Insolvency & Bankruptcy 11

Code, 2016

Concept of Insolvency and Bankruptcy

✓ Insolvency in this Code is regarded as a “state” where assets are insufficient to meet
the liabilities.
✓ If untreated insolvency will lead to bankruptcy for non-corporates and liquidation of
corporate.
✓ insolvency is a state and bankruptcy is a conclusion
✓ insolvency is a situation which arises due to inability to pay off the debts due to
insufficient assets, bankruptcy is a situation wherein application is made to an authority
declaring insolvency and seeking to be declared as bankrupt
✓ Liquidation is the winding up of a corporation or incorporated entity.

Earlier Laws

Recovery of Debts
Presidency Towns due to banks &
SARFAESI Act, 2002
Insolvency Act, 1909 financial Institutions
Act, 1993

Provincial Insolvency Sick Industries

Companies Act, 2013
Act, 1920 Companies Act, 1985

Insolvency and
Indian Partnership
Companies Act, 1956 Bankruptcy Code,
Act, 1932
2016

CA. SHIVANGI AGRAWAL

INSOLVENCY & BANKRUPTCY CODE, 2016 11.2

Need of New Law

✓ In past Bankruptcy regime of India as mentioned in chart above, company’s revival has
been sluggish and cumbersome which often leads to productive assets lying dormant
and getting wasted.
✓ It takes an average of four to five years in insolvency resolution in India. The main
reason behind such delay in the legal process is the existence of overlapping legislations
and adjudicating authorities dealing with insolvency of companies and individuals in
India.
✓ The Government of India then formulated a plan to refurbish the prevailing bankruptcy
laws and replace them with one that will facilitate hassle-free and time-bound for
revival and closure of businesses.
✓ For this, Insolvency and Bankruptcy Code, 2016 has come up with the expeditious
insolvency resolution/revival process for corporate persons, firms and Individuals

Evolution of the Code

In Union Budget On 21st

On 5th May, 2016 Lok
2014-15, Finance December,2015.. it
Sabha passed IBC,
Minister Announced was introduced in Lok
2016
Bankruptcy Code sabha

It was notified the

same day. On 28th May, 2016 On 11th May,2016
Code received Rajya Sabha passed
It appeals and assent of President IBC, 2016
amends many laws

Objective of Insolvency & Bankruptcy Code, 2016

a) Comprehensive Law: Insolvency Code is a comprehensive law which envisages and

regulates the process of insolvency and bankruptcy of all persons including corporates,
partnerships, LLP’s and individuals.
b) No Multiplicity of Laws: The Code has withered away the multiple laws covering the
recovery of debts and insolvency and liquidation process and presents singular platform
for all the reliefs relating to recovery of debts and insolvency.
c) Low Time Resolution: The Code provides a low time resolution and defines fixed time
frames for insolvency resolution of companies and individuals. The process is mandated
to be completed within 180 days, extendable to maximum of 90 days. Further, for a
speedier process there is provision for fast-track resolution of corporate insolvency
within 90 days. If insolvency cannot be resolved, the assets of the borrowers may be
sold to repay creditors.
d) One Window Clearance: It has been drafted to provide one window clearance to the
applicant whereby he gets the appropriate relief at the same authority unlike the earlier
position of law where in case the company is not able to revive the procedure for

CA. SHIVANGI AGRAWAL

INSOLVENCY & BANKRUPTCY CODE, 2016 11.3

winding up and liquidation has to be initiated under separate laws governed by separate
authorities.
e) One Chain of Authority: There is one chain of authority under the Code. It does not
even allow the civil courts to interfere with the application pending before the
adjudicating authority, thereby reducing the multiplicity of litigations. The National
Company Law Tribunal (NCLT) will adjudicate insolvency resolution for companies. The
Debt Recovery Tribunal (DRT) will adjudicate insolvency resolution for individuals.
f) Priority to the interests of workman and employees: The Code also protects the
interests of workman and employees. It excludes dues payable to workmen under
provident fund, pension fund and gratuity fund from the debtor’s assets during
liquidation.
g) New Regulatory Authority: It provides for constitution of a new regulatory authority
‘Insolvency and Bankruptcy Board of India’ to regulate professionals, agencies and
information utilities engaged in resolution of insolvencies of companies, partnership
firms and individuals. The Board has already been established and started functioning.

Objective of IBC, 2016

a) To consolidate and amend the laws relating to re-organization and insolvency resolution
of corporate persons, partnership firms and individuals.
b) To fix time periods for execution of the law in a time bound manner.
c) To maximize the value of assets of interested persons.
d) To promote entrepreneurship
e) To increase availability of credit.
f) To balance the interests of all the stakeholders including alteration in the order of
priority of payment of Government dues.
g) To establish an Insolvency and Bankruptcy Board of India as a regulatory body for
insolvency and bankruptcy law.

Pillars of the Code

Adjudicating
Authorities

Insolvency and
Bankruptcy Board of
India
Insolvency Professional
Agencies

Insolvency Professionals

Information Utilities

CA. SHIVANGI AGRAWAL

INSOLVENCY & BANKRUPTCY CODE, 2016 11.4

Insolvency and Bankruptcy Board of India

Establishment Features Functions

• On 1st October, 2016 • Body Corporate • Legislative

• Head Office- New • perpetual Succession • Executive
Delhi • Common seal • Quasi Judicial with
• Capacity to sue and respect to Insolvency
be sued Professionals, their
• Hold & dispose agencies &
property information Utilities

Composition of
Board

3 Members 5 other
1 member to
from CG not members by
Chairperson be nominated
below rank of Central
by RBI
Joint Secretary Government

of whom
Ministry of
Ministry of Ministry of atleast 3 shall
Corporate
Finance Law be whole time
Affairs
members

Insolvency Professional Agencies

The Code provides for establishment of insolvency professionals agencies to enroll and regulate
insolvency professionals as its members in accordance with the Insolvency and Bankruptcy
Code 2016 and read with regulations.

Functions of IPA

✓ Regulatory Functions- Drafting detailed standards and codes of conduct through bye-
laws, that are made public and are binding on all members
✓ Executive Functions- Gathering information for preventing frivolous behaviour, and
malfeasance in the conduct of IP duties
✓ Quasi-Judicial Functions- Addressing grievances of aggrieved parties, hearing
complaints against members and taking suitable actions

CA. SHIVANGI AGRAWAL

INSOLVENCY & BANKRUPTCY CODE, 2016 11.5

Insolvency Professionals

The Code provides for insolvency professionals as intermediaries who would play a key role
in the efficient working of the bankruptcy process.

Every insolvency professional shall abide by the following code of conduct-

✓ to take reasonable care and diligence

✓ to allow the insolvency professional agency to inspect his records
✓ to submit a copy of the records

Information Utilities

✓ The Code envisages creation of information utility to collect, collate, authenticate

and disseminate financial information of debtors in centralized electronic databases,
at all time.
✓ The Code requires creditors to provide financial information of debtors to multiple
utilities on an ongoing basis. Such information would be available to creditors,
resolution professionals, liquidators and other stakeholders in insolvency and
bankruptcy proceedings.

Adjudicating Authorities

The Code has created one chain of authority for adjudication under the Code. Civil Courts have
been prohibited to interfere in the matters related with application pending before the
Adjudicating Authority.

Corporates, LLP and

Personal Guarantees related NCLT
Adjudicating to Corporate Debtors
Authority

Individuals, Partnerships DRT

XY & Co., a firm applied to NCLT to be declared insolvent as the firm is not able to pay off debts
to his creditors in present and in coming future. State whether the act of the firm is valid as to
the filing of application in terms of jurisdiction.

CA. SHIVANGI AGRAWAL

INSOLVENCY & BANKRUPTCY CODE, 2016 11.6

Structure of the Code

IBC

Part -I Part- II Part -III Part-IIIA Part- IV Part- V

Sections Sections
Sections 1 Sections 4 Sections
188 to 224 to
to 3 to 77 78 to 187 Pre- 223 255
packaged
Insolvency
Resolution
Corporate Insolvency Process Regulation
Insolvency Resolution Miscellaneo
Preliminary of IP, IPA us
Resolution & and IU
Process Bankruptcy
for
Individual &
firm

Important Definitions

Claim [Section 3(6)]

Claim means a right to payment or right to remedy for breach of contract if such breach gives
rise to a right to payment whether or not such right is reduced to judgment, fixed, matured,
unmatured, disputed, undisputed, legal, equitable, secured or unsecured.

Corporate Person [Section 3(7)]

Corporate Person means

(a) a company as defined under section 2(20) of the Companies Act, 2013
(b) a Limited Liability Partnership as defined in 2(1)(n) of Limited Liability Act, 2008 or,
(c) any other person incorporated with limited liability under any law for the time being in
force but shall not include any financial service provider.

Exception: NBFC and HFC with asset size ≥ 500 crore are covered in above definition despite
being financial service provider.

Corporate Debtor [Section 3(8)]

Corporate Debtor means a corporate person who owes a debt to any person.

Creditor [Section 3(10)]

Creditor means any person to whom a debt is owed and includes a financial creditor, an

CA. SHIVANGI AGRAWAL

INSOLVENCY & BANKRUPTCY CODE, 2016 11.7

operational creditor, a secured creditor, an unsecured creditor and a decree holder.

Debt [Section 3(11)]

Debt means a liability or obligation in respect of a claim which is due from any person and
includes a financial debt and operational debt.

Default [Section 3(12)]

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 repaid by the debtor or the corporate debtor, as the
case may be.

Financial Information [Section 3(13)]

Financial information, in relation to a person, means one or more of the following categories of
information, namely:—
(a) records of the debt of the person
(b) records of liabilities when the person is solvent
(c) records of assets of person over which security interest has been created
(d) records, if any, of instances of default by the person against any debt
(e) records of the balance sheet and cash-flow statements of the person; and
(f) such other information as may be specified.

Person [Section 3(23)]

A person includes:-
✓ an individual
✓ a Hindu Undivided Family
✓ a company
✓ a trust
✓ a partnership
✓ A limited liability partnership, and
✓ any other entity established under a Statute.
✓ And includes a person resident outside India

Secured Creditor [Section 3(30)]

Secured creditor means a creditor in favour of whom security interest is created

Adjudicating Authority [Section 5(1)]

Adjudicating Authority, for the purposes of this Part II (Insolvency Resolution and Liquidation
for corporate persons), means National Company Law Tribunal constituted under section 408 of
the Companies Act, 2013. [Section 5(1)]

Corporate Applicant [Section 5(5)]

Corporate applicant means—

a) corporate debtor; or
b) a member or partner of the corporate debtor who is authorised to make an
application for the corporate insolvency resolution process or the pre-packaged
CA. SHIVANGI AGRAWAL
INSOLVENCY & BANKRUPTCY CODE, 2016 11.8

insolvency resolution process as the case may be under the constitutional document of the
corporate debtor; or
c) an individual who is in charge of managing the operations and resources of the
corporate debtor; or
d) a person who has the control and supervision over the financial affairs of the
corporate debtor

Dispute [Section 5(6)]

Dispute includes a suit or arbitration proceedings relating to—

(a) the existence of the amount of debt
(b) the quality of goods or service; or
(c) the breach of a representation or warranty

Financial Creditor [Section 5(7)]

Financial creditor means any person to whom a financial debt is owed and includes a person to
whom such debt has been legally assigned or transferred to.

Insolvency Commencement Date [Section 5 (12)]

Insolvency commencement date means the date of admission of an application for initiating
corporate insolvency resolution process by the Adjudicating Authority under sections 7, 9 or
section 10, as the case may be

Operational Creditor [Section 5(2 0)]

Operational creditor means a person to whom an operational debt is owed and includes any
person to whom such debt has been legally assigned or transferred;[ Section 5(20)]

Related Party [Section 5(24)]

Related party, in relation to a corporate debtor, means—

(a) a director or partner or a relative of a director or partner of the corporate debtor
(b) a key managerial personnel or a relative of a key managerial personnel of the corporate
debtor;
(c) a limited liability partnership or a partnership firm in which a director, partner, or manager
of the corporate debtor or his relative is a partner;
(d) a private company in which a director, partner or manager of the corporate debtor is a
director and holds along with his relatives, more than two per cent. of its share capital;
(e) a public company in which a director, partner or manager of the corporate debtor is a
director and holds along with relatives, more than two per cent. of its paid-up share capital;
(f) any body corporate whose board of directors, managing director or manager, in the ordinary
course of business, acts on the advice, directions or instructions of a director, partner or
manager of the corporate debtor;
(g) any limited liability partnership or a partnership firm whose partners or employees in the
ordinary course of business, acts on the advice, directions or instructions of a director, partner
or manager of the corporate debtor;
(h) any person on whose advice, directions or instructions, a director, partner or manager of the
corporate debtor is accustomed to act;
(i) a body corporate which is a holding, subsidiary or an associate company of the corporate
debtor, or a subsidiary of a holding company to which the corporate debtor is a subsidiary;
CA. SHIVANGI AGRAWAL
INSOLVENCY & BANKRUPTCY CODE, 2016 11.9

(j) any person who controls more than twenty per cent. of voting rights in the corporate debtor
on account of ownership or a voting agreement;
(k) any person in whom the corporate debtor controls more than twenty per cent. of voting
rights on account of ownership or a voting agreement;
(l) any person who can control the composition of the board of directors or corresponding
governing body of the corporate debtor;
(m) any person who is associated with the corporate debtor on account of—
• participation in policy making processes of the corporate debtor; or
• having more than two directors in common between the corporate debtor and such
person; or
• interchange of managerial personnel between the corporate debtor and such person

Resolution Plan [Section 5(26)]

Resolution plan means a plan proposed by any person for insolvency resolution of the corporate
debtor as a going concern in accordance with Part II

Resolution Professional [Section 5(27)]

Resolution professional, for the purposes of this Part, means an insolvency professional
appointed to conduct the corporate insolvency resolution process and includes an interim
resolution professional

Voting Share [Section 5(28)]

Voting share means the share of the voting rights of a single financial creditor in the committee
of creditors which is based on the proportion of the financial debt owed to such financial
creditor in relation to the financial debt owed by the corporate debtor.

Financial Debt [Sec 5(8)]

"Financial debt" means a debt along with interest and includes—
✓ money borrowed against the payment of interest,
✓ accepted against any credit facility
✓ Raised by issue of bonds, notes, debentures, loan stock or any similar instrument.
✓ any liability in respect of any lease
✓ receivables sold or discounted
✓ Other like forward sale or purchase agreement, having the commercial effect of a
borrowing.
any amount raised from an allottee under a real estate project shall be deemed to be an
amount having the commercial effect of a borrowing

Operational Debt [Section 5(21 )]

Claim in respect of Provision of goods or services including employment or a debt in respect of

the payment of dues arising under any law for the time being in force and payable to the Central
Government, any State Government or any local authority

CA. SHIVANGI AGRAWAL

INSOLVENCY & BANKRUPTCY CODE, 2016 11.10

Process of Corporate Insolvency Resolution Process

•Filing of application before NCLT

1

•Admission or Rejection of application

2

•Moratorium and Public Announcement

3

•Appointment of Interim Resolution Professional

4

•Formation of the Committee of Creditors

5

•Appointment of Resolution Professional

6

•Preparation, Examination and approval of the Resolution Plan

7

•Submission of Resolution Plan

8

•Consequences of non-submission- Liquidation

9

Part II of Code
Section 4
✓ Part II of Code contains the provisions with respect to Insolvency Resolution and
liquidation of Corporate Persons. It consists of sections 4 to 77.
✓ Part II shall apply to matters of insolvency and liquidation only when minimum
amount of default is 1 crore.
✓ Central Government may by notification specify minimum amount of default of higher
value which shall not be more than 1 crore.

Part II-Chapter II- Corporate Insolvency Resolution Process

(CIRP)

Application to National Company Law Tribunal

Section 6
The process of insolvency is triggered by occurrence of default.

The corporate insolvency process may be initiated against any defaulting corporate debtor by
making an application for corporate insolvency resolution. The application may be made by:-

a) Financial creditor
b) Operational creditor
c) Corporate debtor
CA. SHIVANGI AGRAWAL
INSOLVENCY & BANKRUPTCY CODE, 2016 11.11

Filing Of Application by Financial Creditor

Section 7
A financial creditor either itself or along with other financial creditors may lodge an
application before the Adjudicating Authority (National Company Law Tribunal) for initiating
corporate insolvency resolution process against a corporate debtor who commits a default
in payment of its dues in specified form and manner.

Enclosure to Application

The Financial Creditor shall along with the application give-

✓ Record of default with Information Utility or other evidence in support of the default
committed by the corporate debtor.
✓ Name of the Interim Resolution Professional.
✓ Any other information as may be prescribed.

Admission/Rejection

The Adjudicating Authority may either accept or reject the application within fourteen days
of receipt of application.

Grounds of Acceptance Grounds of Rejection

If satisfied that- If satisfied that-

✓ Default has occurred ✓ Default has not occurred
✓ Application for Corporate Insolvency ✓ Application for Corporate Insolvency
resolution process is complete resolution process is not complete
✓ No disciplinary proceedings are ✓ disciplinary proceedings are against
against proposed Resolution proposed Resolution professional
professional
However, applicant should be allowed to rectify the defect within seven days of receipt of notice
of such rejection.

Illustration:

Mr. SP booked office space with Elegant Construction Limited. At the time of booking Rs. 36
lakhs was paid. Remaining amount of Rs. 10 lakhs was paid at the time of taking delivery. He
entered into a Memorandum of Understanding (MoU) with the company having various terms
and conditions of the sale/ allotment. According to the MoU, Elegant Construction Limited was
required to build and deliver the possession of the unit within 2 years from the date of
execution of the MoU. It also stipulated payment of an assured return of Rs. 82,000 per month
(subject to TDS u/s 194A of IT Act, 1961) till possession of the unit was delivered to Mr. SP.
Elegant construction Limited failed to pay the assured return. Thereafter Mr. SP filed an
application for initiating insolvency resolution process. Decide about the validity of the said
application in view of the provisions of Insolvency and Bankruptcy Code, 2016 as regards the
definition of a 'financial creditor' under section 5(7) read with section 5(8) of the Code.

Answer:
Real Estate Allottees are Financial creditors and thus make an application under this section in
case of default.
Application may be made by atleast 100 such allottees or not less than 10% of such allottees.

CA. SHIVANGI AGRAWAL

INSOLVENCY & BANKRUPTCY CODE, 2016 11.12

Pre-Condition for Filing by Operational Creditor

Section 8
Sending Of Demand Notice

✓ An operational creditor shall on the occurrence of default, shall first send a demand
notice in such form and manner as may be prescribed and a copy of invoice to the
corporate debtor.
✓ Demand Notice shall contain demand requiring payment of amount involved in
default.

Response to Notice

The corporate debtor shall-

✓ within a period of ten days of receipt of demand notice
✓ notify the operational creditor about the existence of a dispute, any or record of
pendency of any suit or arbitration proceedings.
✓ Bring to notice of operational creditor about payment of unpaid operational debt by
sending attested copy of record of payment

Dispute [Section 5(6)]

It includes suit or arbitration proceedings relating to-

a) Existence of amount of debt

b) Quality of goods or service
c) Breach of representation or warranty

Filing Of Application by Operational Creditor

Section 9
After the expiry of ten days, if the operational creditor does not receive his payment or the
confirmation of a dispute that existed even before the demand notice was sent, he may file an
application before the Adjudicating Authority for initiating a corporate insolvency resolution
process.

Enclosure to Application

The Operational Creditor shall along with the application give-

✓ Copy of Invoice or demand notice delivered by operational creditor to debtor.

✓ An affidavit to effect that no notice given by corporate debtor relating to dispute
✓ Copy of certificate from Financial Institutions maintaining accounts confirming that
no payment of unpaid operational debt is available.
✓ Any other proof confirming non-payment.
✓ An operational creditor may propose Name of Resolution professional

Admission/Rejection

The Adjudicating Authority may either accept or reject the application within fourteen
days of receipt of application.

CA. SHIVANGI AGRAWAL

INSOLVENCY & BANKRUPTCY CODE, 2016 11.13

Grounds of Acceptance Grounds of Rejection

If satisfied that- If satisfied that-

✓ Default has occurred ✓ Default has not occurred
✓ Application for Corporate Insolvency ✓ Application for Corporate Insolvency
resolution process is complete resolution process is not complete
✓ No disciplinary proceedings are ✓ disciplinary proceedings are against
against proposed Resolution proposed Resolution professional
professional ✓ Invoice and demand notice is not
✓ Invoice and demand notice is delivered delivered to Corporate Debtor
to Corporate Debtor ✓ Notice of dispute has been received.
✓ No notice of dispute received.
However, applicant should be allowed to rectify the defect within seven days of receipt of notice
of such rejection.

Filing Of Application by Corporate Applicant

Section 10
Where a corporate debtor has committed a default, a corporate applicant thereof may file an
application for initiating corporate insolvency resolution process with the Adjudicating
Authority.

Enclosure to Application

The Corporate Applicant shall along with the application give-

✓ Information relating to books of account and other documents

✓ Name of Resolution professional
✓ Special Resolution passed by shareholders of Corporate Debtor or the resolution
passed by atleast 3/4th of total number of partners of corporate debtor approving filing
of application.

Admission/Rejection

The Adjudicating Authority may either accept or reject the application within fourteen
days of receipt of application.

Grounds of Acceptance Grounds of Rejection

If satisfied that- If satisfied that-

✓ Application for Corporate Insolvency ✓ Application for Corporate Insolvency
resolution process is complete resolution process is not complete
✓ No disciplinary proceedings are ✓ disciplinary proceedings are against
against proposed Resolution proposed Resolution professional
professional

CA. SHIVANGI AGRAWAL

INSOLVENCY & BANKRUPTCY CODE, 2016 11.14

Commencement of Insolvency Resolution Proceedings

The insolvency resolution process shall commence from the date of admission of
application by the Adjudicating Authority. It is referred to as the Corporate Insolvency
Resolution Date.

Persons not entitled to Initiate

Insolvency Process
Section 11
(a) A corporate debtor already undergoing an insolvency resolution process/ PPIRP or

(b) A corporate debtor having completed corporate insolvency resolution process 12 months
preceding the date of making of the application or

(c) A corporate debtor or a financial creditor who has violated any of the terms of resolution
plan which was approved 12 months before the date of making of an application

(d) A corporate debtor in respect of whom a liquidation order has been made

Other grounds added:

✓ A financial creditor / operational creditor undergoing a PPIRP
✓ a corporate debtor in respect of whom a resolution plan has been approved under
Chapter III-A, 12 months preceding the date of making of the application
In this section, a corporate debtor includes a corporate applicant in respect of such corporate
debtor

Disposal of Applications
Section 11A
✓ Where an application filed under section 54C is pending, the Adjudicating Authority
shall pass an order to admit or reject such application, before considering any
application filed under section 7 or section 9 or section 10 during the pendency of such
application under section 54C, in respect of the same corporate debtor.
✓ Where an application under section 54C is filed within fourteen days of filing of any
application under section 7 or section 9 or section 10, which is pending, in respect of the
same corporate debtor, then, notwithstanding anything contained in sections 7, 9 and
10, the Adjudicating Authority shall first dispose of the application under section 54C.
✓ Where an application under section 54C is filed after fourteen days of the filing of any
application under section 7 or section 9 or section 10, in respect of the same corporate
debtor, the Adjudicating Authority shall first dispose of the application under sections 7,
9 or 10.
✓ The provisions of this section shall not apply where an application under section 7 or
section 9 or section 10 is filed and pending as on the date of the commencement of the
Insolvency and Bankruptcy Code (Amendment) Ordinance, 2021.

CA. SHIVANGI AGRAWAL

INSOLVENCY & BANKRUPTCY CODE, 2016 11.15

Time Limit for Completion of

Insolvency Resolution Process
Section 12
Corporate Insolvency Resolution process shall be completed within a period of 180 days
from the date of admission of application to initiate such process.

Extension

✓ Resolution professional shall file an application to Adjudicating Authority to

extend the period beyond 180 days, if a resolution in this regard is passed at a
meeting of the committee of creditors by a vote of 66% of the voting shares.
✓ On receipt of application, if Authority is satisfied that subject matter of case is such
that Corporate Insolvency resolution process can’t be completed within 180 days, it
may by order extend duration beyond 180 days by such further period as it thinks fir
but not exceeding 90 days
✓ Extension shall not be granted more than once

Withdrawal of Application
Section 12A
Adjudicating Authority may allow withdrawal of application on application made with approval
of 90% voting share of committee of creditors.

Order of Adjudicating Authority

Section 13
The Adjudicating Authority, after admission of the application under section 7 or section 9
or section 10, shall, by an order—
a) declare a moratorium for the purposes referred to in section 14;
b) cause a public announcement of the initiation of corporate insolvency resolution
process and call for the submission of claims under section 15; and
c) appoint an interim resolution professional in the manner as laid down in section 16.

Appointment of IRP
Section 16
Adjudicating authority shall appoint an Interim Resolution Professional within 14 days
from the commencement date.

In Case of Application by Financial Creditor

Where the application for corporate insolvency resolution process is made by a financial
creditor or the corporate debtor, the resolution professional as proposed in the application
shall be appointed as the interim resolution professional, if no disciplinary proceedings are
pending against him.

In Case of Application by Operational Creditor

Where the application for corporate insolvency resolution process is made by an operational
creditor and

CA. SHIVANGI AGRAWAL

INSOLVENCY & BANKRUPTCY CODE, 2016 11.16

Case I: No proposal for an interim resolution professional is made.

✓ The Adjudicating Authority shall make a reference to the Board for the
recommendation of an insolvency professional who may act as an interim resolution
professional.
✓ The Board shall recommend the name of an insolvency professional to the
Adjudicating Authority against whom no disciplinary proceedings are pending, within
ten days of the receipt of a reference from the Adjudicating Authority.
✓ Name proposed by Board shall be appointed.

Case II: A proposal for an interim resolution professional is made.

The proposed resolution professional shall be appointed as the interim resolution

professional, if no disciplinary proceedings are pending against him.

Period of Appointment of IRP

The term of Interim Resolution Professional shall not exceed 30 days from the date of
appointment.

Public Announcement
Section 15
Interim Resolution Professional shall make the Public Announcement immediately after
his appointment.

“Immediately” here means not more than three days from the date of appointment of the
Interim Resolution Professional.

Public announcement shall include the following:-

(a) Name & Address of Corporate Debtor under the Corporate Insolvency Resolution Process.
(b) Name of the authority with which the corporate debtor is incorporated or registered.
(c) Details of interim resolution Professional who shall be vested with the management of
the Corporate Debtor and be responsible for receiving claims.
(d) Penalties for false or misleading Claims.
(e) The last date for the submission of the claims.
(f) The date on which the Corporate Insolvency Resolution Process ends.

The expenses of public announcement shall be borne by the applicant which may be reimbursed
by the Committee of Creditors, to the extent it ratifies them.

Moratorium
Section 14
Following acts shall be prohibited during the moratorium period-

(a) The institution of suits or continuation of any pending suits or proceedings against the
corporate debtor including execution of any judgment, decree or order in any court of law,
tribunal, arbitration panel or other authority

CA. SHIVANGI AGRAWAL

INSOLVENCY & BANKRUPTCY CODE, 2016 11.17

(b) Transferring, encumbering, alienating or disposing of by the corporate debtor any of its
assets or any legal right or beneficial interest therein

(c) Any action to foreclose, recover or enforce any security interest created by the corporate
debtor in respect of its property including any action under the SARFAESI Act, 2002

(d) The recovery of any property by an owner or lessor where such property is occupied by
or in the possession of the corporate debtor.

Schweitzer Systemtek India (P) ltd v Phoenix ARC(P) Ltd

Alpha & Omega Diagnostics (India) ltd vs Asset Reconstruction Co. of India Ltd
When moratorium is declared, it results in prohibition on any action to recover or
enforce any security interest created by debtor in respect of its property. Property not
owned by Corporate debtor is outside the ambit of this section

The order of Moratorium shall have effect from the date of such order till earliest of following:
✓ Approval of Resolution Plan by NCLT
✓ Liquidation order
✓ End of CIRP period

Powers of IRP
Section 17
a) Management of Affairs: The management of the affairs of the corporate debtor shall vest in
the interim resolution professional from the date of his appointment.

(b) Exercise of Power of BoD/ partners: The powers of the board of directors or the partners
of the corporate debtor, as the case may be, shall stand suspended and be exercised by the
interim resolution professional.

(c) Reporting of officers/managers: The officers and managers of the corporate debtor shall
report to the interim resolution professional and provide access to such documents and records
of the corporate debtor as may be required.

(d) Instructions to financial institutions: 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.

IRP also has other duties u/s 18 like collecting information, collating it. Monitoring assets, filing
information with Information Utility, taking custody of asset and others as specified by board.

Committee of Creditors
Section 21
The interim resolution professional 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.

CA. SHIVANGI AGRAWAL

INSOLVENCY & BANKRUPTCY CODE, 2016 11.18

Composition of Committee

Where Financial Creditors exist:

The Committee of creditors shall comprise of all financial creditors of a corporate debtor.
The Resolution Professional shall identify the financial creditors and constitutes a creditors
committee.

Where No Financial Creditors exist:

where a corporate debtor does not have any financial creditors, the committee of creditors
shall be constituted and comprise of such persons to exercise such functions in such manner
as may be specified by the Board.

Provided that a related party to whom a corporate debtor owes a financial debt shall not have
any right of representation, participation or voting in a meeting of the committee of creditors.

Meetings and Report

✓ The resolution professional shall conduct all the meetings of the Committee of
Creditors.
✓ After the constitution of committee of creditors, the interim resolution professional is
required to file a report certifying the constitution of the committee to the
Adjudicating Authority.
✓ The report shall be filed on or before the expiry of thirty days from the date of
appointment of the interim resolution professional.

Consortium Finance

Where the corporate debtor owes financial debts to two or more financial creditors as part
of a consortium or agreement, 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.

Where Any Person is a Financial Creditor as well as an Operational

Creditor

✓ Such person shall be a financial creditor to the extent of the financial debt owed by the
corporate debtor,and shall be included in the committee of creditors, with voting share
proportionate to the extent of financial debts owed to such creditor
✓ Such person shall be considered to be an operational creditor to the extent of the
operational debt owed by the corporate debtor to such creditor.

In Case of Legal Transfer

Where an operational creditor has assigned or legally transferred any operational debt to a
financial creditor, the assignee or transferee shall be considered as an operational creditor to
the extent of such assignment or legal transfer.

CA. SHIVANGI AGRAWAL

INSOLVENCY & BANKRUPTCY CODE, 2016 11.19

One Trustee for More Th an 1 Financial Creditor

Where the terms of the financial debt extended as part of a consortium arrangement or
syndicated facility or issued as securities provide for a single trustee or agent to act for all
financial creditors,

each financial creditor may—

(a) authorise the trustee or agent to act on his behalf in the committee of creditors to the extent
of his voting share;
(b) represent himself in the committee of creditors to the extent of his voting share;
(c) appoint an insolvency professional (other than the resolution professional) at his own cost
to represent himself in the committee of creditors to the extent of his voting share; or
(d) exercise his right to vote to the extent of his voting share with one or more financial
creditors jointly or severally.

Voting Share

✓ The Board may specify the manner of determining the voting share in respect of
financial debts issued as securities
✓ All decisions of the committee of creditors except otherwise stated shall be taken by
a vote of not less than 51% of voting share of the financial creditors

Right to Demand Information

✓ The committee of creditors shall have the right to require the resolution
professional to furnish any financial information in relation to the corporate debtor
at any time during the corporate insolvency resolution process.
✓ The resolution professional shall make available any financial information so
required by the committee of creditors within a period of seven days of such
requisition.

Appointment of Resolution Professional

Section 22
First Meeting of Committee

The first meeting of the committee of creditors shall be held within seven days of the
constitution of the committee of creditors.

Resolution for Appointment or Replacement

The committee of creditors, may, in the first meeting, by a majority vote of not less than
66% of the voting share of the financial creditors, either resolve to appoint the interim
resolution professional as a resolution professional or to replace the interim resolution
professional by another resolution professional.

Appointment

Where the committee of creditors resolves Appointment of resolution professional to

continue the interim resolution professional as resolution professional, it shall communicate

CA. SHIVANGI AGRAWAL

INSOLVENCY & BANKRUPTCY CODE, 2016 11.20

its decision to the interim resolution professional, the corporate debtor and the
Adjudicating Authority

Replacement

✓ To replace the interim resolution professional, it shall file an application before the
Adjudicating Authority for the appointment of the proposed resolution professional.
✓ The Adjudicating Authority shall forward the name of the resolution professional
proposed to the Board for its confirmation and shall make such appointment after
confirmation by the Board.
✓ Where the Board does not confirm the name of the proposed resolution professional
within ten days of the receipt of the name of the proposed resolution professional,
the Adjudicating Authority shall, by order, direct the interim resolution
professional to continue to function as the resolution professional until such time as
the Board confirms the appointment of the proposed resolution professional.

Resolution Professional to Conduct Corporate Insolvency

Resolution Process
Section 23
✓ resolution professional shall conduct the entire corporate insolvency resolution process
and manage the operations of the corporate debtor during the corporate insolvency
resolution process period.
✓ The resolution professional shall exercise powers and perform duties as are vested or
conferred on the interim resolution professional under this Chapter.
✓ In case of any appointment of a resolution professional other than Interim RP, the
interim resolution professional shall provide all the information, documents and records
pertaining to the corporate debtor in his possession and knowledge to the resolution
professional.

Meeting of Committee of Creditors

Section 24
✓ The members of the committee of creditors may meet in person or by such electronic
means as may be specified.
✓ All meetings of the committee of creditors shall be conducted by the resolution
professional.
✓ The resolution professional shall give notice of each meeting of the committee of
creditors to—
• members of Committee of creditors
• members of the suspended Board of Directors or the partners of the corporate
persons, as the case may be
• 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, as referred
to in sub-section (3), may attend the meetings of committee of creditors, but shall not
have any right to vote in such meetings
✓ Any creditor who is a member of the committee of creditors may appoint an insolvency
professional other than the resolution professional to represent such creditor in a
meeting of the committee of creditors

CA. SHIVANGI AGRAWAL

INSOLVENCY & BANKRUPTCY CODE, 2016 11.21

✓ Provided that the fees payable to such insolvency professional representing any
individual creditor will be borne by such creditor.
✓ Each creditor shall vote in accordance with the voting share assigned to him based on
the financial debts owed to such creditor.
✓ The resolution professional shall determine the voting share to be assigned to each
creditor in the manner specified by the Board.
✓ The meetings of the committee of creditors shall be conducted in such manner as may
be specified

Duties of Resolution Professional

Section 25
It shall be the duty of the resolution professional to preserve and protect the assets of the
corporate debtor, including the continued business operations of the corporate debtor.

For above, the resolution professional shall undertake the following actions, namely:—

a. take immediate custody and control of all the assets of the corporate debtor, including
the business records of the corporate debtor
b. represent and act on behalf of the corporate debtor with third parties, exercise rights
for the benefit of the corporate debtor in judicial, quasi-judicial or arbitration proceedings
c. raise interim finances subject to the approval of the committee of creditors under section
28
d. appoint accountants, legal or other professionals in the manner as specified by Board
e. maintain an updated list of claims
f. convene and attend all meetings of the committee of creditors
g. prepare the information memorandum in accordance with section 29
h. invite prospective resolution applicants, who fulfil such criteria as may be laid down by
him with the approval of committee of creditors, having regard to the complexity and scale
of operations of the business of the corporate debtor and such other conditions as may be
specified by the Board, to submit a resolution plan or plans
i. present all resolution plans at the meetings of the committee of creditors
j. file application for avoidance of transactions in accordance with Chapter III, if any; and
k. such other actions as may be specified by the Board.

Rights and Duties of Authorised Representative

Section 25A
✓ The Authorised representative shall have the right to participate and vote in
meetings of committee of creditors on behalf of financial creditor he represents with
prior voting instructions obtained through physical or electronic means.
✓ Authorised representative shall not act against the interest of financial creditor and
always acts in accordance with prior instructions.
✓ In case no prior instructions, he shall abstain from voting on behalf of such creditor.
✓ Authorised representative shall file with the committee of creditors any instructions
received by way of physical or electronic means from the financial creditor he
represents for voting in accordance therewith to ensure that appropriate voting
instructions of the financial creditors is correctly recorded.

CA. SHIVANGI AGRAWAL

INSOLVENCY & BANKRUPTCY CODE, 2016 11.22

Replacement of Resolution Professional to Committee of

Creditors
Section 27
✓ Where, at any time during the corporate insolvency resolution process, the committee
of creditors is of the opinion that a resolution professional appointed under section 22
is required to be replaced, it may replace him with another resolution professional in
the manner provided under this section.
✓ The committee of creditors may, at a meeting, by a vote of seventy five per cent. of
voting shares, propose to replace the resolution professional appointed under
section 22 with another resolution professional.
✓ The committee of creditors shall forward the name of the insolvency professional
proposed by them to the Adjudicating Authority.
✓ The Adjudicating Authority 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 under sub-section (3), the resolution professional appointed under section
22 shall continue till the appointment of another resolution professional under this
section.

Approval of Committee of Creditors for

Certain Actions
Section 28
Resolution professional, during the corporate insolvency resolution process, shall not take
any of the following actions without the prior approval of the committee of creditors
namely:—
(a) raise any interim finance in excess of the amount as may be decided by the committee of
creditors in their meeting;
(b) create any security interest over the assets of the corporate debtor;
(c) 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) record any change in the ownership interest of the corporate debtor;
(e) 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) undertake any related party transaction;
(g) amend any constitutional documents of the corporate debtor;
(h) delegate its authority to any other person;
(i) dispose of or permit the disposal of shares of any shareholder of the corporate debtor or
their nominees to third parties;
(j) make any change in the management of the corporate debtor or its subsidiary;
(k) transfer rights or financial debts or operational debts under material contracts otherwise
than in the ordinary course of business;
(l) make changes in the appointment or terms of contract of such personnel as specified by
the committee of creditors; or
(m) make changes in the appointment or terms of contract of statutory auditors or internal
auditors of the corporate debtor.

CA. SHIVANGI AGRAWAL

INSOLVENCY & BANKRUPTCY CODE, 2016 11.23

Methods of Approval

✓ The resolution professional shall convene a meeting of the committee of creditors and
seek the vote of the creditors prior to taking any of the above actions
✓ No action stated above shall be approved by the committee of creditors unless
approved by a vote of 66% of the voting shares.

Consequences of Non -Approval

✓ Where any action is taken by the resolution professional without seeking the
approval of the committee of creditors in the manner as required in this section, such
action shall be void.
✓ The committee of creditors may report the actions of the resolution professional to the
Board for taking necessary actions against him under this Code.

Information Memorandum
Section 29
A resolution plan is a proposal agreed to by the Debtors and Creditors of an entity in a collective
mechanism to propose a time bound solution to resolve the situation of insolvency.

The Resolution Professional shall prepare an Information Memorandum which shall

contain information for preparing resolution plan.

Resolution Professional shall provide access of the following to a Resolution applicant in order
to prepare the Resolution Plan:

✓ Financial position of corporate debtor

✓ Information required by applicant for resolution plan
✓ Other matters pertaining to corporate debtor

Resolution Professional shall examine the Resolution Plan and submit the same to
Committee of Creditors for its approval.

Persons Not Eligible To Be Resolution Applicant

Section 29A
A person shall not be eligible to submit a resolution plan, if such person, or any other person
acting jointly or in concert with such person—

✓ is an undischarged insolvent
✓ is a wilful defaulter in accordance with the guidelines of the Reserve Bank of India
issued under the Banking Regulation Act, 1949
✓ has an account, or an account of a corporate debtor under the management or control
of such person or of whom such person is a promoter, classified as non-performing
asset in accordance with the guidelines of the Reserve Bank of India issued under the
Banking Regulation Act, 1949 and at least a period of one year has lapsed from the date
of such classification till the date of commencement of the corporate insolvency
resolution process of the corporate debtor
Provided that the person shall be eligible to submit a resolution plan if such person
makes payment of all overdue amounts with interest thereon and charges relating to
non-performing asset accounts before submission of resolution plan
CA. SHIVANGI AGRAWAL
INSOLVENCY & BANKRUPTCY CODE, 2016 11.24

✓ has been convicted for any offence punishable with imprisonment for two years or
more under Act specified in Twelfth Schedule.
✓ has been convicted for any offence punishable with imprisonment for seven years
or more under any other law for the time being in force
✓ 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 or accessing the securities markets
✓ 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 Adjudicating Authority under this Code

Submission of Resolution Plan

Section 30
A resolution applicant may submit a resolution plan to the resolution professional prepared
on the basis of the information memorandum.

Requirements to be examined by Resolution Professional [Section 30(2)]

The resolution professional shall examine each resolution plan received by him to confirm
that each resolution plan—

(a) provides for the payment of insolvency resolution process costs in a manner specified
by the Board in priority to the repayment of other debts of the corporate debtor
(b) provides for the repayment of the debts of operational creditors in such manner as may
be specified by the Board which shall not be less than the amount to be paid to the operational
creditors in the event of a liquidation of the corporate debtor under section 53;
(c) provides for the management of the affairs of the Corporate debtor after approval of the
resolution plan
(d) the implementation and supervision of the resolution plan
(e) does not contravene any of the provisions of the law for the time being in force
(f) conforms to such other requirements as may be specified by the Board.

Approval by Creditors and Submission of Plan

✓ The resolution professional shall present to the committee of creditors for its
approval such resolution plans which confirm the conditions referred to in sub-section
(2).
✓ The committee of creditors may approve a resolution plan by a vote of not less
than 66% of voting share of the financial creditors, after considering its feasibility and
viability
✓ The resolution applicant may attend the meeting of the committee of creditors in which
the resolution plan of the applicant is considered
✓ Provided that the resolution applicant shall not have a right to vote at the meeting of the
committee of creditors unless such resolution applicant is also a financial creditor.
✓ The resolution professional shall submit the resolution plan as approved by the
committee of creditors to the Adjudicating Authority.

CA. SHIVANGI AGRAWAL

INSOLVENCY & BANKRUPTCY CODE, 2016 11.25

Approval of Resolution Plan Section 31

If the Adjudicating Authority is satisfied that the resolution plan as approved by the
committee of creditors meets the requirements as referred to in sub-section (2) of section
30, it shall by order approve the resolution plan which shall be binding on the
corporate debtor and its employees, members, creditors, including the Central
Government, any State Government or any local authority to whom a debt in respect of
the payment of dues arising under any law for the time being in force, such as authorities to
whom statutory dues are owed, guarantors and other stakeholders involved in the
resolution plan.

Provided that the Adjudicating Authority shall, before passing an order for approval of
resolution plan under this sub-section, satisfy that the resolution plan has provisions for
its effective implementation.

Rejection of Resolution Plan

Where the Adjudicating Authority is satisfied that the resolution plan does not confirm to
the requirements referred to in sub-section (1), it may, by an order, reject the resolution
plan.

Consequences of Approval

After the order of approval under sub-section (1), -

(a) the moratorium order passed by the Adjudicating Authority under section 14 shall cease
to have effect; and
(b) the resolution professional shall forward all records relating to the conduct of the
corporate insolvency resolution process and the resolution plan to the Board to be recorded on
its database.

The resolution applicant shall, pursuant to the resolution plan approved under sub-section (1),
obtain the necessary approval required under any law for the time being in force within a
period of one year from the date of approval of the resolution plan by the Adjudicating
Authority

Part II- Chapter III- Liquidation Process

Order of Liquidation
Section 33
Adjudicating Authority may order for liquidation of the Corporate Debtor in the following
cases:-
a) Where before the expiry of the Insolvency Resolution Process or within 180 days of the
initiation of Insolvency Resolution, the Adjudicating Authority does not receive the
Resolution Plan.
b) If the Committee of Creditors before the expiry of the resolution process intimate the
Adjudicating Authority of their decision that they have passed an order for liquidation of the
Corporate Debtor.
c) Where the resolution plan approved by the Adjudicating Authority is contravened by the
concerned corporate debtor, any person other than the corporate debtor, whose interests are
CA. SHIVANGI AGRAWAL
INSOLVENCY & BANKRUPTCY CODE, 2016 11.26

prejudicially affected by such contravention, may make an application to the Adjudicating

Authority for a liquidation order Once the Adjudicating Authority passes an order of liquidation,
a moratorium is imposed on the pending legal proceedings against the corporate debtor, and
the assets of the debtor (including the proceeds of liquidation) vest in the liquidation estate.

Appointment of Liquidator
Section 34
✓ Where the Adjudicating Authority passes an order for liquidation of the corporate
debtor under section 33, the resolution professional appointed for the corporate
insolvency resolution process under Chapter II or for the pre-packaged insolvency
resolution process under Chapter IIIA shall, subject to submission of a written
consent by the resolution professional to the Adjudicatory Authority in specified
form,shall act as the liquidator for the purposes of liquidation unless replaced by the
Adjudicating Authority.

✓ All powers of the board of directors, key managerial personnel and the partners of
the corporate debtor, as the case may be, shall cease to have effect and shall be vested
in the liquidator.

✓ The personnel of the corporate debtor shall extend all assistance and cooperation to
the liquidator as may be required by him in managing the affairs of the corporate debtor

Replacement of Resolution Professional

The Adjudicating Authority shall by order replace the resolution professional, if–
(a) the resolution plan submitted by the resolution professional under section 30 was
rejected for failure to meet the requirements mentioned in sub-section (2) of section 30;
or
(b) the Board recommends the replacement of a resolution professional to the Adjudicating
Authority for reasons to be recorded in writing; or
(c) the resolution professional fails to submit written consent under sub-section (1).

✓ The Adjudicating Authority may direct the Board to propose name of another
insolvency professional to be appointed as a liquidator.
✓ The Board shall propose the name of another insolvency professional along with
written consent from the insolvency professional in the specified form within ten days
of the direction issued by the Adjudicating Authority.
✓ The Adjudicating Authority shall, on receipt of the proposal of the Board for the
appointment of an insolvency professional as liquidator, by an order appoint such
insolvency professional as the liquidator.

Fees of Liquidator

✓ An insolvency professional proposed to be appointed as a liquidator shall charge such

fee for the conduct of the liquidation proceedings and in such proportion to the value of
the liquidation estate assets, as may be specified by the Board.
✓ The fees for the conduct of the liquidation proceedings shall be paid to the liquidator
from the proceeds of the liquidation estate under section 53.

CA. SHIVANGI AGRAWAL

INSOLVENCY & BANKRUPTCY CODE, 2016 11.27

Powers and Duties of Liquidator

Section 35
✓ to verify claims of all the creditors;
✓ to take into his custody or control all the assets, property, effects and actionable
claims of the corporate debtor;
✓ to evaluate the assets and property of the corporate debtor in the manner as may be
specified by the Board and prepare a report;
✓ to take such measures to protect and preserve the assets and properties of the
corporate debtor as he considers necessary;
✓ to carry on the business of the corporate debtor for its beneficial liquidation as he
considers necessary;
✓ subject to section 52, to sell the immovable and movable property and actionable
claims of the corporate debtor in liquidation by public auction or private contract, with
power to transfer such property to any person or body corporate, or to sell the same in
parcels in such manner as may be specified
✓ to draw, accept, make and endorse any negotiable instruments including bill of
exchange, hundi or promissory note in the name and on behalf of the corporate debtor,
with the same effect with respect to the liability as if such instruments were drawn,
accepted, made or endorsed by or on behalf of the corporate debtor in the ordinary
course of its business;
✓ to take out, in his official name, letter of administration to any deceased
contributory and to do in his official name any other act necessary for obtaining
payment of any money due and payable from a contributory or his estate which cannot
be ordinarily done in the name of the corporate debtor, and in all such cases, the money
due and payable shall, for the purpose of enabling the liquidator to take out the letter of
administration or recover the money, be deemed to be due to the liquidator himself;
✓ to obtain any professional assistance from any person or appoint any professional, in
discharge of his duties, obligations and responsibilities;
✓ to invite and settle claims of creditors and claimants and distribute proceeds in
accordance with the provisions of this Code;
✓ to institute or defend any suit, prosecution or other legal proceedings, civil or criminal,
in the name of on behalf of the corporate debtor; 43
✓ to investigate the financial affairs of the corporate debtor to determine undervalued
or preferential transactions;
✓ to take all such actions, steps, or to sign, execute and verify any paper, deed, receipt
document, application, petition, affidavit, bond or instrument and for such purpose to
use the common seal, if any, as may be necessary for liquidation, distribution of assets
and in discharge of his duties and obligations and functions as liquidator;
✓ to apply to the Adjudicating Authority for such orders or directions as may be
necessary for the liquidation of the corporate debtor and to report the progress of the
liquidation process in a manner as may be specified by the Board; and
✓ to perform such other functions as may be specified by the Board.

✓ The liquidator shall have the power to consult any of the stakeholders entitled to a
distribution of proceeds under section 53. Provided that any such consultation shall
not be binding on the liquidator

CA. SHIVANGI AGRAWAL

INSOLVENCY & BANKRUPTCY CODE, 2016 11.28

Liquidation Estate Section 36

Inclusions

Liquidation estate shall comprise all liquidation estate assets which shall include the following: -
(a) any assets over which the corporate debtor has ownership rights, including all rights
and interests therein as evidenced in the balance sheet of the corporate debtor or an
information utility or records in the registry or any depository recording securities of the
corporate debtor or by any other means as may be specified by the Board, including shares held
in any subsidiary of the corporate debtor;
(b) assets that may or may not be in possession of the corporate debtor including but not
limited to encumbered assets;
(c) tangible assets, whether movable or immovable;
(d) intangible assets including but not limited to intellectual property, securities (including
shares held in a subsidiary of the corporate debtor) and financial instruments, insurance
policies, contractual rights;
(e) assets subject to the determination of ownership by the court or authority; 44
(f) any assets or their value recovered through proceedings for avoidance of transactions
in accordance with this Chapter;
(g) any asset of the corporate debtor in respect of which a secured creditor has relinquished
security interest;
(h) any other property belonging to or vested in the corporate debtor at the insolvency
commencement date; and
(i) all proceeds of liquidation as and when they are realised.

Exclusions

The following shall not be included in the liquidation estate assets and shall not be used for
recovery in the liquidation: -
(a) assets owned by a third party which are in possession of the corporate debtor, including -
assets held in trust for any third party;
• bailment contracts;
• all sums due to any workmen or employee from the provident fund, the pension fund
and the gratuity fund
• other contractual arrangements which do not stipulate transfer of title but only use of
the assets; and
• such other assets as may be notified by the Central Government in consultation with any
financial sector regulator;
(b) assets in security collateral held by financial services providers and are subject to
netting and set-off in multi-lateral trading or clearing transactions;
(c) personal assets of any shareholder or partner of a corporate debtor as the case may be
provided such assets are not held on account of avoidance transactions that may be avoided
under this Chapter;
(d) assets of any Indian or foreign subsidiary of the corporate debtor; or
(e) any other assets as may be specified by the Board, including assets which could be subject
to set-off on account of mutual dealings between the corporate debtor and any creditor.

CA. SHIVANGI AGRAWAL

INSOLVENCY & BANKRUPTCY CODE, 2016 11.29

Powers of Liquidator to Access Information

Section 37
The liquidator shall have the power to access any information systems for the purpose of
admission and proof of claims and identification of the liquidation estate assets relating to the
corporate debtor from the following sources, namely-
(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 in force;
(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.

Power of Creditors to Call for Information

✓ The creditors may require the liquidator to provide them any financial information
relating to the corporate debtor in such manner as may be specified.

✓ The liquidator shall provide information referred to in sub-section (2) to such creditors
who have requested for such information within a period of seven days from the date of
such request or provide reasons for not providing such information.

Consolidation of Claims
Section 38
✓ The liquidator shall receive or collect the claims of creditors within a period of
thirty days from the date of the commencement of the liquidation process.
✓ A financial creditor may submit a claim to the liquidator by providing a record of such
claim with an information utility
Provided that where the information relating to the claim is not recorded in the
information utility, the financial creditor may submit the claim in the same manner
provided for the submission of claims for the operational creditor
✓ An operational creditor may submit a claim to the liquidator 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.
✓ A creditor who is partly a financial creditor and partly an operational creditor shall
submit claims to the liquidator to the extent of his financial debt and to the extent of his
operational debt in specified manner.
✓ A creditor may withdraw or vary his claim under this section within fourteen days
of its submission.

Verification of Claims
Section 39
✓ The liquidator shall verify the claims submitted under section 38 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.

CA. SHIVANGI AGRAWAL

INSOLVENCY & BANKRUPTCY CODE, 2016 11.30

Admission or Rejection of Claims

Section 40
✓ The liquidator may, after verification of claims under section 39, either admit or
reject the claim, in whole or in part, as the case may be.
✓ Provided that where the liquidator rejects a claim, he shall record in writing the reasons
for such rejection.
✓ The liquidator shall communicate his decision of admission or rejection of claims to
the creditor and corporate debtor within seven days of such admission or
rejection of claims.

Determination of Valuation of Claims

Section 41
The liquidator shall determine the value of claims admitted under section 40 in such manner as
may be specified by the Board.

Appeal against the Decision of Liquidator

Section 42
A creditor may appeal to the Adjudicating Authority against the decision of the liquidator
accepting or rejecting the claims within fourteen days of the receipt of such decision.

Preferential Transactions & Extortionate Credit

Transactions
Section 43
Where the liquidator or the resolution professional (RP), is of the opinion that the corporate
debtor has at a relevant time given a preference in such transactions to any of the following
persons:
✓ A related party (other than by reason only of being an employee), during the period of
two years preceding the insolvency commencement date.
✓ A person other than a related party during the period of one year preceding the
insolvency commencement date.
In such case, the liquidator or RP shall apply to the Adjudicating Authority for avoidance of
preferential transactions and for, one or more of the orders referred to in section 44.

What is regarded as Preference?

A corporate debtor shall be deemed to have given a preference in the following circumstances:-
✓ If there is a transfer of property or an interest thereof of the corporate debtor for the
benefit of a creditor or a surety or a guarantor for or on account of an antecedent
financial debt or operational debt or other liabilities owed by the corporate debtor.
✓ If the transfer has the effect of putting such creditor or a surety or a guarantor in a
beneficial position than it would have been in the event of a distribution of assets
being made in accordance with Section 53 of the Code.

What is not regarded as Preference?

Following transfers shall not be referred to as a preference transaction:-

✓ The transfer made in the ordinary course of the business or financial affairs of the
corporate debtor or the transferee.
CA. SHIVANGI AGRAWAL
INSOLVENCY & BANKRUPTCY CODE, 2016 11.31

✓ Any transfer creating a security interest in property acquired by the corporate debtor to
the extent that-
(i) such security interest secures new value and was given at the time of or after the
signing of a security agreement that contains a description of such property as security
interest and was used by corporate debtor to acquire such property; and
(ii) such transfer was registered with an information utility on or before thirty days
after the corporate debtor receives possession of such property.
✓ Further, any transfer made in pursuance of the order of a Court shall not preclude such
transfer to be deemed as giving of preference by the corporate debtor.

Order in case of Preferential Transaction

Section 44
The Adjudicating Authority, may, on an application made by the resolution professional or
liquidator, by an order :
a) require any property transferred in connection with the giving of the preference to be
vested in the corporate debtor;
b) require any property to be so vested if it represents the application either of the
proceeds of sale of property so transferred or of money so transferred;
c) release or discharge (in whole or in part) of any security interest created by the
corporate debtor;
d) require any person to pay such sums in respect of benefits received by him from the
corporate debtor, such sums to the liquidator or the resolution professional, as the
Adjudicating Authority may direct;
e) direct any guarantor, whose financial debts or operational debts owed to any person
were released or discharged (in whole or in part) by the giving of the preference, to be
under such new or revived financial debts or operational debts to that person as the
Adjudicating Authority deems appropriate;
f) direct for providing security or charge on any property for the discharge of any financial
debt or operational debt under the order, and such security or charge to have the same
priority as a security or charge released or discharged wholly or in part by the giving of
the preference; and
g) direct for providing the extent to which any person whose property is so vested in the
corporate debtor, or on whom financial debts or operational debts are imposed by the
order, are to be proved in the liquidation or the corporate insolvency resolution process
for financial debts or operational debts which arose from, or were released or
discharged wholly or in part by the giving of the preference:

Provided that an order under this section shall not—

a) affect any interest in property which was acquired from a person other than the corporate
debtor or any interest derived from such interest and was acquired in good faith and for value;
b) require a person, who received a benefit from the preferential transaction in good faith and
for value to pay a sum to the liquidator or the resolution professional.

It is clarified that where a person, who has acquired an interest in property from another person
other than the corporate debtor, or who has received a benefit from the preference or such
another person to whom the corporate debtor gave the preference, —
✓ had sufficient information of the initiation or commencement of insolvency resolution
process of the corporate debtor;
✓ is a related party,
it shall be presumed that the interest was acquired or the benefit was received otherwise
than in good faith unless the contrary is shown.
CA. SHIVANGI AGRAWAL
INSOLVENCY & BANKRUPTCY CODE, 2016 11.32

A person shall be deemed to have sufficient information or opportunity to avail such

information if a public announcement regarding the corporate insolvency resolution process
has been made under section 13.

Avoidance of Undervalued Transactions

Section 45
If the liquidator or the RP, on an examination of the transactions of the corporate debtor,
determines that certain transactions were made during the relevant period under section 46,
were undervalued, he shall make an application to the Adjudicating Authority to declare such
transactions as void and reverse the effect of such transaction.

A transaction shall be considered undervalued where the corporate debtor —

(a) makes a gift to a person; or
(b) enters into a transaction with a person which involves the transfer of one or more assets by
the corporate debtor for a consideration the value of which is significantly less than the value of
the consideration provided by the corporate debtor, and such transaction has not taken place in
the ordinary course of business of the corporate debtor.

Relevant Period for Avoidable Transactions Section 46

In an application for avoiding a transaction at undervalue, the liquidator or resolution

professional shall determine:
a) That the transaction was entered within the period of one year preceding the insolvency
commencement date; or
b) That the transaction was made with a related party within a period of two years
preceding the insolvency commencement date.

Application by Creditor In Case Of Undervalued

Transactions
Section 47
where an undervalued transaction has taken place and the liquidator or the resolution
professional has not reported it to the Adjudicating Authority after having sufficient information
or opportunity to avail information, a creditor, member or a partner of a corporate debtor may
make an application to the Adjudicating Authority to declare such transactions void and reverse
their effect.
Adjudicating Authority shall pass an order-
✓ restoring the position as it existed before such transactions and reversing the effects
thereof and
✓ requiring the Board to initiate disciplinary proceedings against the liquidator or the
resolution professional

Order in cases of Undervalued Transactions Section 48

NCLT may provide for following:

✓ Require any property transferred as a part of transaction to be vested in Corporate

Debtor
✓ Release or discharge security interest
CA. SHIVANGI AGRAWAL
INSOLVENCY & BANKRUPTCY CODE, 2016 11.33

✓ Require any person to pay such sums, in respect of benefits received by such person, to
the liquidator or the resolution professional as the case may be
✓ Require the payment of such consideration for the transaction as may be determined by
an independent expert.

Transactions Defrauding Creditors

Section 49
where the corporate debtor has entered into an undervalued transaction under section 45 and
the Adjudicating Authority is satisfied that such transaction was deliberately entered into by
such corporate debtor—
(a) for keeping assets of the corporate debtor beyond the reach of any person who is
entitled to make a claim against the corporate debtor; or
(b) in order to adversely affect the interests of such a person in relation to the claim, the
Adjudicating Authority shall make an order—
(i) restoring the position as it existed before such transaction as if the transaction had not
been entered into; and
(ii) protecting the interests of persons who are victims of such transactions:

However, an order passed under this section—

(1) shall not affect any interest in property which was acquired from a person other than
the corporate debtor and was acquired in good faith, for value and without notice of the
relevant circumstances, or affect any interest deriving from such an interest, and
(2) shall not require a person who received a benefit from the transaction in good faith, for
value and without notice of the relevant circumstances to pay any sum unless he was a party to
the transaction.

Extortionate Credit Transactions

Section 50
where the corporate debtor has been a party to an extortionate credit transaction involving the
receipt of financial or operational debt during the period within two years preceding the
insolvency commencement date, the liquidator or the resolution professional as the case may
be, may make an application for avoidance of such transaction to the Adjudicating Authority if
the terms of such transaction required exorbitant payments to be made by the corporate debtor.

A transaction shall be considered an extortionate credit transaction under section 50(2) where
the terms:
a) require the corporate debtor to make exorbitant payments in respect of the credit
provided; or
b) are unconscionable under the principles of law relating to contracts.

Where any debt extended by any person providing financial services which is in compliance
with any law for the time being in force in relation to such debt shall in no event be considered
as an extortionate credit transaction.

Order of Adjudicating Authority

Section 51
If an Adjudicating Authority after examining the application is satisfied that the terms of a credit
transaction required exorbitant payments to be made by the corporate debtor, it shall, by an
order:-
CA. SHIVANGI AGRAWAL
INSOLVENCY & BANKRUPTCY CODE, 2016 11.34

a) Restore the position as it existed prior to such transaction;

b) Set aside the debt created on account of the extortionate credit transaction;
c) Modify the terms of the transaction;
d) Require any person who is/ was, a party to the transaction to repay any amount received
by such person; or
e) Require any security interest that was created as part of the extortionate credit
transaction to be relinquished in favour of the liquidator or the resolution professional, as
the case may be.

Secured Creditor in liquidation proceedings

Section 52
✓ A secured creditor in the liquidation proceedings may-
• relinquish its security interest to the liquidation estate and receive proceeds
from the sale of assets by the liquidator in the manner specified in section 53; or
• realise its security interest in the manner specified in this section.

✓ Where the secured creditor realises security interest under clause (b) of sub-section
(1), he shall inform the liquidator of such security interest and identify the asset
subject to such security interest to be realised.

✓ Before any security interest is realised by the secured creditor under this section, 52

✓ the liquidator shall verify such security interest and permit the secured creditor to
realise only such security interest, the existence of which may be proved either –
• by the records of such security interest maintained by an information utility; or
• by such other means as may be specified by the Board.

✓ A secured creditor may enforce, realise, settle, compromise or deal with the
secured assets in accordance with such law as applicable to the security interest being
realised and to the secured creditor and apply the proceeds to recover the debts due to
it.

✓ If in the course of realising a secured asset, any secured creditor faces resistance
from the corporate debtor or any person connected therewith in taking
possession of, selling or otherwise disposing off the security, the secured creditor
may make an application to the Adjudicating Authority to facilitate the secured
creditor to realise such security interest in accordance with law for the time being in
force.

✓ The Adjudicating Authority, on the receipt of an application from a secured creditor

under sub-section (5) may pass such order as may be necessary to permit a secured
creditor to realise security interest in accordance with law for the time being in force.

✓ Where the enforcement of the security interest under sub-section (4) yields an
amount by way of proceeds which is in excess of the debts due to the secured creditor,
the secured creditor shall-
• account to the liquidator for such surplus; and
• tender to the liquidator any surplus funds received from the enforcement of
such secured assets.

CA. SHIVANGI AGRAWAL

INSOLVENCY & BANKRUPTCY CODE, 2016 11.35

✓ The amount of insolvency resolution process costs, due from secured creditors who
realise their security interests in the manner provided in this section, shall be deducted
from the proceeds of any realisation by such secured creditors, and they shall transfer
such amounts to the liquidator to be included in the liquidation estate.

✓ Where the proceeds of the realisation of the secured assets are not adequate to repay
debts owed to the secured creditor, the unpaid debts of such secured creditor shall be
paid by the liquidator in the manner specified in clause (e) of sub-section (1) of section
53.

Distribution of Assets
Section 53
The proceeds from the sale of the liquidation assets shall be distributed in the following order of
priority and within such period and in such manner as may be specified, namely:-
(a) the insolvency resolution process costs and the liquidation costs paid in full
(b) the following debts which shall rank equally between and among the following :—
✓ workmen's dues for the period of twenty-four months preceding the liquidation
commencement date; and
✓ debts owed to a secured creditor in the event such secured creditor has relinquished
security in the manner set out in section 52
(c) wages and any unpaid dues owed to employees other than workmen for the period of twelve
months preceding the liquidation commencement date
(d) financial debts owed to unsecured creditors
(e) the following dues shall rank equally between and among the following:—
✓ any amount due to the Central Government and the State Government including the
amount to be received on account of the Consolidated Fund of India and the
Consolidated Fund of a State, if any, 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
(f) any remaining debts and dues; Other debts and dues Unsecured Financial creditors Dues of
Central Government & State Government Wages and any unpaid dues owed to employees, other
than workmen, for the period of 12 months Workmen's dues for the period of 24 months & dues
of secured creditors Costs and Expenses of Insolvency
(g) preference shareholders, if any; and
(h) equity shareholders or partners, as the case may be.

CA. SHIVANGI AGRAWAL

INSOLVENCY & BANKRUPTCY CODE, 2016 11.36

•Costs and Expenses of Insolvency

1

•Workmen's dues for the period of 24 months and dues of Secured Creditors
2 •Debts owed to a secured creditor in the event such creditor has relinquished security.

•Wages and unpaid dues to employees other than workmen for the period of 12 month
3

•Financial debts to unsecured creditors

4

•Dues of Central and State Government

•Dues to Secured Creditor for unpaid amount following enforcement of security
5 interest

•Remaning Debts and dues

6

•Preference Share holders

7

•Equity Share holders

8

Dissolution of Corporate Debtor

Section 54
✓ Where the assets of the corporate debtor have been completely liquidated, the
liquidator shall make an application to the Adjudicating Authority for the
dissolution of such corporate debtor.
✓ The Adjudicating Authority shall on application filed by the liquidator under sub-
section (1) 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 an order under sub-section (2) shall within seven days from the date of
such order, be forwarded to the authority with which the corporate debtor is
registered.

Fast Track CIRP Not covered in Syllabus

Pre- Packaged Insolvency Resolution Not covered in Syllabus
Process (PPIRP)

CA. SHIVANGI AGRAWAL

INSOLVENCY & BANKRUPTCY CODE, 2016 11.37

Personal Insolvency

Part III of the Insolvency & Bankruptcy Code, 2016 relates to Insolvency resolution and
Bankruptcy of Individuals and Partnership Firms.

Chapter I Preliminary Sections 78 & 79

Chapter II Fresh Start Process Sections 80- 93
Chapter III Insolvency Resolution Process Sections 94- 120
Chapter IV Bankruptcy Order for Individuals and Partnership Sections 121- 148
Firms
Chapter V Administration and Distribution of the estate of Sections 149-178
Bankrupt
Chapter VI Adjudicating Authority for Individuals and Sections 179- 183
Partnership Firms
Chapter VII Offences and Penalties Sections 184- 187

Basics

Process: Fresh Start/ Insolvency Resolution followed by Bankruptcy Order

Process by: Resolution Professional
Adjudicating Authority Debt Recovery Tribunal (DRT)
Appellate Authority Debt Recovery Appellate Tribunal (DRAT)

Process of Insolvency Resolution

(Only for Reading- Not to be learnt for Exam)

Public Notice for

Making of Application inviting claims and
Moratorium
by Debtor/ Creditor Preparation of List of
Creditors

Preparation of
Admission or
Repayment Plan and
Interim Moratorium Rejection of
Approval in Meeting of
Application
COC

Order of Adjudicating
Appointment of Submission of Report
Authority,
Resolution by Resolution
Implementation and
Professional Professional
Discharge

CA. SHIVANGI AGRAWAL

INSOLVENCY & BANKRUPTCY CODE, 2016 11.38

Process of Bankruptcy
(To be learnt for Exam)

When an Application for Bankruptcy may be filed?

Application of bankruptcy can be made by Debtor/ creditor under sections 122 and 123 singly
or jointly against-
Explanation:
order under 100(4) If the application referred to in section 94 or 95, as the case may
relating to defrauding a be, is rejected by the Adjudicating Authority on the basis of report
creditor submitted by the resolution professional or that the application
was made with the intention to defraud his creditors or the
resolution professional, the creditor becomes entitled to file for a
bankruptcy order
order under 115(2) Where the Adjudicating Authority rejects the repayment plan
regarding rejection of the under section 114, the debtor and the creditors become entitled
repayment plan to file an application for bankruptcy
order under 118(3) on non The Adjudicating Authority passes an order on the basis of the
satisfaction of the debt as report that the repayment plan has not been completely
per repayment plan. implemented and the debtor or the creditor, whose claims under
repayment plan have not been fully satisfied, become entitled to
apply for a bankruptcy

within 3 months of the order, along with relevant documents of evidence, details of claim, and
copy of the order referred above.
Application cannot be withdrawn without permission of adjudicating authority

Interim Moratorium

An interim-moratorium shall commence on the date of the making of the application on all
actions against the properties of the debtor in respect of his debts and such moratorium shall
cease to have effect on the bankruptcy commencement date.
During interim moratorium,
✓ all litigation shall be stayed and
✓ no new litigation can be initiated.
However, this shall not apply to such transactions as CG may notify

Appointment of Insolvency Professional as Bankruptcy Trustee

✓ The IP proposed shall be continued/rejected by Adjudicating Authority(AA) based on

information on IP to be sent by the Board.
✓ In case none is proposed, the AA shall request for nomination within 7 days to Board
and Board shall nominate within 10 days.
✓ COC may with 75% voting replace the Bankruptcy trustee (BT) who may also resign suo
moto. Replacement can be done with the consent of the Board and Adjudicating
Authority ( section 145 and 146)

Passing of Order

The Adjudicating Authority shall pass a bankruptcy order within fourteen days of receiving the
confirmation or nomination of the bankruptcy trustee under section 125.
CA. SHIVANGI AGRAWAL
INSOLVENCY & BANKRUPTCY CODE, 2016 11.39

Inviting Public Claims

✓ Adjudicating Authority to send notice within 10 days to creditors with relevant

document asking for submission of claim with last date.
✓ A public notice shall also be issued.

Registration of Claims

✓ Creditor shall register claim within 7 days of public notice to bankruptcy trustee who
shall make a list of creditors within 14 days.
✓ Bankruptcy Trustee shall call a meeting of creditors within 21 days of bankruptcy
commencing date and in the meeting constitute COC, will decide, along with other
businesses.
✓ Interested creditors shall not vote.

Completion of Administration

✓ The bankruptcy trustee shall convene a meeting of the committee of creditors on

completion of the administration and distribution of the estate of the bankrupt in
accordance with the provisions of Chapter V
✓ The bankruptcy trustee shall provide the committee of creditors with a report of the
administration of the estate of the bankrupt in the meeting of the said committee to be
approved by COC within 7 days of receipt and decide to release the BT.
✓ BT has to present before AA within 7 days thereafter for his release.
✓ BT may also apply for release after one year, in case released by COC.

Order

✓ Under section 126, the Adjudicating Authority shall pass an order within 14 days of
confirmation of IP/ trustee by the Board, which shall be valid till the debt is discharged.
✓ The estate will vest on the trustee.
✓ The creditor shall be barred to take legal action against the debtors/properties. Secured
creditors shall have to take action to realize within 30 days, failing which his interest
shall be forfeited.
✓ Where an order has been passed, the bankrupt shall submit his statement of financial
position or any other information required by the trustee.

Discharge of Bankruptcy Trustee (BT)

✓ Once the authority passes order of discharge, the BT shall be discharged from his
functions and responsibilities subject to conditions.
✓ The bankrupt shall be released from all his debts. Any such order may be modified on
application by the person effected.BT/IP shall be deemed to have been released on
confirmation of appointment for new BT/IP

Disqualification /Restriction on the bankrupt

During bankruptcy proceeding, bankrupt, shall:

a) not be appointed as trustee, public servant, election of local authority,
b) not to act as director, taking part in formation of companies,
c) disclose in all transaction about the bankruptcy proceedings,
CA. SHIVANGI AGRAWAL
INSOLVENCY & BANKRUPTCY CODE, 2016 11.40

d) travel overseas The functions, powers of the BT and the process to be followed is similar
to liquidation process of corporate.

The provisions are mentioned in detail in chapter V from section 149 to 178 with chapter
heading as- “Administration and Distribution of the Estate of the Bankrupt”

Adjudicating Authority (Chapter VI)

Section 179 to 180 provides for the adjudicating authorities, their powers and duties.
✓ the Authority shall be the Debt Recovery Tribunal having territorial jurisdiction over the
place where individual debtor actually resides or carries on business or works for gain.
✓ The Tribunal shall function as a court as per Civil Procedure Code.
✓ Civil Court shall have no jurisdiction
✓ The decision of DRT can be appealed DRAT within 15days.
✓ The decision of DRAT on question of law can be appealed to Supreme Court

CA. SHIVANGI AGRAWAL