C H A P T E R
6
Fast track corporate insolvency
resolution process
6.1 Speedy process for insolvency resolution
A speedy process for corporate insolvency resolution has been designed. It is
termed as fast track corporate insolvency resolution process for small
corporates.
This is applicable to following corporate debtors - (a) a corporate debtor with
assets and income below a level as may be notified by the Central Government;
or (b) a corporate debtor with such class of creditors or such amount of debt
as may be notified by the Central Government; or (c) such other category of
corporate persons as may be notified by the Central Government - section
55(2) of Insolvency Code, 2016.
Applicability of the provisions - The provisions are applicable to - (a) small
company under section 2(85) of Companies Act (b) a start-up (other than
partnership firm) as defined by Ministry of Commerce and Industry notification
No. GSR 501(E) dated 23-5-2017 (c) an unlisted company with total assets not
exceeding Rs. one crore as per financial statement immediately preceding the
financial year - SO 1911(E) dated 14-6-2017.
An unlisted company with assets less than Rs one crore is eligible for fast track
process – SREI Infrastructure v. Right Towers (2019) 155 SCL 771 = 109
taxmann.com 412 (NCLT).
6.1-1 Time period for completion of fast track process
The fast track corporate insolvency resolution process shall be completed within
a period of 90 days from the insolvency commencement date. It can be extended
by Adjudicating Authority by further 45 days, if resolution passed at a meeting
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Para 6.3 FAST TRACK CORPORATE INSOLVENCY RESOLUTION PROCESS 1.140
of the committee of creditors and supported by a vote of seventy five per cent
of the voting shares - section 56(3) of Insolvency Code, 2016.
Further extension is not allowable.
6.2 Application for fast track process
An application for fast track corporate insolvency resolution process may be
filed by a creditor or corporate debtor as the case may be, alongwith— (a) the
proof of the existence of default as evidenced by records available with an
information utility or such other means as may be specified by the Board
(IBBI); and (b) such other information as may be specified by the Board (IBBI)
to establish that the corporate debtor is eligible for fast track corporate
insolvency resolution process. Manner of initiating fast track corporate
insolvency resolution process - section 57 of Insolvency Code, 2016.
The resolution plan shall contain specified details of resolution applicant and
other connected persons to enable the committee to assess credibility of each
resolution applicant - Regulation 37(3) of IBBI (Fast Track Insolvency
Resolution Process for Corporate Persons) Regulations, 2016 inserted on 7-11-
2017.
The resolution professional will submit all resolution plans which comply with
requirements of Code and Regulations. He will also submit details of
transactions of preferential transactions (section 43), undervalue transactions
(section 45), extortionate credit transactions (section 50) and fraudulent
transactions. He will also submit copies of orders of adjudicating authority in
respect of these transactions - Regulation 38(2) of IBBI (Fast Track Insolvency
Resolution Process for Corporate Persons) Regulations, 2016 substituted w.e.f.
7-11-2017.
The process for conducting a corporate insolvency resolution process under
Chapter II of Part II of Insolvency Code, 2016 and the provisions relating to
offences and penalties under Chapter VII of Part II of Insolvency Code, 2016
shall apply to this Chapter as the context may require - section 58 of Insolvency
Code, 2016.
6.3 Procedure for fast track process
The procedure for fast track process has been specified in IBBI (Fast Track
Insolvency Resolution for Corporate Persons) Regulations, 2017. [The words
‘Fast Track’ were added w.e.f. 5-10-2017]. These regulations have been amended
on 7-2-2018 in line with amendments made in IBBI (Insolvency Resolution
Process for Corporate Persons) Regulations, 2016.
The broad basic principles are similar to normal procedure as specified in
IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.
However, procedural simplifications have been made.
1.141 PROCEDURE FOR FAST TRACK PROCESS Para 6.3
The company will have to appoint resolution professional. Public announcement
will be made in specified form A. This public announcement will also be made
on designated IBBI website.
IBBI has designated the website www.ibbi.gov.in for the purpose. The details
of the manner of publishing such forms on the designated website are described
in IBBI circular No. IP(CIRP)/006/2018 dated 23-2-2018.
The information shall be sent in pdf form to IBBI on public.ann@ibbi.gov.in by
the Resolution Professional. The public announcement will be published by
IBBI on designated website.
Proof of claims will be obtained. Committee of Creditors shall be constituted.
Meetings of Committee will be organised by Insolvency Professional. He will
then conduct fast track process as per procedure prescribed in the Regulations.
Resolution plan will be approved by Adjudicating Authority (NCLT). Normally,
NCLT will come into picture only at the time of final approval of resolution
plan.
