professional (IRP) 15.8
 Section 16
(1) Who (2) Appointment of IRP (3) Appointment of IRP in case of

appoints in case of application by application by operational creditor:
IRP: financial creditor or When an operational creditor applies
On the corporate applicant: for the corporate insolvency resolution
insolvency If an application for process and-
commenceme corporate insolvency (a) In the absence of a proposal for an
nt date, the resolution process is interim resolution professional, the
Adjudicating made by a financial Adjudicating Authority shall send
Authority creditor or a corporate the matter to the Board for the
selects an debtor, respectively, the recommendation of an insolvency
interim resolution professional expert who may operate as an
resolution proposed in the interim resolution professional.
professional. application under section (b) If a proposal for an interim
7 or section 10 shall be resolution professional is made
appointed as the interim under subsection (4) of section 9, the
resolution professional, if resolution professional as suggested
no disciplinary is appointed as the interim
proceedings are pending resolution professional if no
against him. disciplinary actions against him are
pending.
15.9
(4) Board Recommendation: (5) IRP tenure: The interim

Within ten days of receiving resolution professional's tenure
a reference from the must remain until the resolution
Adjudicating Authority professional is appointed under
under sub-section (3), the section 22.
Board shall propose to the
Adjudicating Authority the
name of an insolvency
professional against whom
no disciplinary actions are
pending.
15.10
While filing an
application to (1) The applicant
shall obtain a (2) The application
initiate CIRP under
written under sub-rule (1)
section 7, 9, or 10 of
communication in must be
the Code, Rule 9 of accompanied by a
the Insolvency and Form 2 from the
insolvency certificate
Bankruptcy
professional for confirming the
(Application to proposed insolvency
Adjudicating appointment as an
interim resolution professional's
Authority) Rules,
professional and eligibility for
2016 requires the
enclose it with the appointment as a
submission of resolution
written consent of application made
under rules 4, 6 or 7, professional under
the insolvency
as applicable, the Insolvency and
professional whose Bankruptcy Board
name is wherever he is
required to propose of India (Insolvency
recommended for
or proposes to Resolution Process
appointment as an
appoint an for Corporate
Interim Resolution Persons)
Professional (IRP). insolvency resolution
professional. Regulations, 2016.
It is stated:
Management of Affairs of Corporate Debtor By Interim Resolution 15.11
Professional - Section 17
Section 17 of the Code provides for the management of a corporate debtor's affairs by
an interim resolution professional, i.e., the powers and duties of an IRP upon
appointment, as follows:
(1)From the date of appointment of the interim resolution

(1) From
professional, - the date of appointment of the interim resolution
professional, -
(a) The interim resolution professional will be in charge of the corporate debtor's
affairs.
(b) the powers of the corporate debtor's board of directors or partners, as

applicable, shall be suspended and exercised by the interim resolution expert;
(c) the corporate debtor's officers and management must report to the interim
resolution professional and provide access to the corporate debtor's documents
(2) records
and The interim resolution
as requested by theprofessional vested
interim resolution with the management of
professional.
the corporate debtor, shall-
(d) the financial institutions maintaining accounts of the corporate debtor shall
act on the instructions of the interim resolution professional in relation to such
accounts and furnish all information relating to the corporate debtor available
with them to the interim resolution professional.
(2) The interim resolution professional vested with the 15.12
management of the corporate debtor, shall-
(a) act and execute all deeds, receipts, and other papers, if any, in the
name and on behalf of the corporate debtor;
(b) take such steps, in the manner and subject to such limits as the
Board may specify;
(c) have the authority to access the corporate debtor's electronic

records from an information utility that has financial information
about the corporate debtor;
(d) having the authority to access corporate debtor's books of

account, records, and other necessary documents held by government
authorities, statutory auditors, accountants, and such other
individuals as may be specified; and
(e) be responsible for complying with the requirements of any current

law on behalf of the corporate debtor.
15.13
Section 18 - Duties of interim resolution professional
(a) collect all information relating to the assets, finances and operations of the
corporate debtor for determining the financial position of the corporate
debtor, including information relating to –
(i) business operations for the previous two years;
(ii) financial and operational payments for the previous two years;
(iii) list of assets and liabilities as on the initiation date; and
(iv) such other matters as may be specified
(b) receive and collate all the claims submitted by creditors to him, pursuant to
the public announcement made under sections 13 and 15;
(c) constitute a committee of creditors;
(d) monitor the assets of the corporate debtor and manage its operations
until a resolution professional is appointed by the committee of creditors;
15.14
(e) file information collected with the information utility, if necessary; and
(f) take control and custody of any asset over which the corporate debtor has
ownership rights as recorded in the balance sheet of the corporate debtor, or with
information utility or the depository of securities or any other registry that
records the ownership of assets including –
(i) assets over which the corporate debtor has ownership rights which may be located in a
foreign country;
(ii) assets that may or may not be in possession of the corporate debtor;
(iii) tangible assets, whether movable or immovable;
(iv) intangible assets including intellectual property;
(v) securities including shares held in any subsidiary of the corporate debtor, financial
instruments, insurance policies;
(vi) assets subject to the determination of ownership by a court or authority;
(g) to perform such other duties as may be specified by the Board Explanation. –
For the purposes of this section, the term “assets” shall not include the
following, namely: -
(a) assets owned by a third party in possession of the corporate debtor held under trust or
under contractual arrangements including bailment;
(b) assets of any Indian or foreign subsidiary of the corporate debtor; and
(c) such other assets as may be notified by the Central Government in consultation with
any financial sector regulator
15.15
Personnel to Extend Co-operation to Interim Resolution Professional
Section 19
(1) The staff of the (2) If any of the (3) Upon receipt of
corporate debtor, its corporate debtor's an application under
promoters, or any personnel, its subsection (2), the
other person engaged promoter, or any Adjudicating
with the other person Authority shall, by
administration of the required to assist or order, direct such
corporate debtor shall cooperate with the personnel or other
provide the interim interim resolution person to comply
resolution professional fails to with the resolution
professional with all do so, the interim professional's
support and resolution instructions and to
cooperation that he professional may collaborate with him
may demand in apply to the in the gathering of
managing the Adjudicating information and
business of the Authority for management of the
corporate debtor. necessary directions. corporate debtor.
15.16
Management of Operations of Corporate Debtor as Going Concern
Section 20 of the Code mandates IRP to run management of operations of

corporate debtor as going concern.
Section 21 of the Code imposes duty on IRP to constitute

“Committee of creditors “
It states that the interim resolution professional (IRP) shall after collation
of all claims received against the corporate debtor and determination of the
financial position of the corporate debtor, constitute a committee of
creditors
Appointment of Resolution Professional – Section 22 15.17
The CoC shall, in the first meeting, by 66% votes either resolve to appoint
the interim resolution professional as a resolution professional or to replace
the interim resolution professional by another resolution professional.
When CoC resolves to continue IRP as resolution professional, subject to a

written consent from the IRP, it shall communicate its decision to the IRP,
the corporate debtor and the NCLT.
When CoC resolves to replace the IRP, it shall file an application before the
NCLT for the appointment of the proposed resolution professional along
with a written consent from the proposed resolution professional.
The NCLT shall forward the name of the resolution professional proposed to
replace IRP to IBBI for its confirmation and shall make such appointment
after confirmation by the IBBI.
Where IBBI does not confirm the name of the proposed resolution
professional within ten days of the receipt of the name, the IRP shall
continue to function as the resolution professional until such time as the
Board confirms the appointment of the proposed resolution professional
15.18
Meeting of Committee of Creditors
The resolution professional must preside over all meetings of the committee of
creditors, according to Section 24 of the Code. Subsection (3) states that the
resolution professional must notify the committee of creditors of each meeting.
(a) members of the creditors'

(b) members of the (c) operational creditors
committee, including the
suspended Board of or their representatives
authorised representatives
Directors or corporate if the total amount of
mentioned in subsections (6)
partners, as the case their dues exceeds 10% of
and (6A) of section 21, as well as
may be; the debt.
subsection (5);
It also requires the resolution professional to determine the voting share to be

assigned to each creditor in the manner prescribed by the Board.
Duties of Resolution Professional – Section 25 15.19
(a) seize and control all of the corporate debtor's assets, including all of the
corporate debtor's business documents;
(b) represent and act on behalf of the corporate debtor with third parties, and
exercise rights in judicial, quasi-judicial, or arbitration procedures for the
advantage of the corporate debtor;
(c) raise interim funds subject to the permission of the creditors' committee under
Section 28;
(d) appoint accountants, lawyers, and other experts in accordance with the
Board's instructions;
(e) keep an up-to-date list of claims;
(f) convene and attend all meetings of the committee of creditors;

15.20
(g) compile the information memorandum in accordance with Section 29.
(h) invite prospective resolution applicants who meet such criteria as he may lay
down with the approval of the committee of creditors, having regard to the
complexity and scale of operations of the corporate debtor's business and such
other conditions as the Board may specify, to submit a resolution plan or plans.
(i) present all resolution plans before the committee of creditors meetings;
(j) file an application for the avoidance of transactions in accordance with Chapter
III, if applicable; and (k) take any additional actions indicated by the Board.
15.21
The IBBI (Insolvency

Regulation 4 of the IBBI
Resolution Process for
(Insolvency Resolution
Corporate Persons)
Process for Corporate
Regulations, 2016 provides for
Persons) Regulations, 2016
following duties of
provides for right of Interim
IRP/Resolution Professional:
Resolution Professional
(IRP)/Resolution Professional
4B. Disclosure of change in
as follows:
name and address of corporate
debtor:
(1) Access to Books:
4C. Process e-mail:
(2) Duty of the personnel to
provide information to
IRP/RP:
15.22
Replacement of Resolution Professional by Committee of Creditors
Section 27
Where the committee or creditors is of the opinion that a resolution

professional appointed is required to be replaced, it may at a meeting, by a
vote of 66% of voting shares, resolve to replace the resolution professional
appointed under section 22 with another resolution professional, subject to a
written consent from the proposed resolution professional in the specified
form.
The committee of creditors shall forward the name of the insolvency

professional proposed by them to the NCLT.
The NCLT shall forward the name of the proposed resolution professional to
the Board for its confirmation and a resolution professional shall be
appointed in the same manner as laid down in section 16.
Where any disciplinary proceedings are pending against the proposed

resolution professional, the resolution professional appointed under section
22 shall continue till the appointment of another resolution professional
under this section.
15.23
Enrolment and Registration
Section 206
Relevant
Regulatons -
Enrolment as Insolvency and
a member of Bankruptcy
Registration
an insolvency Board of India
with the IBBI
professional (Insolvency
agency Professional)
Regulations,
2016
15.24
Functions Obligations
• to take such actions as may be •to take reasonable care and diligence
necessary in - •to comply with all requirements and
•a fresh start order terms and conditions specified in the
• individual insolvency resolution bye-laws of the insolvency professional
process agency of which he is a member
•corporate insolvency resolution process •to allow the insolvency professional
•individual bankruptcy process agency to inspect his records
•liquidation of a corporate debtor •to submit a copy of the records of every
proceeding before the Adjudicating
Authority to the Board as well as to the
insolvency professional agency of which
he is a member;
•to perform his functions in such manner
and subject to such conditions as may be
specified.
15.25
IBBI (Insolvency
Professional)
Regulations,
2016
FIRST SCHEDULE [Under Regulation 7(2)(h)] - CODE OF 15.26
CONDUCT FOR INSOLVENCY PROFESSIONALS
2. Independence
1. Integrity and 3. Professional
and
Objectivity competence
Impartiality
4. Representation
of correct facts and 6. Information
5. Timeliness
correcting management
misapprehensions.
8. Occupation, 9.
7.
employability Remuneration
Confidentiality
and restrictions and costs
10. Gifts and

hospitality
15.27
Relationship of the Disclosure to be made within
insolvency professional with three days of
(1) (2)
Corporate debtor his appointment.
Registered valuers / accountants/ appointment of the professionals.

legal professionals/ other
professionals appointed by him
Financial creditors the constitution of committee of
creditors.
Interim finance providers the agreement with the interim
finance provider.
Prospective resolution applicants the supply of information
memorandum to the prospective
resolution applicant.
If relationship with any of the above, of such notice or arising
comes to notice or arises
subsequently
Group Insolvency
16.1
WHAT IS GROUP INSOLVENCY?
It is a situation where a company/few companies belonging to a single group is undergoing corporate

insolvency resolution process. Group Insolvency requires co-ordination of insolvency of different
companies in a group and are dealt globally through prescribed regulatory framework resulting in
reduction of cost and maximisation of value.
While the IB Code provides detailed provisions to deal with the insolvency of each corporate debtor
separately, it lacks a dedicated framework to deal with coordination of insolvency proceedings of
different group companies. Thus, the insolvency of different companies belonging to the same group
is dealt with through separate insolvency proceedings for each company.
Example of a group of companies that is viewed as a single economic entity

B is a company engaged in the execution of construction contracts involving engineering,
procurement and construction projects. It is the holding company of several subsidiary companies by
way of direct and indirect investments. B holds more than 90% shareholding in all the subsidiary
companies. B along with several of its subsidiary companies have defaulted in their respective loans
and CIRPs have been initiated for the same
16.2
UNCITRAL Model Law On “Enterprise group” means two or more enterprises that are
Enterprise Group Insolvency interconnected by control or significant ownership;
“Control” means the capacity to determine, directly or indirectly, the
operating and financial policies of an enterprise
UNCITRAL Legislative Enterprise group as “two or more enterprises that are interconnected
Guide on Insolvency Law by control or significant ownership”, with control being “the capacity
to determine, directly or indirectly, the operating and financial
policies of an enterprise”
Cross Border Insolvency “Group” means two or more corporate debtors that are
Rules/Regulations interconnected by control or significant ownership;
Committee “Control” includes the right to appoint majority of the directors or
other key managerial personnel entitled to manage the affairs of the
body corporate or to control the management or policy decisions
exercisable by a person or persons acting individually or in concert,
directly or indirectly, including by virtue of their shareholding,
management rights, ownership interest, shareholders agreements,
voting agreements, articles of association, limited liability partnership
agreements or in any other manner,
“Significant ownership” includes the right to exercise twenty-six per
cent or more voting rights;
16.3
Methods of dealing with Group

Insolvency
“Substantive consolidation” is the
“Procedural coordination” refers treatment of the assets and
to coordination of the liabilities of two or more
administrations of two or more enterprise group members as if
insolvency proceedings in respect they were a single insolvency
of enterprise group members. It estate.
includes aspects such as procedure “Partial coordination” refers to a
for co-ordination amongst Court, Worldwide, substantive method that is a blend of both -
appointment of common Court, consolidation is triggered as an procedural coordination and
appointment of common exceptional tool in situations such substantive consolidation
administrators, co-ordination as assets and liabilities of entities
amongst administrators, group are inseparable, creditors
communication process, perception as a group rather than a
appointment of coordinator, his single entity, administrative
independence and so on benefits of consolidation, unity of
ownership etc
16.4
Cooperation between courts and other competent authorities of this State and foreign States involved in those cases;
Objectives Of UNCITRAL Model Law On Enterprise
Cooperation between insolvency representatives appointed in this State and foreign States in those cases;
Development of a group insolvency solution for the whole or part of an enterprise group and crossborder
recognition and implementation of that solution in multiple States;
Group Insolvency
Fair and efficient administration of insolvencies concerning enterprise group members that protects the interests
of all creditors of those enterprise group members and other interested persons, including the debtors;
Protection and maximization of the overall combined value of the assets and operations of enterprise group
members affected by insolvency and of the enterprise group as a whole;
Facilitation of the rescue of financially troubled enterprise groups, thereby protecting investment and preserving
employment;
Adequate protection of the interests of the creditors of each enterprise group member participating in a group insolvency
solution and of other interested persons.
16.5
Recommendations of Working Group on Group Insolvency
The law may envisage a framework to facilitate insolvency resolution and liquidation of companies
belonging to a group. The framework may be enabling, and may be voluntarily used by relevant
stakeholders of the company. Only provisions relating to communication, cooperation and
information sharing may be mandatory for insolvency professionals, Adjudicating Authorities and
committees of creditors (“CoCs”) of the companies which belong to a group and have been admitted
into CIRP.
The law may enable phased implementation of the framework. The first phase may facilitate the
introduction of procedural co-ordination of only domestic companies in groups and rules against
perverse behaviour. Cross-border group insolvency and substantive consolidation could be
considered at a later stage, depending on the experience of implementing the earlier phases of the
framework, and the felt need at the relevant time.
A ‘corporate group’ may include holding, subsidiary and associate companies, as defined under the
Companies Act, 2013. However, an application may be made to the Adjudicating Authority to include
companies that are so intrinsically linked as to form part of a ‘group’ in commercial understanding,
but are not covered by the definition of corporate group above, as well. Procedural coordination
mechanisms under this framework may be applicable only to those group companies which have
defaulted, and which are covered by the Code for the purpose of insolvency resolution or liquidation.
16.6
In addition to cooperation, communication and information sharing, other elements of procedural
coordination may be enabled as under:
Joint Application for the insolvency resolution: The law may enable a single application to be
filed to commence the insolvency resolution processes of multiple companies in a group, before any
Adjudicating Authority that has jurisdiction over any one of the companies.
Single insolvency professional and single Adjudicating Authority: The law may enable and
encourage appointment of a single insolvency professional and designation of a single Adjudicating
Authority for resolution of multiple companies admitted into CIRP, except where there are issues
such as conflict of interest, lack of sufficient resources (in case of insolvency professionals) or where
stakeholders would get adversely affected (in case of Adjudicating Authorities) etc.
Group creditors’ committee: The law may, at the option of the CoCs of participating companies,
enable the creation of a group creditors’ committee to support individual CoCs, and not supplant
them.
Group coordination proceedings: The law may enable group co-ordination proceedings, at the
option of the CoCs of the companies under CIRP. Group coordination proceedings may be governed
by a Framework Agreement among the CoCs of the participating CDs. It may entail appointment of a
“group coordinator” who would propose a strategy for the synchronised resolution of insolvency of
the group companies. This strategy could propose invitation of a common expression of interest,
resolution plan, etc. Once group coordination proceedings are initiated, one Adjudicating Authority
(chosen as per the Framework Agreement) would have jurisdiction over the insolvency proceedings
of each of the companies and the group coordination proceedings.
16.7
Promotion of Information Symmetry
Reduction in Costs of Insolvency

Proceedings
Advantages of Group
Maximization of Value
Insolvency
Reduction in costs of Capital
Incresing certainty for stakeholders
Saving of Judicial Time

16.8
Potential for Cost of

Capital to Increase
Challenges Potential for expenses of

to Group the framework to reduce
Insolvency recovery
Potential for unfair

capture of value by some
stakeholders
16.9
Recommendations of Cross Border Insolvency
Rules/Regulations Committee (CBRIC) On Group Insolvency
A group insolvency framework that is voluntary, flexible and enabling in nature should be provided
under the Code. Such a framework may be introduced in phases. In the first phase, only provisions
governing domestic group insolvency may be enacted.
The UNCITRAL Model Law on Enterprise Group Insolvency (MLEGI) may not be adopted in India
at present, and its adoption may be considered after enactment of single entity cross border
insolvency laws and based on learnings from its implementation.
Jurisprudence on substantive consolidation, i.e., pooling of assets and liabilities of an insolvent group,
is already developing under the Code through case law. This is a remedy resorted to in exceptional
circumstances and provisions governing substantive consolidation may not be provided in the Code at
present. The need for such provisions may be contemplated at a later stage, on the basis of practice
and jurisprudence evolved in this regard.
The group insolvency framework under the Code should only apply to corporate debtors in respect
of whom a corporate insolvency resolution process or liquidation process is ongoing. The law shall
not apply to solvent members of the group.
16.10
In the group insolvency framework under the Code, a broad and inclusive definition of ‘group’ should
be provided so as to include a large number of corporate debtors within the ambit of the framework.
The definition of ‘group’ may be based on the criteria of control and significant ownership. This
definition should be applicable to all entities that fall within the definition of a ‘corporate debtor’
under the Code, i.e., companies and limited liability partnerships. The group insolvency framework
may not apply to financial service providers notified under Section 227 of the Code
Filing of joint applications for initiation of corporate insolvency resolution proceedings against
multiple corporate debtors belonging to the same group may be permitted. Such applications may be
filed with an Adjudicating Authority that has territorial jurisdiction over any one of the corporate
debtors in respect of whom such joint application is being filed. Although filing jointly may be
permitted, the application form for each corporate debtor should be separate.
All proceedings related to corporate debtors belonging to a group may take place under the same
Adjudicating Authority. To give this effect, all pending applications and proceedings under the Code in
respect of a group member may be transferred to the NCLT that is the first to admit an application
for triggering an insolvency resolution process in respect of any corporate debtor belonging to the
group.All new applications in respect of any group member should also be filed in such NCLT.
A common insolvency professional may be appointed as the resolution professional or liquidator of

corporate debtors that belong to the same group. An insolvency professional should refuse taking
such appointment if she believes that there are conflicts of interest which may affect her functions.
16.11
A group CoC may be formed with adequate representation from CoCs of all group members. This
may be at discretion of the CoCs and its constitution and formation may be subject to negotiation
amongst parties. The group CoC (outside of a group coordination proceeding) may only provide
procedural assistance and should not be tasked with taking decisions that affect the substantive rights
and obligations of the parties, which right shall continue to be available to the CoCs of the relevant
group members.
The CoCs and insolvency professionals appointed in respect of corporate debtors belonging to the
same group should mandatorily be required to cooperate, coordinate and share information with
each other.
The law should enable group coordination proceedings for corporate debtors belonging to the same
group and undergoing a corporate insolvency resolution or liquidation process under the Code. A
group coordination proceeding may be opened on application made by two or more CoCs of
corporate debtors belonging to a group. If the corporate debtor is in liquidation, the application may
be made by the liquidator.
Participation of a corporate debtor in the group coordination proceeding should be voluntary. The
CoCs may have flexibility to opt-in to the group coordination proceedings until 30 days after its
opening. Any opt-ins after such time may be permitted with the approval of the participating CoCs
and liquidators.
16.12
The group coordinator shall constitute a group CoC consisting of suitable representatives from CoCs
of all participating group members. The group CoC (in group coordination proceeding) may perform
functions delegated to it by separate CoCs. However, the power to approve a resolution plan shall not
be permitted to be delegated to the group CoC.
The group coordinator will conduct the group coordination proceedings and develop a group
strategy. A group strategy may provide various combinations of measures that synchronise the
insolvency resolution or liquidation proceedings of the participating corporate debtors.
A group strategy should require the approval of all participating CoCs by 66% of each of their voting
shares respectively. Where a corporate debtor participating in a group coordination proceeding is
undergoing liquidation, the liquidator should decide whether to approve the group strategy for the
corporate debtor it represents. Once approved, the group strategy shall be filed with the Adjudicating
Authority and shall be binding on all parties to the group strategy.
A group coordination proceeding shall terminate if the group coordinator applies for a termination
order, which may be on the grounds that – (a) the group strategy has been approved and fully
implemented; (b) the CoCs and liquidators have approved such termination by requisite majority; (c)
the CoCs and liquidators have failed to approve a group strategy and the group coordinator is of the
opinion that it is not feasible for participating group members to agree on a group strategy.
The costs of conducting group coordination proceedings should form part of the insolvency
resolution or liquidation process costs of the participating group members
16.13
Where group coordination proceedings are opened, an additional 90 days may be added to the time
period for completion of the insolvency resolution process for the participating corporate debtors
Specific provisions to deal with perverse behaviour may not be required as provisions dealing with
avoidance actions and fraudulent or wrongful trading under the Code may be sufficient. Detailed
provisions targeting perverse behaviour in group insolvency scenarios should be legislated based on
practice developed under the Code in due course.
Effective capacity building measures and increase in use of technology during implementation will
bolster the efficiency of the group insolvency framework.
Cross Border Insolvency
17.1
What is Cross Border Insolvency?
Cross-border insolvency is the expression frequently

employed to designate those cases of insolvency where
assets or liabilities, of an insolvent debtor, are located in two
or more separate jurisdictions or where the personal
circumstances of the debtor are such as to render him or
they are simultaneously subject-to the insolvency laws of
more than one country.
17.2
OBJECTIVES OF CROSS BORDER INSOLVENCY
LAWS
Maximization of value of assets
Ensuring equitable treatment of similarly situated creditors
Provision for timely, efficient and impartial resolution of insolvency
Preservation of the insolvency estate to allow equitable distribution to creditors
Ensuring a transparent and predictable insolvency law that contains incentives for gathering
and dispensing information
Recognition of existing creditor rights and establishment of clear rules for ranking of priority
claims
Establishment of a framework for cross-border insolvency.

17.3
UNCITRAL
• UNCITRAL stands for United Nations Commission for International
Trade and Law.
• UNCITRAL adopted Model law on cross-border insolvency (the Model
Law) in May 1997.
• UNCITRAL adopted the Legislative Guide on insolvency Laws in June,
7004.
• The purpose of the Legislative Guide on Insolvency Law is to assist
the establishment of an efficient and effective legal framework to
address the financial difficulty of debtors.
17.4
Part II - core features of an effective

Part 1- the key objectives of an
insolvency law, following as closely as
insolvency law, structural issues such
possible the various stages of an
as the relationship between insolvency
insolvency proceeding from their
law and other laws, Institutional
commencement to discharge of the
framework
debtor and closure of the proceedings.
Legislative Guide
Part IV - the obligations that might be

imposed upon those responsible for
Part III – the treatment of enterprise
making decisions with respect to the
groups in insolvency, both nationally
management of an enterprise when
and internationally
that enterprise faces imminent
insolvency
17.5
Cooperation between the courts

and other competent authorities of
Greater legal certainty for trade
a state (the country that enacts the
and investment
law) and foreign states involved in
cases of cross-border insolvency;
Model Law
Fair and efficient administration

of cross-border insolvencies that
Protection and maximization of
protects the interests of all
the value of the debtor’s assets
creditors and other interested
persons
17.6
Access Recognition
Elements of
Model Law
Cooperation and
Relief
Coordination
17.7
SCOPE OF APPLICATION OF MODEL
LAW
(a) assistance is sought in this State by a (b) assistance is sought in a foreign State in
foreign court or a foreign representative in connection with a proceeding under identify
connection with a foreign proceeding; or laws of the enacting State relating to
insolvency; or
(c) A foreign proceeding and a proceeding (d) Creditors or other interested persons in a
under identify laws of the enacting State foreign State have an interest in requesting
relating to insolvency in respect of the same the commencement of, or participating in, a
debtor are taking place concurrently; or proceeding under identify laws of the enacting
State relating to insolvency
17.8
UNCITRAL LEGISLATIVE GUIDE VIS-À-VIS
UNCITRAL MODEL LAW
• A model law generally is used differently than a legislative guide
• A model law is a legislative text recommended to States for

enactment as part of national law, with or without modification.
• The focus of a legislative guide, on the other hand, is upon

providing guidance to legislators and other users and for that
reason guides generally include a substantial commentary
discussing and analysing relevant issues.
17.9
Implementation:
Compatible credit
institutional and
and enforcement
regulatory
systems
frameworks
World Bank
Principles
Overarching
considerations of
sound investment Insolvency Laws
climates Systems
17.10
• Compatible credit and enforcement systems are essential

Compatible for a functioning credit system, especially for unsecured
credit and credit.
• Enforcement systems must be efficient, transparent and
enforcement affordable for a credit-based economy.
systems • Legal control of credit information systems can be used to
advance public policies, such as anti-discrimination laws.
• Strong institutions and regulations are crucial for an

Implementation: effective insolvency system. The institutional framework
has three main elements –
institutional and • a) The institutions responsible for insolvency proceedings,
regulatory • b) The operational system through which cases and
decisions are processed and,
frameworks • c) The requirements needed to preserve the integrity of
those institutions.
17.11
Overarching • Minimum standards of transparency and corporate governance

considerations should be established to foster communication and cooperation.
• Disclosure of basic information – including financial statements,
of sound operating statistics and detailed cash flows – is recommended for
sound risk assessment.
investment • Accounting and auditing standards should be compatible with
international best practices so that creditors can assess credit risk
climates and monitor a debtor’s financial viability.
• Effective insolvency systems should always aimed to:-

• Integrate with a country’s broader legal and commercial systems
• Maximize the value of a firm’s assets and recoveries by creditors;
Insolvency •
•
Provide for both efficient liquidation of non-viable -businesses and those where liquidation
is likely to provide a greater return to creditors and reorganization of viable businesses;
Provide to equitable treatment of similarly situated creditors, including similarly situated
Laws Systems •
foreign and domestic creditors;
Provide for timely, efficient and impartial resolution of insolvencies;
• Prevent the improper use of the insolvency system;
• Provide a transparent procedure the contains, and consistently applies clear risk allocation
rules and incentives for gathering and dispensing information
PROVISIONS OF CROSS BORDER TRANSACTIONS
17.12
UNDER THE INSOLVENCY AND BANKRUPTCY

CODE, 2016
• Agreements with foreign countries – Section 234 empowers the central
government to enter into an agreement with other countries to resolve
situations pertaining to cross border insolvency
• Section 235 of the Code lays down that notwithstanding anything contained
in this Code or any law for the time being in force if, in the course of
insolvency resolution process, or liquidation or bankruptcy proceedings, as
the case may be, under this Code, the resolution professional, liquidator or
bankruptcy trustee, as the case may be, is of the opinion that assets of the
corporate debtor or debtor, including a personal guarantor of a corporate
debtor, are situated in a country outside India with which reciprocal
arrangements have been made under section 234, he may make an
application to the Adjudicating Authority that evidence or action relating to
such assets is required in connection with such process or proceeding.
17.13
INSOLVENCY LAW COMMITTEE ON CROSS
BORDER INSOLVENCY
• The Ministry of Corporate Affairs has constituted the Insolvency
Law Committee (ILC) to recommend amendments to the
Insolvency and Bankruptcy Code of India, 2016. The Committee
has submitted its 2nd Report to the Government on 16 October
2018 recommending amendments in the Insolvency and
Bankruptcy Code, 2016 with respect to cross-border insolvency.
The Insolvency Law Committee (ILC) has recommended the
adoption of the UNCITRAL Model Law of Cross Border
Insolvency, 1997 as it provides for a comprehensive framework
to deal with cross border insolvency issues

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CS PROFESSIONAL

MODULE 2 | NEW SYLLABUS

CONCEPT BOOK &

CH 01 – INTRODUCTION TO INSOLVENCY AND BANKRUPTCY CODE

10. Objectives of Insolvency and Bankruptcy Code, 2016 1.13

CH 02 - CORPORATE INSOLVENCY RESOLUTION PROCESS

23. Application By Financial Creditor 2.7

37. Management of Affairs of the Corporate Debtor as a Going 2.22

51. Preparation of Information Memorandum 2.38

64. Equity Restructuring 3.5

CH 04 – FASTTRACK CORPORATE INSOLVENCY RESOLUTION PROCESS

77. Claims by Operational Creditors 4.8

91. Transfer of debt due to Creditors 4.22

CH 05 – LIQUIDATION OF CORPORATE PERSONS

104. Reporting by the Liquidator 5.6

118. Preferential Transactions 5.22

131. Appointment of Liquidator 6.10

CH 07 - ADJUDICATION AND APPEALS FOR CORPORATE PERSONS

144. NCLT Benches and their Jurisdictions 7.5

CH 08 – PRE PACKAGED INSOLVENCY REOSLUTION PROCESS

171. Management of Corporate Debtor during PPIRP 8.18

CH 09 – SECURITIZATION AND DEBT RECOVERY

184. Registration of ARC 9.7

198. DRTs and DRATs 9.24

211. Intimation for Winding Up 10.10

CH 11 - INSOLVENCY RESOLUTION OF INDIVIDUAL AND PARTNERSHIP FIRMS

224. Excluded Debts 11.3

238. Premature End of Repayment Plan 11.18

CH 12 - BANKRUPTCY ORDER FOR INDIVIDUALS AND PARTNERSHIP FIRMS

CH 13 - BANKRUPTCY FOR INDIVIDUALS AND PARTNERSHIP FIRMS

264. Proof of Debt 13.16

CH 14 – FRESH START PROCESS

277. Admission/Rejection of the Application 14.7

CH 15 - PROFESSIONAL AND ETHICAL PRACTICES FOR INSOLVENCY PRACTITIONERS

290. Related Provisions under IBC 15.7

304. Relationships and Disclosures by RPs 15.27

CH 17 – CROSS BORDER INSOLVENCY

316. Legislative Guide 17.4

Definitions Cross Resoluti

Fast Pre Insolvency Fresh

Introduction to Insolvency and

Is a Of not being able Is a Formal Declaration

 The Insolvency Act, 1986 provides for five legal processes —

 The Administration method was first introduced in 1986 and updated by

 ‘Company voluntary arrangements’ (CVAs) – provides a way in which a

 ‘Administrative receivership’ – permits the appointment of a receiver by

 American bankruptcy laws as the United States gained independence from

Committee Year Recommendation

Narsimha Committee II 1998 Enactment of Securitisation and Reconstruction of Financial

Justice Eradi Committee 1999 Recommended setting up of a National Company Law

Interim Passed By Lok Passed By Rajya

Insolvency and Bankruptcy Code, 2016

The Code deals 1) The law

The Code deals

Objectives of Insolvency and Bankruptcy Code, 2016

To provide for To establish an

Applicability of the Code – Section 2

• Regulation of Information Utilities;

Individual Insolvency of Insolvency of Limited Corporate