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UNFOLDS NEW PROFESSIONAL OPPORTUNITIES AVAILABLE FOR THE CHARTERED ACCOUNTANTS IN THE ROLE OF INSOLVENCY PROFESSIONAL AND HOW TO BE ONE?

The document discusses the professional opportunities for chartered accountants in the field of insolvency resolution, particularly under the Insolvency and Bankruptcy Code of 2016. It outlines various roles, such as insolvency professionals, valuers, and advisors, along with the steps required to become certified in this field. Additionally, it provides a detailed overview of the examination process, including eligibility, exam structure, and preparation strategies.

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1 UNFOLDS NEW PROFESSIONAL OPPORTUNITIES AVAILABLE FOR THE CHARTERED ACCOUNTANTS IN THE ROLE OF INSOLVENCY PROFESSIONAL AND HOW TO BE ONE? By CA. (Dr.) Rajkumar Adukia Author of more than 300 books, Business Growth and Motivational Coach, Member IFRS SMEIG London 2018-2020 Ex director - SBI mutual fund, BOI mutual fund Ph. D , LL.B, LLM (Constitution), FCA,FCS, MBA, MBF , FCMA, Dip Criminology, Dip in IFR(UK) Justice (Harvard) , CSR, Dip IPR, Dip Criminology ,dip in CG , Dip Cyber, dip data privacy B. Com , M. Com., Dip LL & LW Student of – MA (psychology), MA (Economics), IGNOU PGDCR, PGCAP etc Chairman western region ICAI 1997, Council Member ICAI 1998-2016 Introduction: Chartered Accountants especially due to their expertise whether it is in finance, advisory, management or audit are in an advantageous position to play huge role in the insolvency resolution domain. The Insolvency and Bankruptcy Code, 2016 that provides a mechanism for the resolution of insolvency provides significant professional opportunities for such professionals that they may explore to challenge their growth potential. List of some professional opportunities that they explore: 1. Assisting IP in preparing for pre-CIRP preparation. 2. Reviewing the various risks involved in restructuring. 3. Developing risk mitigation strategies.
2 4. Working out a detailed bankable financial structure of the business. 5. Working out a detailed plan for restructuring the business from all angles. 6. Assessment of distressed assets, cash position, due diligence and turnaround feasibility 7. Advice on optimum utilization of resources. 8. Corporate Applicant Insolvency. 9. Assessing Cross Border Insolvency transactions. 10. Representation before the Debt Recovery Tribunals – particularly after notification of individual/firm bankruptcies. 11. Representation before the NCLT or NCLAT, High Courts or Supreme Court. 12. Negotiating settlements. 12. Advisory in relation to a merger or acquisition or takeover. 13. Advisory services to management on an ongoing basis. 14. Bankruptcy of Personal Guarantors, Firms and Individuals. 15. Handling the Liquidation Process. 16. Managing Interim Finance. 17. Spotting and evaluating distressed companies for restructuring and rescue planning. What are the opportunities available for Professionals under IBC?  Becoming an Insolvency Professional  Becoming a Valuer  Other than Insolvency Professional Opportunities as an Insolvency Professional  Interim Resolution Professionals  Resolution Professional  Representation on Committee of Creditors  Liquidator  Corporate consulting for Resolution / Liquidation  Control and custody of the assets of the corporate debtor  Bankruptcy
3  Voluntary Liquidation  Recovery under various relevant Laws  Factoring, Loan & Sale Documentation  Assessment of distressed assets, cash position, due diligence and turnaround feasibility;  Advice on optimum utilization of resources. Opportunities other than Insolvency Professional  Assisting Interim Resolution Professional/Resolution Professional  Preparation of Evaluation Matrix, Process Document and other materials  Identification of prospective resolution applicants, investors, lenders  Managing operations/cash flows of the entity  Preparation of resolution plans and representations of resolution applicant before Resolution Professional, Committee of Creditors, NCLT  Legal Advisory Service / Representation  Interim Finance / Fund Syndications  Representations before DRT  Representations before NCLT/NCLAT  Advisory to Corporate Debtor  Advisory to Banks /Financial Institutions  Stock Audit  Forensic Audit  Internal Audit  Assisting in passing Limited Insolvency Examination  Pre-Insolvency/ Distress Advisory  Sell movable and immovable properties by auction/ private contract  Financial Due Diligence  Reviewing the various risks involved in restructuring.  Developing risk mitigation strategies.  Legal Advice in in debt & business restructuring area  Assessing Cross Border Insolvency transactions
4  Corporate Restructuring based on Mergers/ Demergers/ Take over/Acquisitions  Negotiating settlements  Identifying strategic investors  Drafting of various due diligence report, applications, affidavits etc. How to become Insolvency Professional? Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016 (IP Regulations) Chartered Accountant, Company Secretary, Cost Accountant or an Advocate) having 10 years of experience, or graduates having 15 years of managerial experience, Steps involved:  First get enrollment for Limited Insolvency Examination  Limited Insolvency Examination, time limit- within 12 months before the date of his application for enrolment with the insolvency professional agency  Mandatory 50 hours Pre- Registration Educational Course (hereinafter referred to as ‘Course’) from an Insolvency Professional Agency (IPA) after his enrolment as a Member.  Apply to the Board for registration as an ‘insolvency professional’
5  The National Insolvency Programme will be notified by the Board in due time. For Professionals, having less than 10 years of experience Steps involved:  Complete the Graduate Insolvency Programme (GIP)  Pass the limited insolvency examination  Enroll as a professional member with an insolvency professional agency (IPA), within a period of 12 months of clearing the Limited Insolvency Examination  Complete a pre-registration educational course by the IPA.  Apply to the Board for registration as an ‘insolvency professional’ (IP) Note: The National Insolvency Programme yet not notified by the IBBI. Enrollment for Limited Insolvency Examination All the information is available at -https://ibbi.gov.in/examination/view-examination/17 Steps for registration  First go to https://ibbi.gov.in/examination/view-examination/17  Click- ‘Register and Enroll Online’  Select “New User”  Provide your e-mail address & other details  Upload- (PP)- i. PAN Card ii. Passport size photograph  Submit the form online  You will receive an activation link on your registered e-mail address. Please click on this link to verify your e-mail address. Note: No fee is payable for registration  After Login id &password generated. Through this Login id, the candidates can check the slot availability in the “Centre Details”
6  Exam fee- Rs.1770/  Payment mode- Debit Card / Net Banking/ Credit Card  Admit Card- download from the hyperlink under the "Candidate Dashboard" Appearing for examination Carry a Admit Card, original PAN Card/Aadhar Card/Passport and arrive 30 minutes before the scheduled time at the examination center. Is rescheduling of exam permitted?  It is permitted only if there is a bonafide reason.  All such requests must be addressed to the Test Administrator NSEIT at examsupport@onlineregistrationform.org.  Time limit: 15 days before the date of examination Exam centers Available at- https://ibbi.gov.in/examination/view-examination/17 Upper age limit for seeking registration with the Board as an IP There is no such upper age limit for seeking registration. However, age restrictions are applicable for practicing as an IP. Passing criteria Professional need to score 60% to pass the examination. Exam Result After submitting the exam paper, the result will be displayed on the screen, immediately. However, the final certificate will be issued by the Insolvency and Bankruptcy Board of India within due course. Brief idea of exam structure Types of questions: MCQs
7 Time allowed: 2 hours Total Marks: 100 Negative Marks: 25% of marks Total no. of Questions: 75 Distribution of marks: 50 questions of 1 mark each, 25 questions of 2 marks each Distribution of marks subject wise Code, Rules and Regulations &other Acts-45 marks, General Awareness- 5 marks (50 marks) 1. The Insolvency and Bankruptcy Code, 2016 (Code)- 10 marks 2. Rules and Regulations under the Code (Updated till 31st December 2020)- 15 Marks 3. The Companies Act, 2013, (except- Chapter- I, II, VIII, X, XI to XIV, XVI, XIX, XXI to XXVI) Note: Topics included- Securities, Shares, Debentures, Deposits, Charges, Management, Accounts, Amalgamations, Valuers, Removal of names, Winding up, NCLT, Special Courts & Punishment. ThePartnership Act, 1932& The Limited Liability Partnership Act, 2008- 04 marks (three Acts i.e. the Company, Partnership & LLP covering 4 marks) 4. 11 other Acts- 11 Marks i. The Indian Contract Act, 1872 ii. (The Negotiable Instruments Act, 1881 iii. The Transfer of Property Act, 1882 and the Sale of Goods Act, 1930 iv. The Code of Civil Procedure, 1908 (Sections 9, 10, 11, 26-32, 38-45,60-64, 73, 75-78, 89 and Order 21) and the Limitation Act, 1963 v. The Prevention of Corruption Act, 1988 (Definition of public servant, Section 7-16 read with Section 29A of the Code) and the Prevention of Money Laundering Act, 2002 (Sections: 2-8, 48, 63, 67, 71, 72)
8 vi. The Recovery of Debts and Bankruptcy Act, 1993 vii. The Arbitration and Conciliation Act, 1996 viii. The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interests Act, 2002 ix. The Micro, Small and Medium Enterprises Development Act, 2006: (Classification of enterprises, Advisory committee, Memorandum of micro, small and medium enterprises, Delayed payments to micro and small enterprises) x. Real Estate (Regulation and Development) Act, 2016 (Sections: 2, 4, 5, 11, 17, 18, 20, 23, 31, 34, 36, 37, 38, 40, 41, 42, 58, 59, 69, 70, 71, 79, 80, 85, 86, 88, 89, 90) xi. Securities Contracts Regulation Act, 1956 (Contracts and options in securities, listing of securities, Offences, penalties, and adjudication) and the 4 SEBI Regulations: - - Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 - Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009 - Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 - Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 5. Finance and Accounts (Corporate Finance; Financial Analysis; Liquidity Management; Tax Planning and GST) (covering 5 topics) - 5 Marks 6. General Awareness (covering 6 topics) : 5 Marks (I) Constitution of India: Right to Constitutional Remedies; provisions of Union Judiciary; provisions of High Courts in the States; (ii) Rights of Workmen under Labour Laws; (iii) Economy; (iv) Financial Markets; (v) Basic concepts of Valuation; and (vi) Forensic Audit
9 Case Laws & Case study- (25 questions of 2 marks each) 7. Case Laws- Important decisions of Supreme Court and High Courts, Decisions of NCLAT and NCLT relating to Corporate Insolvency Resolution, Corporate Liquidation, Voluntary Liquidation and Fast Track Resolution Process. – 10 Marks (5 Questions of 2 marks each) 8. Case Study on Corporate Insolvency Resolution and Liquidation. 1 case study-10 questions of 2 marks each- 20 Marks 9. Case Study on Individual Insolvency Resolution and Bankruptcy. 1 case study-04 questions of 2 marks each-08 Marks 10. Case Study on Companies/Partnership firms/ Limited Liability Partnerships. 1 case study-03 questions of 2 marks each- 06 Marks 11. Case Study on Business and Professional Ethics. 1 case study-03 questions of 2 marks each- 06 Marks Strategies for preparing for exam  Create study plan  Prepare memory techniques  Be updated  Be aware of all the notifications issued by IBBI and other authorities  More and more revision  Prepare objective questions  Read all MCQs available  Attend group study sessions or webinars  Study for the exam pattern How many Insolvency Professional Agencies are there? (Currently 3)
10  The Indian Institute of Insolvency professionals of ICAI -‘IIIPI’  ICSI Institute of Insolvency Professionals  Insolvency Professional Agency of Institute of Cost Accountants of India Registered since November, 2016 The Insolvency and Bankruptcy Code, 2016 The Insolvency and Bankruptcy Code, 2016 has come up with an ultimate solution to an old regime. It was enacted with the intention to establish regulatory framework for liquidation and insolvency resolution in India. The main feature of the Insolvency and Bankruptcy Code, 2016 is that it provides time bound process for resolution of insolvency and bankruptcy in the country. It was enacted with a view to promote ease of doing business and facilitation of more investments for higher economic growth. Various committees formed on Bankruptcy reforms 1. 24th Law Commission – 1964 2. Tiwari Committee (Department of Company Affairs) – 1981 3. Narasimham Committee I (RBI) – 1991 4. Narasimham Committee II (RBI) – 1998 5. Justice V. B. Balakrishna Eradi Committee – 1999 6. L. N. Mitra Committee (RBI) – 2001 7. Irani Committee (RBI) – 2005 8. Shri Raghuram Rajan Committee (Planning Commission) – 2008 9. Financial Sector Legislative Reforms Commission (Ministry of Finance) – 2013 10. Bankruptcy Law Reforms Committee – 2014 Background of the Insolvency and Bankruptcy Code, 2016
11  The Bankruptcy Law Reforms Committee was formed on August 22, 2014 under the Chairmanship of Dr. T. K. Viswanathan.  Interim Report of the BLRC – February 5, 2015 on which comments were open till  February 20, 2015  Final Report of the BLRC – November 4, 2015  Introduction in the Parliament –December 21, 2015  Formation of Joint Committee (Parliament) on the Insolvency and Bankruptcy Code,  2015 – December 23, 2015  Report of the Joint Committee (of Parliament) – April 28, 2016  Passed in the Lok Sabha on – May 5, 2016  Passed in the Rajya Sabha on – May 11, 2016  President’s Assent on – May 28, 2016  Formation of the Insolvency and Bankruptcy Board of India – October 1, 2016 Contents The Code is divided into 5 parts, 255 sections and 12 corresponding schedules. Note: THE TWELFTH SCHEDULE: ACTS FOR THE PURPOSES OF CLAUSE (d) OF SECTION 29A- inserted by Act No. 26 of 2018, sec. 38 (w.e.f. 6-6-2018) Five Parts of the Code: 1. Preliminary (Sections: 1-3) 2. Insolvency Resolution and Liquidation for Corporate Persons (Sections: 4-77) 3. Insolvency Resolution and Bankruptcy for Individuals and Partnership Firms (Sections: 78-187) 4. Regulation of Insolvency Professionals, Agencies and Information Utilities (Sections: 188-223) 5. Miscellaneous (Sections: 224-255) Division of Parts, Chapters and applicable Rules & Regulations (Section wise) Part I- Preliminary contains 3 sections providing for Short title, Application and Definition
12 Applicable Regulation- The Insolvency and Bankruptcy Board of India (Bankruptcy Process for Personal Guarantors to Corporate Debtors) Regulations, 2019 Applicable Rules-  The Insolvency and Bankruptcy (Application to Adjudicating Authority for Bankruptcy Process for Personal Guarantors to Corporate Debtors) Rules, 2019 (w.e.f. 1st day of December, 2019)  The Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019 (w.e.f. 1st day of December, 2019) Part II – Insolvency Resolution and Liquidation for Corporate Persons (Section 4-77) (74 sections) S. No. Chapter’s Name Sections Applicable Rules Applicable Regulations I Preliminary 4-5 - - II Corporate Insolvency Resolution Process (CIRP) 6-32 The Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 The Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 III Liquidation Process 33-54 - The Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016
13 IIIA Pre-packaged insolvency resolution process 54A-54P The Insolvency and Bankruptcy (prepackaged insolvency resolution process) Rules, 2021 The Insolvency and Bankruptcy Board of India (Pre-packaged Insolvency Resolution Process) Regulations, 2021 IV Fast Track Corporate Insolvency Resolution Process 55-58 - The Insolvency and Bankruptcy Board of India (Fast Track Insolvency Resolution Process for Corporate Persons) Regulations, 2017 V Voluntary Liquidation of Corporate Persons 59 - The Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017 VI Adjudicating Authorities for Corporate Persons 60-67 - The Insolvency and Bankruptcy Board of India (Bankruptcy Process for Personal Guarantors to Corporate Debtors) Regulations, 2019 VII Offences and Penalties 68-77 - -
14 Part-III-Insolvency Resolution and Bankruptcy for Individuals and Partnership Firms S. No. Chapter’s Name Sections Applicable Rules Applicable Regulations I Preliminary 78-79 (notified on 15th November, 2019, effective date-1st December, 2019. The Insolvency and Bankruptcy (Application to Adjudicating Authority for Bankruptcy Process for Personal Guarantors to Corporate Debtors) Rules, 2019 (w.e.f. 1st day of December, 2019)& The Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019 (w.e.f. 1st day of December, 2019) -
15 II Fresh Start Process 80-93 - - III Insolvency Resolution Process (IRP) 94-120 (notified Sections 94 to 187 on 15th November- effective date-1st December, 2019 - - IV Bankruptcy Order for Individuals and Partnership Firms 121-148 - - V Administration and Distribution of the Estate of the Bankrupt 149-178 - - VI Adjudicating Authority (AA) for Individuals and Partnership Firms 179-183 - - VII Offences and Penalties 184-187 - - Part IV - Regulation of Insolvency Professionals, Agencies and Information Utilities S. No. Chapter’s Name Sections Applicable Rules Applicable Regulations 1 The Insolvency and Bankruptcy Board of India 188-195 The Insolvency and Bankruptcy Board of India (Medical Facility to Chairperson and Whole -time Members) Scheme Rules, 2019& The Insolvency and Bankruptcy Board of The Insolvency and Bankruptcy Board of India (Engagement of Research Associates and Consultants) Regulations, 2017&
16 India (Salary, Allowances and other Terms and Conditions of Service of Chairperson and members) Rules, 2016 The IBBI (Procedure for Governing Board Meetings) Regulations, 2017 II Powers and Functions of the Board 196-198 - The Insolvency and Bankruptcy Board of India (Advisory Committee) Regulations, 2017 III Insolvency Professional Agencies 199-205 - The Insolvency and Bankruptcy Board of India (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016 &The Insolvency and Bankruptcy Board of India (Insolvency Professional Agencies) Regulations, 2016 IV Insolvency Professionals 206-208 - The Insolvency and Bankruptcy
17 Board of India (Insolvency Professionals) Regulations, 2016 V Information Utilities 209-216 - The Insolvency and Bankruptcy Board of India (Information Utilities) Regulations, 2017 VI Inspection and Investigation 217-220 - The Insolvency and Bankruptcy Board of India (Inspection and Investigation) Regulations, 2017 VII Finance, Accounts and Audit 221-223 The Insolvency and Bankruptcy Board of India (Form of Annual Statement of Accounts) Rules, 2018 PART V- Miscellaneous (Sections: 224-255) Applicable Rules-  The Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019  The Insolvency and Bankruptcy Board of India (Annual Report) Rules, 2018 Applicable Regulations-under Section 240
18  The Insolvency and Bankruptcy Board of India (Grievance and Complaint Handling Procedure) Regulations, 2017  The Insolvency and Bankruptcy Board of India (Employees’ Service) Regulations, 2017  The Insolvency and Bankruptcy Board of India (Mechanism for Issuing Regulations) Regulations, 2018. Sections notified till date S. No. Notification No. Notification Date w.e.f. Sections 1 S.O. 2618(E) 05.08.2016 05.08.2016 Sections 188 to 194 (both inclusive) 2 S.O. 2746(E) 19.08.2016 19.08.2016 -Clauses (1), (5), (22), (26), (28) and (37) of Section 3; -Sections 221, 222, 225, 226, 230, 232 and 233; -Sub-section (1) and clause (zd) of sub-section (2) of Section 239; -Sub-section (1) and clause (zt) of sub-section (2) of Section 240; -Sections 241 and 242 3 S.O. 3355(E) 01.11.2016 01.11.2016 -Clause (2) to clause(4), clause (6) to clause (21), clause (23) to clause (25), clause (27)clause (29) to clause (36) of Section 3; -Sections 196, 197 and 223; -Clause(ze) to clause (zh) and clause (zl) to clause (zm) of sub- section (2) of Section 239; -Clause (a) to clause (zm) and clause (zu) to clause (zzzc) of sub- section (2) of Section 240;
19 -Section 244; -Section 246 to Section 248 (both inclusive); -Sections 250 and 252 4 S.O. 3453(E) 15.11.2016 15.11.2016 -Section 199 to Section 207 (both inclusive); -Clause (c) and clause (e) of sub- section (1)of Section 208; -Sub-section (2) of Section 208; -Section 217 to Section 220 (both inclusive); -Sections 251, 253, 254 and 255 5 S.O. 3594(E) 30.11.2016 01.12.2016 -Clause (a) to clause (d) of Section 2 (except with regard to voluntary liquidation or Bankruptcy; -Section 4 to Section 32 (both inclusive); -Section 60 to Section 77 (both inclusive); -Section 198, Section 231; -Section 236 to Section 238 (both inclusive) and -Clause (a) to clause (f) of sub- section (2) of Section 239 6 S.O. 3687(E) 09.12.2016 15.12.2016 Section 33 to Section 54 (both inclusive) 7 S.O. 1005(E) 30.03.2017 01.04.2017 -Section 59; - Section 209 to 215 (both inclusive); -Sub-section (1) of Section 216 and -Section 234 and Section 235
20 8 S.O. 1570(E) 15.05.2017 01.04.2017 -Clause (a) to clause (d) of section 2 relating to voluntary liquidation or bankruptcy 9 S.O. 1910(E) 14.06.2017 14.06.2017 -Section 55 to Section 58 (both inclusive) 10 S.O. 3393(E) 18.10.2017 18.10.2017 -Section 247 11 S.O. 1817(E) 01.05.2018 01.05.2018 -Section 227 to Section 229 (both inclusive) 12 S.O. 4126(E) 15.11.2019 01.12.2019 Following provisions of the Code only in so far as they relate to personal guarantors to corporate debtors: -Section 2(e); -Section 78 (except with regard to fresh start process) and section 79; -Sections 94 to 187 (both inclusive); -Clause (g) to clause (i) of sub- section (2) of section 239; -Clause (m) to clause (zc) of sub- section (2) of section 239; -Clause (zn) to clause (zs) of sub- section (2) of section 240 and -Section 249 Sections not notified till date Section 195: Power to designate financial sector regulator Section 224: Insolvency and Bankruptcy Fund Section 243: Repeal of certain enactments and savings Section 245: Amendment to the Indian Partnership Act, 1932
21 Schedules to the Act-12 Amendments to other Acts-11 Schedule Section Act Amended 1st 245 The Indian Partnership Act,1932 2nd 246 The Central Excise Act, 1944 3rd 247 The Income-Tax Act, 1961 4th 248 The Customs Act, 1962 5th 249 The Recovery of Debts Due to Banks and Financial Institutions Act, 1993 6th 250 The Finance Act, 1994 7th 251 The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 8th 252 The Sick Industrial Companies (Special Provisions) Repeal Act, 2003 9th 253 The Payment and Settlement Systems Act, 2007 10th 254 The Limited Liability Partnership Act, 2008 11th 255 The Companies Act, 2013 Note: THE TWELFTH SCHEDULE: ACTS FOR THE PURPOSES OF CLAUSE (d) OF SECTION 29A- inserted by Act No. 26 of 2018, sec. 38 (w.e.f. 6-6-2018) Section 29A deals with person not eligible to be a resolution applicant who has been convicted for any offence punishable with imprisonment –for two years or more under any Act specified under the Twelfth Schedule Act specified under the Twelfth Schedule- (26 Acts) (1) The Foreign Trade (Development and Regulation) Act, 1922 (22 of 1922);
22 (2) The Reserve Bank of India Act, 1934 (2 of 1934); (3) The Central Excise Act, 1944 (1 of 1944); (4) The Prevention of Food Adulteration Act, 1954 (37 of 1954); (5) The Essential Commodities Act, 1955 (10 of 1955); (6) The Securities Contracts (Regulation) Act, 1956 (42 of 1956); (7) The Income-tax Act, 1961 (43 of 1961); (8) The Customs Act, 1962 (52 of 1962); (9) The Water (Prevention and Control of Pollution) Act, 1974 (6 of 1974); (10) The Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (52 of 1974); (11) The Air (Prevention and Control of Pollution) Act, 1981 (14 of 1981); (12) The Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986); (13) The Environment (Protection) Act, 1986 (29 of 1986); (14) The Prohibition of Benami Property Transactions Act, 1988 (45 of 1988); (15) The Prevention of Corruption Act, 1988 (49 of 1988); (16) The Securities and Exchange Board of India Act, 1992 (15 of 1992); (17) The Foreign Exchange Management Act, 1999 (42 of 1999); (18) The Competition Act, 2002 (12 of 2003); (19) The Prevention of Money-laundering Act, 2002 (15 of 2003); (20) The Limited Liability Partnership Act, 2008 (6 of 2009); (21) The Foreign Contribution (Regulation) Act, 2010 (42 of 2010); (22) The Companies Act, 2013 (18 of 2013) or any previous company law;
23 (23) The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (22 of 2015); (24) the Insolvency and Bankruptcy Code, 2016 (31 of 2016); (25) The Central Goods and Services Tax Act, 2017 (12 of 2017) and respective State Acts imposing State goods and services tax; (26) Such other Acts as may be notified by the Central Government. Rules and Regulations Rules- S. No. Rules Amended up to No. of Rules 1 The Insolvency and Bankruptcy (pre- packaged insolvency resolution process) Rules, 2021 09 April, 2021 4 2 The Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 24 September, 2020 10 3 The Insolvency and Bankruptcy Board of India (Annual Report) Rules, 2020 16 September, 2020 4 4 The Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019 15 November, 2019 10 5 The Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019 15 November, 2019 11
24 6 The Insolvency and Bankruptcy (Application to Adjudicating Authority for Bankruptcy Process for Personal Guarantors to Corporate Guarantors) Rules, 2019 15 November, 2019 16 7 IBBI (Medical Facility to Chairperson and Whole -time Members) Scheme Rules, 2019 05 August, 2019 6 8 The Insolvency and Bankruptcy Board of India (Form of Annual Statement of Accounts) Rules, 2018 01 May, 2018 4 9 IBBI (Salary, Allowances and other Terms and Conditions of Service of Chairperson and Members) Rules, 2016 09 February, 2018 21 Other applicable Rules 1. The National Company Law Tribunal Rules, 2016 - notified on 21st July, 2016 2. The National Company Law Appellate Tribunal Rules, 2016 - notified on 21st July, 2016 3. The Companies (Transfer of Pending Proceedings) Rules, 2016 - notified on 7th December, 2016, w.e.f. 15th December, 2016, except rule 4 which come into effect from 1st April, 2017 4. The Companies (Registered Valuers and Valuation) Rules, 2017 (up to 13-11-2018) Regulations S. No. Regulations Amended up to No. of Regulations 1 IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 30 September, 2021 40 (10 Chapters) 2 IBBI (Liquidation Process) Regulations, 30 September, 2021 47 (7 Chapters, 2
25 2016 Schedules) 3 IBBI (Insolvency Professionals) Regulations, 2016 22 July, 2021 15 (5 Chapters, 2 Schedules) 4 IBBI (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016 22 July, 2021 7 (3 Chapters& a Schedule) 5 IBBI (Information Utilities) Regulations, 2017 13 April, 2021 42 (7 Chapters, & a Schedule) 6 IBBI (Pre-packaged Insolvency Resolution Process) Regulations, 2021 09 April, 2021 50 (10 Chapters & A Schedule) 7 IBBI (Voluntary Liquidation Process) Regulations, 2017 05 August, 2020 41 (7 Chapters, 2 Schedules) 8 IBBI (Bankruptcy Process for Personal Guarantors to Corporate Debtors) Regulations, 2019 20 November, 2019 37 (6 Chapters) 9 IBBI (Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Regulations, 2019 20 November, 2019 22 (5 Chapters) 10 IBBI (Insolvency Professional Agencies) Regulations, 2016 23 July, 2019 15 (5 Chapters, 2 Schedules) 11 IBBI (Procedure for Governing Board Meetings) Regulations, 2017 23 July, 2019 18 (6 Chapters, 2 Schedules) 12 IBBI (Engagement of Research Associates and Consultants) Regulations, 2017 23 July, 2019 9 (1 Schedule) 13 IBBI (Mechanism for Issuing Regulations) Regulations, 2018 22 October, 2018 9 (4 Chapters) 14 IBBI (Employees' Service) Regulations, 2017 26 March, 2018 63(7 Chapters, 2 Schedules) 15 IBBI (Fast Track Insolvency Resolution Process for Corporate Persons) Regulations, 07 February, 2018 39 (10 Chapters & a Schedule)
26 2017 16 IBBI (Grievance and Complaint Handling Procedure) Regulations, 2017 07 December, 2017 8 (5 Chapters) 17 The Insolvency and Bankruptcy Board of India (Inspection and Investigation) Regulations, 2017 14 June, 2017 7 (3 Chapters) 18 Insolvency and Bankruptcy Board of India (Advisory Committee) Regulations, 2017 31 Jan, 2017 14 (5 Chapters) Points to remember:  Total No. of Rules till 30.09.2021-9  Total No. of Regulations till 30.09.2021-18  First Rules notified on 29 August, 2016 i.e. The Insolvency and Bankruptcy Board of India (Salary, Allowances and other Terms and Conditions of Service of Chairperson and Members) Rules, 2016  First 2 Regulations notified on 21st November, 2016 i.e. The Insolvency and Bankruptcy Board of India (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016. & the Insolvency and Bankruptcy Board of India (Insolvency Professional Agencies) Regulations, 2016 Guidelines-13 S. No. Guidelines Date of issue/ last updated 1 Insolvency Professionals to act as Interim Resolution Professionals, Liquidators, Resolution Professionals and Bankruptcy Trustees (Recommendation) Guidelines, 2021 01 June, 2021 2 Guidelines for Association for Summer/Winter/Short Term/Certificate Courses with Academic Institutions/ Civil 05 May, 2021
27 Services Academies/ Judicial Academies, 2021 3 Guidelines for Appointment of Insolvency Professionals as Administrators under the Securities and Exchange Board of India (Appointment of Administrator and Procedure for Refunding to the Investors) Regulations, 2018 09 March, 2021 4 IBBI (Use of Caveats, Limitations, and Disclaimers in Valuation Reports) Guidelines, 2020 01 September, 2020 5 The Insolvency and Bankruptcy Board of India Research Initiative, 2019 (Updated as on 31st July, 2020) 01 August, 2020 6 IBBI (Online Delivery of Educational Course and Continuing Professional Education by Insolvency Professional Agencies and Registered Valuers Organizations) Guidelines, 2020 03 September, 2021 7 Guidelines for Technical Standards for the Performance of Core Services and Other Services under the Insolvency and Bankruptcy Board of India (Information Utilities) Regulations, 2017 (Updated up to 22-1-2020) 22 January, 2020 8 Insolvency and Bankruptcy Board of India (Continuing Professional Education for Insolvency Professionals) Guidelines, 2019 06 August, 2019 9 Guidelines for Empanelment of Advocates 01 November, 2018 10 Insolvency Professionals to act as Interim Resolution Professionals or Liquidators (Recommendation) Guidelines 2018 31 May, 2018 10 Insolvency Professionals to act as Interim Resolution Professionals or Liquidators (Recommendation) Guidelines, 2017 15 December, 2017 11 Guidelines on Essay Competition 13 October, 2017 12 Guidelines for Internships with IBBI 16 August, 2017 13 Insolvency Professionals to act as Interim Resolution 25 May, 2017
28 Professionals (Recommendation) Guidelines, 2017 Regulator Insolvency and Bankruptcy Board of India-https://www.ibbi.gov.in/ Date of establishment- 1st October, 2016 Regulates- i. Insolvency Professionals, ii. Insolvency Professional Agencies, iii. Insolvency Professional Entities and iv. Information Utilities. Governing Board 1. Chairperson- 2. Whole-time Members- i. Dr. Navrang Saini (Department-Registration and Monitoring Wing) ii. Dr. Ms. MukulitaVijayawargiya (Department-Administrative Law Wing) iii. Sh. Sudhaker Shukla (Department- Research and Regulation Wing) 3. Ex-officio Members-
29 i. Dr. Shashank Saksena (Department of Economic Affairs, Ministry of Finance) ii. Sh. Gyaneshwar Kumar Singh (Joint Secretary and Legal Adviser, Department of Legal Affairs, Ministry of Law & Justice. iii. Dr. Rajiv Mani (Joint Secretary and Legal Adviser, Department of Legal Affairs Ministry of Law & Justice.) iv. Sh. Unnikrishnan A(Legal Adviser, Reserve Bank of India) 4. Part-time Members i. Dr. Krishnamurthy Subramanian (Chief Economic Advisor) ii. Sh. B. Sriram (Former Managing Director & CEO of IDBI Bank Ltd.) Various committees under Insolvency and Bankruptcy Board of India 1. Disciplinary Committee under Section 220 of the Insolvency and Bankruptcy Code, 2016  1 Feb 2017- Dr. M. S. Sahoo  23 Aug 2017- Dr. (Ms.) MukulitaVijayawargiya, Whole Time Member  09 Apr 2018- a) Dr. M. S. Sahoo, Chairperson/ Mrs. Suman Saxena, Whole Time Member  b) Dr. (Ms.) MukulitaVijayawargiya, Whole Time Member  17 Oct 2018- Dr. Navrang Saini, Whole Time Member  15 Jun 2020- Dr. (Ms.) MukulitaVijayawargiya, Whole Time Member 2. Advisory Committee (Section 197) on- A. Individual Insolvency and Bankruptcy (15th September, 2017 to 15th September, 2020) (Section 197)- 1 chairperson & 9 Members Chairperson- Justice B. N. Srikrishna Former Justice, Supreme Court of India Member-
30 i. Mr. C. B. Bhave Chairperson, Indian Institute for Human Settlements and Former Chairman, SEBI ii. Professor Dipankar Gupta Sociologist and Author iii. Mr. Prithvi Haldea Founder Chairman, Prime Database iv. Dr. (Mrs.) Poornima Advani Former Chairperson, National Commission for Women and Advocate v. Mr. R. V. Verma Former CMD, National Housing Bank vi. Mr. Sanjeev Sanyal Principal Economic Advisor, Ministry of Finance vii. Representative, Ministry of Corporate Affairs viii. President, Society of Insolvency Practitioners of India ix. CEO, Indian Institute of Insolvency Professionals of ICAI B. Service Providers (26th May, 2020 to 25th May, 2023) Chairperson- Mr. T. V. Mohandas Pai, Chairman, Manipal Global Education Services Member-11 i. A representative of the Ministry of Corporate Affairs ii. Mr. Akhil Gupta, Chairman, Bharti Infratel Ltd. iii. Dr. Bimal N. Patel, Director General, Raksha Shakti University iv. Dr. Binoy J. Kattadiyil, Managing Director, ICSI Institute of Insolvency Professionals v. Mr. Chinna Veerappan Rajendran, MD & CEO, CSB Bank vi. Mr. J. Ranganayakulu, Former ED, SEBI vii. Mr. P. R. Ramesh, Former Chairman, Deloitte India viii. Dr. Punam Sahgal, Former Dean & Professor, Indian Institute of Management, Lucknow ix. Dr. Sameer Sharma, DG & CEO, Indian Institute of Corporate Affairs x. Mr. Shrikrishna Kulkarni, Chairman, Board of Governors, Indian Institute of Management, Calcutta xi. Mr. Vellayan Subbiah Murugappa, Managing Director, Tube Investments of India Ltd. Previous committees- Earlier dates
31  18th October 2016  30th August 2017  11th Dec 2017  6th May 2019 C. Corporate Insolvency and Liquidation (24th September, 2020 to 11th June, 2023) Chairperson- Mr. Uday Kotak, Executive Vice Chairman and Managing Director, Kotak Mahindra Bank Member-12 i. A representative of the Ministry of Corporate Affairs ii. Mr. Ashish Kumar Chauhan, Managing Director and CEO, BSE Limited iii. Ms. AshuSuyash, Managing Director & Chief Executive Officer, CRISIL iv. Mr. M. V. Nair, Chairman, Credit Information Bureau (India) Limited v. Mr. Nirmal Mohanty, Formerly Chief Economist, National Stock Exchange of India Limited vi. Prof (Dr.) Ranbir Singh, Vice Chancellor, National Law University, Delhi vii. Mr. R. K. Nair, Formerly Whole Time Member, IRDAI viii. Mr. R. Shankar Raman, Whole-time Director & Chief Financial Officer, Larsen & Toubro Limited ix. Rashesh Shah, Chairman & CEO, Edelweiss Group x. Mr. SomasekharSundaresan, Legal Counsel xi. Chairman, Indian Banks’ Association xii. MD, Insolvency Professional Agency of Institute of Cost Accountants of India Previous committees- Earlier dates  18th October, 2016 to 24th August, 2017
32  25th August, 2017 to 11th June, 2020  12th June, 2020 to 13th September, 2020 3. Technical Committee in accordance with Regulation 14 of the IBBI (Information Utilities) Regulations, 2017 Chairperson- Dr. R.B. Barman, Former Chairman, National Statistical Commission Member-3 i. Dr. N.L. Sarda, Professor (Ret'd), IIT Bombay & Visiting Professor, IIT Dharwad ii. Dr. Pulak Ghosh, IIMB Chair of Excellence, IIM Bangalore iii. Mr. V.G.Kannan, Former Managing Director, State Bank of India 4. Internal Complaints Committee for Prevention of Sexual Harassment at Workplace dated 11th November, 2020 i. Presiding Officer- Dr. (Ms.) MukulitaVijayawargiya, Whole Time Member, Insolvency and Bankruptcy Board of India ii. External Expert- Ms. Bina Jain, Managing Trustee, AIWC Education Trust iii. Member- v- Mr. RiteshKavdia, Executive Director, Insolvency and Bankruptcy Board of India iv. Member Secretary- Dr. Anuradha Guru, Executive Director, Insolvency and Bankruptcy Board of India Detailed provisions under the Insolvency and Bankruptcy Code, 2016 It comprises of 5 Parts, 255 Sections and 12 Schedules. Applicability of the Code It extends to the whole of India. Earlier, Part III which provides the provisions for Partnership firms and Individual was not applicable for the State of Jammu and Kashmir. Now it applies to whole of India. Note: This was omitted by the Jammu and Kashmir Reorganisation (Adaptation of Central Laws) Order, 2020 No.SO1123(E) dated 18th March, 2020. The IBC 2016 Applies for….
33 I. For Company and LLP, personal guarantors to corporate debtors-  Insolvency Resolution Process  Liquidation Process  Fast Track Insolvency Resolution Process  Voluntary Liquidation Process II. For Individual & Partnership-  Fresh Start Process  Insolvency Resolution Process  Bankruptcy Order Definitions involved under Section 3- Section 3(1)- “Board” means the Insolvency and Bankruptcy Board of India established under sub-section (1) of section 188 Section 3(2) - "bench" means a bench of the Adjudicating Authority; Section 3(3) - "bye-laws" mean the bye-laws made by the insolvency professional agency under section 205; Section 3(4) - "charge" means an interest or lien created on the property or assets of anyperson or any of its undertakings or both, as the case may be, as security and includes a mortgage; Section 3(6) - "claim" means— (a) a right to payment, whether or not such right is reduced to judgment, fixed, disputed, undisputed, legal, equitable, secured or unsecured; (b) right to remedy for breach of contract under any law for the time being in force, if such breach gives rise to a right to payment, whether or not such right is reduced to judgment, fixed, matured, unmatured, disputed, undisputed, secured or unsecured;
34 Section 3(7) - "corporate person" means a company as defined in clause (20) of section 2of the Companies Act, 2013, a limited liability partnership, as defined in clause (n) ofsub-section (1) of section 2 of the Limited Liability Partnership Act, 2008, or any other person incorporated with limited liability under any law for the time being in force but shall not include any financial service provider; Section 3(8) - "corporate debtor" means a corporate person who owes a debt to any person; Section 3(9) "core services" means services rendered by an information utility for— (a) Accepting electronic submission of financial information in such form and manner as may be specified; (b) Safe and accurate recording of financial information; (c) Authenticating and verifying the financial information submitted by a person; and (d) Providing access to information stored with the information utility to persons as may be specified; Section 3(10) - "creditor" means any person to whom a debt is owed and includes a financial creditor, an operational creditor, a secured creditor, an unsecured creditor and a decree holder; 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; Section 3(12) - "default" means non-payment of debt when whole or any part or installment of the amount of debt has become due and payable and is not paid by the debtor or the corporate debtor, as the case may be; 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;
35 (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. Section 3(14) "financial institution" means— (a) A scheduled bank; (b) Financial institution as defined in section 45-I of the Reserve Bank of India Act, 1934; (c) Public financial institution as defined in clause (72) of section 2 of the Companies Act, 2013; and (d) Such other institution as the Central Government may by notification specify as a financial institution; Section 3(15) - "financial product" means securities, contracts of insurance, deposits, credit arrangements including loans and advances by banks and financial institutions, retirement benefit plans, small savings instruments, foreign currency contracts other than contracts to exchange one currency (whether Indian or not) for another which are to be settled immediately, or any other instrument as may be prescribed; Section 3(16) - "financial service" includes any of the following services, namely:— (a) Accepting of deposits; (b) Safeguarding and administering assets consisting of financial products, belonging to another person, or agreeing to do so; (c) Effecting contracts of insurance; (d) Offering, managing or agreeing to manage assets consisting of financial products belonging to another person;
36 (e) Rendering or agreeing, for consideration, to render advice on or soliciting for the purposes of— (i) buying, selling, or subscribing to, a financial product; (ii) availing a financial service; or (iii) Exercising any right associated with a financial product or financial service; (f) Establishing or operating an investment scheme; (g) Maintaining or transferring records of ownership of a financial product; (h) Underwriting the issuance or subscription of a financial product; or (i) selling, providing, or issuing stored value or payment instruments or providing payment services; Section 3(17) - "financial service provider" means a person engaged in the business of providing financial services in terms of authorization issued or registration granted bya financial sector regulator; Section 3(18) - "financial sector regulator" means an authority or body constituted under any law for the time being in force to regulate services or transactions of financial sector and includes the Reserve Bank of India, the Securities and Exchange Board of India, the Insurance Regulatory and Development Authority of India, the Pension Fund Regulatory Authority and such other regulatory authorities as may be notified by the Central Government; Section 3(19) - "insolvency professional" means a person enrolled under section 206 within insolvency professional agency as its member and registered with the Board as an insolvency professional under section 207; Section 3(20) - "insolvency professional agency" means any person registered with the Board under section 201 as an insolvency professional agency; Section 3(21) - "information utility" means a person who is registered with the Board as an information utility under section 210;
37 Section 3(23) "person" includes— (a) an individual; (b) a Hindu Undivided Family; (c) a company; (d) a trust; (e) a partnership; (f) a limited liability partnership; and (g) any other entity established under a statute, and includes a person resident outside India; Section 3(24) - "person resident in India" shall have the meaning assigned to such terming clause (v) of section 2 of the Foreign Exchange Management Act, 1999; Section 3(25) - "person resident outside India" means a person other than a person resident in India; Section 3(27) "property" includes money, goods, actionable claims, land and every description of property situated in India or outside India and every description of interest including present or future or vested or contingent interest arising out of, or incidental to, property; Section (30) "secured creditor" means a creditor in favor of whom security interest is created; Section 3(31) - "security interest" means right, title or interest or a claim to property, created in favor of, or provided for a secured creditor by a transaction which secures payment or performance of an obligation and includes mortgage, charge, hypothecation, assignment and encumbrance or any other agreement or arrangement securing pay mentor performance of any obligation of any person: Note: security interest will not include a performance guarantee; Section 3(33) - "transaction" includes a agreement or arrangement in writing for the transfer of assets, or funds, goods or services, from or to the corporate debtor; Section 3(34) - "transfer" includes sale, purchase, exchange, mortgage, pledge, gift, loaner any other form of transfer of right, title, possession or lien; Section 3(35) - "transfer of property" means transfer of any property and includes a transfer of any interest in the property and creation of any charge upon such property; Section 3(36) - "workman" shall have the same meaning as assigned to it in clause (s) of section 2 of the Industrial Disputes Act, 1947; Insolvency Resolution and Liquidation for Corporate Persons (Section 4)
38 i. For matters relating to the insolvency and liquidation of corporate debtors-Minimum amount of default- 1 Lakh rupees ii. Note: The Central Government may, by notification, specify the minimum amount of default of higher value which shall not be more than one crore rupees. iii. For matters relating to thepre-packaged insolvency resolution process of corporate debtors- minimum amount of default-10 Lakh rupees (Note: amended by the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2021 (3 of 2021) by notification S.O. 1543(E) dated 9th April, 2021) The Central Government may, by notification, specify the minimum amount of default of higher value which shall not be more than one crore rupees. Note-The Ministry of Corporate Affairs (MCA) has raised the threshold of default under Section 4 of the Insolvency and Bankruptcy Code, 2016 to Rs. 1 crore (from the existing threshold of Rs. 1 lakh) vide Notification dated 24th March, 2020. This step was taken, inter alia, to assist and aid the functioning of Corporate Persons which might face default owing to the economic slowdown and unprecedented situation due to COVID19. Important definitions under Section 5 Adjudicating Authority- National Company Law Tribunal Auditor- a chartered accountant certified to practice as such by the Institute of Chartered Accountants of India. Base resolution plan- a resolution plan provided by the corporate debtor under clause (c) of sub- section (4) of section 54A Constitutional document- includes-  articles of association  memorandum of association of a company  incorporation documents of a Limited Liability Partnership
39 Corporate applicant – (a) Corporate debtor; or (b) a member or partner of the corporate debtor who is authorized to make an application for the corporate insolvency resolution process or the pre-packagedinsolvency 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; Corporate guarantor- a corporate person who is the surety in a contract of guarantee to a corporate debtor Dispute - 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- any person to whom a financial debt is owed and includes a person to whom such debt has been legally assigned or transferred to. Information memorandum- a memorandum prepared by resolution professional. Initiation date- the date on which a financial creditor, corporate applicant or operational creditor, as the case may be, makes an application to the Adjudicating Authority for initiating corporate insolvency resolution process or pre-packaged insolvency resolution process, as the case may be.
40 Insolvency commencement date- 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. Insolvency resolution process costs– (a) The amount of any interim finance and the costs incurred in raising such finance; (b) The fees payable to any person acting as a resolution professional; (c) Any costs incurred by the resolution professional in running the business of the corporate debtor as a going concern; (d) Any costs incurred at the expense of the Government to facilitate the insolvency resolution process; and (e) Any other costs as may be specified by the Board; Insolvency resolution process period- the period of 180 days starting from the insolvency commencement date and ending on 180th day. Interim finance- any financial debt raised by the resolution professional during the insolvency resolution process period or by the corporate debtor during the prepackaged insolvency resolution process period, as the case may bean such other debt as may be notified. Operational creditor- a person to whom an operational debt is owed and includes any person to whom such debt has been legally assigned or transferred. Preliminary information memorandum” means a memorandum submitted by the corporate debtor under clause (b) of sub-section (1) of section 54G. Pre-packaged insolvency commencement date- means the date of admission of an application for initiating the pre-packaged insolvency resolution process by the Adjudicating Authority. Pre-packaged insolvency resolution process costs- (a) The amount of any interim finance and the costs incurred in raising such finance;
41 (b) the fees payable to any person acting as a resolution professional and any expenses incurred by him for conducting the pre-packaged insolvency resolution process during the pre-packaged insolvency resolution process period, (c) Any costs incurred by the resolution professional in running the business of the Corporate debtor as a going concern pursuant to an order under sub-section (2) of section 54J; (d) Any costs incurred at the expense of the Government to facilitate the prepackaged insolvency resolution process; and (e) Any other costs as may be specified Pre-packaged insolvency resolution process period- the period beginning from the pre- packaged insolvency commencement date and ending on the date on which an order under sub- section (1) of section 54L, or sub-section (1) of section 54N, or sub-section(2) of section 54-O, as the case may be, is passed by the Adjudicating Authority. Related party, in relation to a corporate debtor - (a) A director or partner of the corporate debtor or a relative of a director or partner of the corporate debtor; (b) A key managerial personnel of the corporate debtor or a relative of 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 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 debtors a director and holds along with relatives, more than two per cent. Of its paid- up share capital; (f) anybody corporate whose board of directors, managing director or manager, in the ordinary course of business, acts on the advice, directions or instructions of 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;
42 (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 Isa subsidiary; (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 (I) participation in policy making processes of the corporate debtor; or (ii) Having more than two directors in common between the corporate debtor and such person; or (iii) Interchange of managerial personnel between the corporate debtor and such person; or (iv) Provision of essential technical information to, or from, the corporate debtor; Related party, in relation to an individual- (a) A person who is a relative of the individual or a relative of the spouse of the individual; (b) A partner of a limited liability partnership, or a limited liability partnership or a partnership firm, in which the individual is a partner; (c) a person who is a trustee of a trust in which the beneficiary of the trust includes the individual, or the terms of the trust confers a power on the trustee which may be exercised for the benefit of the individual; (d) A private company in which the individual is a director and holds along with his relatives, more than two per cent. Of its share capital; (e) A public company in which the individual is a director and holds along with relatives, more than two per cent. Of its paid-up share capital; (f) A body corporate whose board of directors, managing director or manager, in the ordinary course of business, acts on the advice, directions or instructions of the Individual; (g) A limited liability partnership or a partnership firm whose partners or employees in the ordinary course of business, act on the advice, directions or instructions of the individual; (h) A person on whose advice, directions or instructions, the individual is accustomed to act;
43 (I) a company, where the individual or the individual along with its related party, own more than fifty per cent. Of the share capital of the company or controls the appointment of the board of directors of the company. Resolution applicant- a person, who individually or jointly with any other person, submits a resolution plan to the resolution professional pursuant to the invitation made. Resolution plan- a plan proposed by resolution applicant for insolvency resolution of the corporate debtor as a going concern in accordance with Part II. Initiation of corporate insolvency resolution process Section 6 prescribes that on the event of default, an application for initiating corporate insolvency resolution process in respect of such corporate debtor may be made by the following persons- a) financial creditor under Section 7 b) an operational creditor under Section 9 or c) the corporate debtor itself under Section 10 Suspension of initiation of corporate insolvency resolution process The Insolvency and Bankruptcy Code (Second Amendment) Act, 2020 with effect from 5th June 2020 provides for insertion of Section 10A to the Code for temporary suspension of initiation of corporate insolvency resolution process (CIRP) under Section 7, 9 and 10 of the Code for a period of six months or such further period not exceeding one year from 25th March 2020, as follows:. i. The benefit of the suspension is applicable to all those defaults of the corporate debtor that occur from 25th March, 2020 and till the end of period of suspension. ii. The provisions of this section shall not apply to any default committed under the said sections before 25th March, 2020. iii. Section 66 has been amended to provide protection to directors from personal liability for COVID period defaults.
44 The time period under section 10A of the code has been extended vide notification no. SO- 4638 (E) dated 22nd December, 2020 for a further period of three months from 25th December, 2020. Persons not entitled to make application (a) a corporate debtor undergoing a corporate insolvency resolution process or a pre- packaged insolvency resolution process]; or (aa) a financial creditor or an operational creditor of a corporate debtor undergoing a pre- packaged insolvency resolution process; or; (b) a corporate debtor having completed corporate insolvency resolution process twelve months preceding the date of making of the application; or (ba) a corporate debtor in respect of whom a resolution plan has been approved under ChapterIII-A, twelve 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 twelve months before the date of making of an application under this Chapter; or (d) A corporate debtor in respect of whom a liquidation order has been made. Is there any time limit prescribed for completion of insolvency resolution process? Insolvency Resolution is a time bound process and shall be completed within 180 days of insolvency commencement date (date of admission of application). This period can be further extended by NCLT on an application supported by 66% voting share of Committee of Creditors. It should also be noted that, only one such grant is allowed under the Insolvency and Bankruptcy Code, 2016. The period of extension shall not be more than 90 days. Time bound resolution The corporate insolvency resolution process shall mandatorily be completed within a period of three hundred and thirty days from the insolvency commencement date, including any extension
45 of the period of corporate insolvency resolution process granted under this section and the time taken in legal proceedings in relation to such resolution process of the corporate debtor. Where the insolvency resolution process of a corporate debtor impending and has not been completed within the staid period, such resolution process shall be completed within a period of ninety days from the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2019. Detailed corporate insolvency resolution process under the Code On Account of default, financial creditor either by itself or jointly with 2[other financial creditors, or any other person on behalf of the financial creditor, operational creditor or corporate applicant may file application to NCLT. An application by financial creditor against the corporate debtor shall be filed jointly by not less than one hundred of such creditors in the same class or not less than ten per cent. Of the total number of such creditors in the same class, whichever is less? Operational Creditor shall file application only after 10 days from the date of delivery of the notice or invoice demanding payment, on account of non-receipt of payment from the corporate debtor or notice of the dispute. The application can be withdrawn before admission of application. On receipt of application, NCLT may accept or reject the application within 14 days of receipt. While rejecting the application, NCLT shall give 7-day period for rectification of, mistakes in the application. The NCLT may allow the withdrawal of application admitted under section 7 or section 9 or section 10, on an application made by the applicant with the approval of ninety per cent. Voting share of the committee of creditors. On admission of application,  NCLT shall declare a moratorium,
46  appoint an interim resolution professional within 14 days of insolvency commencement date During moratorium period A license, permit, registration, quota, concession, clearance or a similar grant or right given by the Central Government, State Government, local authority, sect oral regulator or any other authority constituted under any other law for the time being in force, shall not be suspended or terminated on the grounds of insolvency, subject to the condition that there is no default in payment of current dues arising for the use or continuation of the license or a similar grant or right during moratorium period. The order of moratorium shall have effect from the date of such order till the completion of the corporate insolvency resolution process Public announcement Interim resolution professional shall cause a public announcement of the initiation of corporate insolvency resolution process and call for the submission of claim not later than 3 days of his appointment. Appointment and tenure of interim resolution professional On appointment of interim resolution professional (on the insolvency commencement date), all powers of management go to interim resolution professional and he shall strive to keep the business of corporate debtor as going concern. The term of the interim resolution professional shall continue till the date of appointment of the resolution professional. Duties of interim resolution professional. - (a) Collect all information relating to the assets, finances and operations of the corporate debtor for determining the financial position of the corporate debtor, including information relating to - (i) business operations for the previous two years;
47 (ii) Financial and operational payments for the previous two years; (iii) List of assets and liabilities as on the initiation date; and (iv) Such other matters as may be specified; (b) Receive and collate all the claims submitted by creditors to him, pursuant to the public announcement; (c) Constitute a committee of creditors; (d) Monitor the assets of the corporate debtor and manage its operations until are solution professional is appointed by the committee of creditors Procedure after appointment of interim resolution professional Within 7 days of appointment, interim resolution professional shall appoint two registered values. On or before 14 days of appointment of interim resolution professional, resolution professional shall collect claims of creditors in specified forms. Financial creditor can submit his claim only in electronic form. IRP shall verify claims within 7 days of receipt. Creditor shall bear the cost of proving the debt due to such creditor. After collation of claims, IRP shall constitute committee of creditors. Meeting of committee shall be held within 7 days of constitution. IRP shall file a report certifying constitution of the committee to the Adjudicating Authority on or before the expiry of thirty days from the date of his appointment. Committee of creditors  The committee of creditors shall comprise all financial creditors of the corporate debtor.  It is noted that financial creditor or the authorized representative of the financial creditor, if it is a related party of the corporate debtor, shall not have any right of representation, participation or voting in a meeting of the committee of creditors.
48  All decisions of the committee of creditors shall be taken by a vote of not less than fifty- one per cent. Of voting share of the financial creditors.  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 first meeting of the committee of creditors shall be held within seven days of the constitution of the committee of creditors. Committee of Creditors may appoint interim resolution professional as resolution professional or may propose a new resolution professional. It is done by a majority vote of not less than sixty-six per cent. Of the voting share of the financial creditors. Approval of committee of creditors for certain actions The 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 maybe 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;
49 (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. Resolution Professional Resolution Professional shall prepare an information memorandum comprising of assets and liabilities, latest financial statements, liquidation value etc. of corporate debtor. On the basis of information memorandum, resolution applicant shall prepare a resolution plan and submit to the resolution professional. A resolution applicant may submit a resolution plan along with an affidavit stating that he is eligible under section 29A to the resolution professional prepared on the basis of the information memorandum. Resolution plan The committee of creditors may approve a resolution plan by a vote of not less than sixty-six per cent. Of voting share of the financial creditors, after considering its feasibility and viability, the manner of distribution proposed, which may take into account the order of priority. Resolution on after certifying that the plan is in accordance with the Code may put such plan before committee of creditors of approval. The resolution applicant shall, pursuant to the resolution plan approved, 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 NCLT or within such period as provided for in such law, whichever is later.
50 Resolution Professional shall submit the approved resolution plan to the NCLT.NCLT may approve the plan if the plan is in accordance with the Code. On order of approval of resolution plan:  the moratorium order passed by the Adjudicating Authority shall cease to have effect; and  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. Liquidation Process Liquidation process is governed by Part II, Chapter III covering Sections 33-54 read with the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 under the Insolvency and Bankruptcy Code, 2016. ‘Company Liquidator’ means a person appointed by the Tribunal as a Company Liquidator in accordance with the provisions of section 275 for the winding up of a company under this Act. ‘Winding up’ means winding up under this act or liquidation under the Insolvency and Bankruptcy Code, 2016, as applicable. When Liquidation order can be passed by Adjudicating Authority?  Before the expiry of the insolvency resolution process period or the maximum period permitted for completion of the corporate insolvency resolution process under or the fast track corporate insolvency resolution process, as the case may be, does not receive a resolution plan.  rejects the resolution plan for the non-compliance of the requirements specified by the Code.  Where the resolution professional, at any time during the corporate insolvency resolution process but before confirmation of resolution plan, intimates the Adjudicating Authority
51 of the decision of the committee of creditors approved by not less than sixty-six per cent. Of the voting share to liquidate the corporate debtor, the Adjudicating Authority shall pass a liquidation order to liquidate the corporate debtor.  Where the resolution plan approved by the Adjudicating Authority under section31 or under sub-section (1) of section 54L,is contravened by the concerned corporate debtor, any person other than the corporate debtor, whose interests are prejudicially affected by such contravention, may make an application to the Adjudicating Authority for a liquidation order. On happening of above circumstances, Adjudicating Authority shall:  pass an order requiring the corporate debtor to be liquidated in the manner as laid down in this Chapter;  issue a public announcement stating that the corporate debtor is in liquidation; and  Require such order to be sent to the authority with which the corporate debtor is registered. Powers and duties of liquidator Following are the powers and duties of the liquidator provided under Section 35- (a) To verify claims of all the creditors; (b) To take into his custody or control all the assets, property, effects and actionable claims of the corporate debtor; (c) To evaluate the assets and property of the corporate debtor in the manner as may be specified by the Board and prepare a report; (d) To take such measures to protect and preserve the assets and properties of the corporate debtor as he considers necessary; (e) To carry on the business of the corporate debtor for its beneficial liquidation as he considers necessary;
52 (f) 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. (g) 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; (h) 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; (i) to obtain any professional assistance from any person or appoint any professional, in discharge of his duties, obligations and responsibilities; (j) To invite and settle claims of creditors and claimants and distribute proceeds in accordance with the provisions of this Code; (k) to institute or defend any suit, prosecution or other legal proceedings, civil or criminal, in the name of on behalf of the corporate debtor; (l) To investigate the financial affairs of the corporate debtor to determine undervalued or preferential transactions; (m) 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;
53 (n) 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 (o) To perform such other functions as may be specified by the Board. What is Liquidation Estate? It includes: 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; 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 realized. Not included in liquidation estate
54 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 - (i) Assets held in trust for any third party; (ii) Bailment contracts; (iii) All sums due to any workmen or employee from the provident fund, the pension fund and the gratuity fund; (iv) Other contractual arrangements which do not stipulate transfer of title but only use of the assets; and (v) 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 maybe 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. Detailed provision under Liquidation process  Resolution professional appointed shall act as Liquidator after passing of order of liquidation by the NCLT unless replaced by the NCLT.  Liquidator’s fee shall be approved by the Committee of Creditors if order of liquidation is passed on the grounds of non-receipt of resolution plan within time specified or approval
55 of liquidation by the committee of creditors. In all other cases fee, shall be as prescribed in the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016  Liquidator has powers to access the information of corporate debtor and may appoint professionals for the purpose.  The liquidator shall make a public announcement in Form B of Schedule II within five days from his appointment to call upon stakeholders to submit their claims as on the liquidation commencement date.  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.  The liquidator shall verify the claims and after verification of claims, either admit or reject the claim, in whole or in part, as the case may be.  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.  Liquidator shall form an estate of the assets which will be called the liquidation estate in relation to the corporate debtor. o On forming the liquidation estate, the liquidator shall prepare an asset memorandum within seventy-five days from the liquidation commencement date.  The liquidator shall submit a Preliminary Report to the Adjudicating Authority within seventy-five days from the liquidation commencement date comprising of capital structure, asset and liabilities of corporate debtor etc.  Any time after the preparation of the Preliminary Report, if it appears to the liquidator that the realizable properties of the corporate debtor are insufficient to cover the cost of the liquidation process and the affairs of the corporate debtor do not require any further investigation, he may apply to the Adjudicating Authority for early dissolution of the corporate debtor and for necessary directions in respect of such dissolution.  Liquidator shall submit progress reports- (a) The first Progress Report within fifteen days after the end of the quarter in which he is appointed;
56 (b) Subsequent Progress Report(s) within fifteen days after the end of every quarter during which he acts as liquidator.  And specified in Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016.  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. o The liquidator shall verify the claims submitted within thirty days from the last date for receipt of claims and may either admit or reject the claim, in whole or in part, as the case may be.  The liquidator shall prepare a list of stakeholders, category-wise, on the basis of proofs of claims submitted and accepted.  The liquidator shall file the list of stakeholders with the Adjudicating Authority within forty-five days from the last date for receipt of claims, and the filing of the list shall be announced to the public.  Order may be passed by NCLT on application by resolution professional for preferential transactions and extortionate credit transactions.  Secured creditor may relinquish his interest.  Liquidator may sale assets by auction or private mode of sale.  The liquidator may sell- (a) An asset on a standalone basis; (b) The assets in a slump sale; (C) A set of assets collectively; (d) The assets in parcels; (e) The corporate debtor as a going concern; or (f) The business(s) of the corporate debtor as a going concern  Where the valuation has been conducted under regulation 35 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons)Regulations, 2016 or regulation 34 of the Insolvency and Bankruptcy Board of India(Fast Track Insolvency Resolution Process for Corporate Persons) Regulations, 2017,as the case may be, the liquidator shall consider the average of the estimates of the
57 values arrived under those provisions for the purposes of valuations under these regulations.  In cases not covered under above provision or where the liquidator is of the opinion that fresh valuation is required under the circumstances, he shall within seven days of the liquidation commencement date, appoint two registered values to determine the realizable value of the assets or businesses.  On sale of an asset, the liquidator shall prepare an asset sale report in respect of said asset, to be enclosed with the Progress Reports.  A liquidator may assign or transfer a not readily realizable asset through a transparent process, in consultation with the stakeholders’ consultation committee in accordance with Regulation 31A, for a consideration to any person, who is eligible to submit a resolution plan for insolvency resolution of the corporate debtor.  The liquidator shall realize any amount due from any contributory to the corporate debtor.  The liquidator shall open a bank account in the name of the corporate debtor followed by the words ‘in liquidation’, in a scheduled bank, for the receipt of all moneys due to the corporate debtor.  The liquidator shall not commence distribution before the list of stakeholders and the asset memorandum has been filed with the Adjudicating Authority.  Notwithstanding anything to the contrary contained in any law enacted by the Parliament or any State Legislature for the time being in force, 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: - 1. the insolvency resolution process costs and the liquidation costs paid in full; 2. the following debts which shall rank equally between and among the following: - i. workmen's dues for the period of twenty-four months preceding the liquidation commencement date; and ii. debts owed to a secured creditor in the event such secured creditor has relinquished security; 3. wages and any unpaid dues owed to employees other than workmen for the period of twelve months preceding the liquidation commencement date;
58 4. financial debts owed to unsecured creditors; 5. the following dues shall rank equally between and among the following: - i. 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; ii. debts owed to a secured creditor for any amount unpaid following the enforcement of security interest; 6. any remaining debts and dues; 7. preference shareholders, if any; and 8. equity shareholders or partners, as the case may be. Pre-packaged insolvency resolution process (Chapter III-A-Section 54A-54P) Governing Framework:  Chapter III -A, Section 54A-54P has been inserted by Act No. 26 of 2021, sec.8 (w.e.f. 04-04-2021).  Also, the Insolvency and Bankruptcy (prepackaged insolvency resolution process) Rules, 2021 notified on 9th Aril, 2021 and  the Insolvency and Bankruptcy Board of India (Pre-packaged Insolvency Resolution Process) Regulations, 2021- notified on 9th Aril, 2021 Pre-packaged insolvency resolution processes available for resolution of stress of corporate MSMEs. Eligibility for Pre-packaged insolvency resolution process (ii) is eligible to submit a resolution plan under section 29A of the Code; (iii) Has not undergone a Pre-packaged insolvency resolution process during the three years preceding the initiation date;
59 (iv) Has not completed a CIRP during the three years preceding the initiation date; (v) Is not undergoing a CIRP; and (vi) Is not required to be liquidated by an order under section 33 of the Code. Fast Track Insolvency Process Sections 55-58 under Chapter IV of Part II of the Code read with the Insolvency and Bankruptcy Board of India (Fast Track Insolvency Resolution Process for Corporate Persons) Regulations, 2017 deals with the Fast Track Insolvency Process. What categories of corporate debtors can make application for fast track corporate insolvency resolution process? -a small company, or -a startup (other than the partnership firm), or -an unlisted company with total assets, not exceeding Rs.1 crore Time Limit This process shall be completed in 90 days from the insolvency commencement date. Resolution professional may apply to the Adjudicating Authority for extension for a period of maximum 45 days. This application shall be supported by resolution passed by committee of creditor by 75% voting share. Voluntary Liquidation Process Chapter V of Part II of the Code covering section 59 of the Code read with the Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017 under the Insolvency and Bankruptcy Code, 2016 deals with the voluntary liquidation. Earlier, Voluntary Winding Up was dealt with under Chapter XX of Part II of the Companies Act, 2013. Who can make application for voluntary liquidation? A corporate person who intends to liquidate itself voluntarily and has not committed any default may initiate voluntary liquidation proceedings.
60 When commencement of Voluntary Liquidation takes place? Voluntary liquidation of a company shall commence from passing of resolution by members. Voluntary liquidation for a corporate person other than a company shall be deemed to have commenced from the date of passing of the resolution partners or contributories. [Regulation 3(3) of the Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017] The company shall notify the Registrar of Companies and the Board about the resolution passed by members to liquidate the company within seven days of such resolution or the subsequent approval by the creditors, as the case may be. Adjudicating Authorities for Corporate Persons (Companies & LLPs)- Section 60 of the Insolvency and Bankruptcy Code, 2016 prescribes that National Company Law Tribunal (NCLT) y having territorial jurisdiction over the place where the registered office of the corporate person is located, is the adjudicating authority in relation to insolvency resolution and liquidation for corporate persons including corporate debtors and personal guarantors thereof. An insolvency resolution process or liquidation or bankruptcy proceeding of a corporate guarantor or personal guarantor, as the case may be, of the corporate debtor pending in any court or tribunal shall stand transferred to the Adjudicating Authority dealing within solvency resolution process or liquidation proceeding of such corporate debtor. National Company Law Tribunal (NCLT) having territorial jurisdiction over the place where the registered office of the corporate person is located. The NCLT has 16 benches. The principal bench of the NCLT is located at New Delhi, with 15 other benches at New Delhi, Mumbai, Kolkata, Chennai, Bangalore, Chandigarh, Allahabad, Ahmedabad,Amaravati, Cuttack, Indore, Jaipur, Kochi, Hyderabad and Guwahati. Appellate Authorities for Corporate Persons (Companies & LLPs)- Any person aggrieved by order of NCLT may file appeal to National Company Law Appellate Tribunal (NCLAT) within 30 days of order of the NCLT.
61 Insolvency Resolution Process for Individual and Partnership Firms Part III, 7 Chapters, Sections 78 to 187 deals with Insolvency Resolution Process for Individual and Partnership Firms. Part III - Insolvency Resolution and Bankruptcy for Individuals and Partnership Firms S. No. Chapter’s Name Sections 1 Preliminary 78-79 2 Fresh Start Process 80-93 3 Insolvency Resolution Process 94-120 4 Bankruptcy Order for Individuals and Partnership Firms 121-148 5 Administration and Distribution of the Estate of the Bankrupt 149-178 6 Adjudicating Authority for Individuals and Partnership Firms 179-183 7 Offences and Penalties 184-187 Application for insolvency resolution process may be filed by any individual or partnership firm who has committed default. Application can be filed by the creditor or by the debtor itself. When an application is filed by debtor or creditor an interim-moratorium shall commence on the date of the application in relation to all the debts and shall cease to have effect on the date of admission of such application.
62 The different processes involved are: A. Fresh Start Process B. Insolvency Resolution Process C. Bankruptcy Procedure involved in Fresh Start Process  Filing of Application  Commencement of Interim Moratorium  Appointment of Resolution Professional  Examination of application by Resolution Professional  Consideration of report on application for fresh start process by Resolution Professional by the Adjudicating Authority  Commencement of Moratorium Period on Acceptance of Application  Objections by creditor and their examination by Resolution Professional  Revocation of order passed by Adjudicating Authority for accepting the application for fresh start  Process  Discharge order Adjudicating Authorities for Individuals and Partnership Firms- Debt Recovery Tribunal (DRT) having territorial jurisdiction over the place where the individual debtor actually and voluntarily resides or carries on business or personally works for gain and can entertain an application under IBC 2016 regarding such person. Appellate Authorities for Individuals and Partnership Firms- Any person aggrieved by order of DRT may file appeal to Debt Recovery Appellate Tribunal (DRAT) within 30 days of such order. Regulation of Insolvency Professionals, Agencies and Information Utilities
63 Following authorities involved for conduct of insolvency resolution process: (i) Insolvency and Bankruptcy Board of India (IBBI) (ii) Insolvency Professional Agencies (IPAs) (iii) Insolvency Professionals (IPs) (iv) Information Utilities (IUs) Insolvency Professionals (IPs) Insolvency Professionals who are registered as member of an insolvency professional agency and registered with the Board are regulated by Insolvency Professional Agency. Insolvency Professional plays a vital role in Insolvency and bankruptcy Process. Insolvency professional acts a resolution professional under the Code. Also, an insolvency professional shall be abided by the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016. Information Utilities (IUs) Information Utilities are in the place for having centralized database of the Country regarding to such cases. It shall be abided by the Insolvency and Bankruptcy Board of India (Information Utilities) Regulations, 2017-come into force on 1st April, 2017. National E-Governance Services Limited (NeSL)-Information Utility registered with IBBI NeSL works towards  Time-bound resolution by providing verified information to creditors and to Adjudicating Authorities that do not require further authentication.  Default intimation to Creditors linked to a debtor when any creditor files a default against a debtor  Mitigation of information asymmetry between parties to a debt  Superior credit monitoring by creditors
64  An agreed statement of outstanding balance between parties to a debt  Facilitate all stakeholders of the IBC ecosystem by leveraging Information Technology to achieve objective of code INSOL International https://www.insol.org/ Useful website https://iica.nic.in/gip/- https://www.iiipicai.in/-Indian Institute of Insolvency Professionals of ICAI https://icsiiip.in/-ICSI Institute of Insolvency Professionals (ICSI IIP) https://www.ipaicmai.in/- Insolvency Professional Agency of Institute of Cost Accountants of India ("IPAICAI") www.nesl.co.in

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UNFOLDS NEW PROFESSIONAL OPPORTUNITIES AVAILABLE FOR THE CHARTERED ACCOUNTANTS IN THE ROLE OF INSOLVENCY PROFESSIONAL AND HOW TO BE ONE?

  • 1.
    1 UNFOLDS NEW PROFESSIONALOPPORTUNITIES AVAILABLE FOR THE CHARTERED ACCOUNTANTS IN THE ROLE OF INSOLVENCY PROFESSIONAL AND HOW TO BE ONE? By CA. (Dr.) Rajkumar Adukia Author of more than 300 books, Business Growth and Motivational Coach, Member IFRS SMEIG London 2018-2020 Ex director - SBI mutual fund, BOI mutual fund Ph. D , LL.B, LLM (Constitution), FCA,FCS, MBA, MBF , FCMA, Dip Criminology, Dip in IFR(UK) Justice (Harvard) , CSR, Dip IPR, Dip Criminology ,dip in CG , Dip Cyber, dip data privacy B. Com , M. Com., Dip LL & LW Student of – MA (psychology), MA (Economics), IGNOU PGDCR, PGCAP etc Chairman western region ICAI 1997, Council Member ICAI 1998-2016 Introduction: Chartered Accountants especially due to their expertise whether it is in finance, advisory, management or audit are in an advantageous position to play huge role in the insolvency resolution domain. The Insolvency and Bankruptcy Code, 2016 that provides a mechanism for the resolution of insolvency provides significant professional opportunities for such professionals that they may explore to challenge their growth potential. List of some professional opportunities that they explore: 1. Assisting IP in preparing for pre-CIRP preparation. 2. Reviewing the various risks involved in restructuring. 3. Developing risk mitigation strategies.
  • 2.
    2 4. Working outa detailed bankable financial structure of the business. 5. Working out a detailed plan for restructuring the business from all angles. 6. Assessment of distressed assets, cash position, due diligence and turnaround feasibility 7. Advice on optimum utilization of resources. 8. Corporate Applicant Insolvency. 9. Assessing Cross Border Insolvency transactions. 10. Representation before the Debt Recovery Tribunals – particularly after notification of individual/firm bankruptcies. 11. Representation before the NCLT or NCLAT, High Courts or Supreme Court. 12. Negotiating settlements. 12. Advisory in relation to a merger or acquisition or takeover. 13. Advisory services to management on an ongoing basis. 14. Bankruptcy of Personal Guarantors, Firms and Individuals. 15. Handling the Liquidation Process. 16. Managing Interim Finance. 17. Spotting and evaluating distressed companies for restructuring and rescue planning. What are the opportunities available for Professionals under IBC?  Becoming an Insolvency Professional  Becoming a Valuer  Other than Insolvency Professional Opportunities as an Insolvency Professional  Interim Resolution Professionals  Resolution Professional  Representation on Committee of Creditors  Liquidator  Corporate consulting for Resolution / Liquidation  Control and custody of the assets of the corporate debtor  Bankruptcy
  • 3.
    3  Voluntary Liquidation Recovery under various relevant Laws  Factoring, Loan & Sale Documentation  Assessment of distressed assets, cash position, due diligence and turnaround feasibility;  Advice on optimum utilization of resources. Opportunities other than Insolvency Professional  Assisting Interim Resolution Professional/Resolution Professional  Preparation of Evaluation Matrix, Process Document and other materials  Identification of prospective resolution applicants, investors, lenders  Managing operations/cash flows of the entity  Preparation of resolution plans and representations of resolution applicant before Resolution Professional, Committee of Creditors, NCLT  Legal Advisory Service / Representation  Interim Finance / Fund Syndications  Representations before DRT  Representations before NCLT/NCLAT  Advisory to Corporate Debtor  Advisory to Banks /Financial Institutions  Stock Audit  Forensic Audit  Internal Audit  Assisting in passing Limited Insolvency Examination  Pre-Insolvency/ Distress Advisory  Sell movable and immovable properties by auction/ private contract  Financial Due Diligence  Reviewing the various risks involved in restructuring.  Developing risk mitigation strategies.  Legal Advice in in debt & business restructuring area  Assessing Cross Border Insolvency transactions
  • 4.
    4  Corporate Restructuringbased on Mergers/ Demergers/ Take over/Acquisitions  Negotiating settlements  Identifying strategic investors  Drafting of various due diligence report, applications, affidavits etc. How to become Insolvency Professional? Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016 (IP Regulations) Chartered Accountant, Company Secretary, Cost Accountant or an Advocate) having 10 years of experience, or graduates having 15 years of managerial experience, Steps involved:  First get enrollment for Limited Insolvency Examination  Limited Insolvency Examination, time limit- within 12 months before the date of his application for enrolment with the insolvency professional agency  Mandatory 50 hours Pre- Registration Educational Course (hereinafter referred to as ‘Course’) from an Insolvency Professional Agency (IPA) after his enrolment as a Member.  Apply to the Board for registration as an ‘insolvency professional’
  • 5.
    5  The NationalInsolvency Programme will be notified by the Board in due time. For Professionals, having less than 10 years of experience Steps involved:  Complete the Graduate Insolvency Programme (GIP)  Pass the limited insolvency examination  Enroll as a professional member with an insolvency professional agency (IPA), within a period of 12 months of clearing the Limited Insolvency Examination  Complete a pre-registration educational course by the IPA.  Apply to the Board for registration as an ‘insolvency professional’ (IP) Note: The National Insolvency Programme yet not notified by the IBBI. Enrollment for Limited Insolvency Examination All the information is available at -https://ibbi.gov.in/examination/view-examination/17 Steps for registration  First go to https://ibbi.gov.in/examination/view-examination/17  Click- ‘Register and Enroll Online’  Select “New User”  Provide your e-mail address & other details  Upload- (PP)- i. PAN Card ii. Passport size photograph  Submit the form online  You will receive an activation link on your registered e-mail address. Please click on this link to verify your e-mail address. Note: No fee is payable for registration  After Login id &password generated. Through this Login id, the candidates can check the slot availability in the “Centre Details”
  • 6.
    6  Exam fee-Rs.1770/  Payment mode- Debit Card / Net Banking/ Credit Card  Admit Card- download from the hyperlink under the "Candidate Dashboard" Appearing for examination Carry a Admit Card, original PAN Card/Aadhar Card/Passport and arrive 30 minutes before the scheduled time at the examination center. Is rescheduling of exam permitted?  It is permitted only if there is a bonafide reason.  All such requests must be addressed to the Test Administrator NSEIT at [email protected].  Time limit: 15 days before the date of examination Exam centers Available at- https://ibbi.gov.in/examination/view-examination/17 Upper age limit for seeking registration with the Board as an IP There is no such upper age limit for seeking registration. However, age restrictions are applicable for practicing as an IP. Passing criteria Professional need to score 60% to pass the examination. Exam Result After submitting the exam paper, the result will be displayed on the screen, immediately. However, the final certificate will be issued by the Insolvency and Bankruptcy Board of India within due course. Brief idea of exam structure Types of questions: MCQs
  • 7.
    7 Time allowed: 2hours Total Marks: 100 Negative Marks: 25% of marks Total no. of Questions: 75 Distribution of marks: 50 questions of 1 mark each, 25 questions of 2 marks each Distribution of marks subject wise Code, Rules and Regulations &other Acts-45 marks, General Awareness- 5 marks (50 marks) 1. The Insolvency and Bankruptcy Code, 2016 (Code)- 10 marks 2. Rules and Regulations under the Code (Updated till 31st December 2020)- 15 Marks 3. The Companies Act, 2013, (except- Chapter- I, II, VIII, X, XI to XIV, XVI, XIX, XXI to XXVI) Note: Topics included- Securities, Shares, Debentures, Deposits, Charges, Management, Accounts, Amalgamations, Valuers, Removal of names, Winding up, NCLT, Special Courts & Punishment. ThePartnership Act, 1932& The Limited Liability Partnership Act, 2008- 04 marks (three Acts i.e. the Company, Partnership & LLP covering 4 marks) 4. 11 other Acts- 11 Marks i. The Indian Contract Act, 1872 ii. (The Negotiable Instruments Act, 1881 iii. The Transfer of Property Act, 1882 and the Sale of Goods Act, 1930 iv. The Code of Civil Procedure, 1908 (Sections 9, 10, 11, 26-32, 38-45,60-64, 73, 75-78, 89 and Order 21) and the Limitation Act, 1963 v. The Prevention of Corruption Act, 1988 (Definition of public servant, Section 7-16 read with Section 29A of the Code) and the Prevention of Money Laundering Act, 2002 (Sections: 2-8, 48, 63, 67, 71, 72)
  • 8.
    8 vi. The Recoveryof Debts and Bankruptcy Act, 1993 vii. The Arbitration and Conciliation Act, 1996 viii. The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interests Act, 2002 ix. The Micro, Small and Medium Enterprises Development Act, 2006: (Classification of enterprises, Advisory committee, Memorandum of micro, small and medium enterprises, Delayed payments to micro and small enterprises) x. Real Estate (Regulation and Development) Act, 2016 (Sections: 2, 4, 5, 11, 17, 18, 20, 23, 31, 34, 36, 37, 38, 40, 41, 42, 58, 59, 69, 70, 71, 79, 80, 85, 86, 88, 89, 90) xi. Securities Contracts Regulation Act, 1956 (Contracts and options in securities, listing of securities, Offences, penalties, and adjudication) and the 4 SEBI Regulations: - - Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 - Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009 - Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 - Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 5. Finance and Accounts (Corporate Finance; Financial Analysis; Liquidity Management; Tax Planning and GST) (covering 5 topics) - 5 Marks 6. General Awareness (covering 6 topics) : 5 Marks (I) Constitution of India: Right to Constitutional Remedies; provisions of Union Judiciary; provisions of High Courts in the States; (ii) Rights of Workmen under Labour Laws; (iii) Economy; (iv) Financial Markets; (v) Basic concepts of Valuation; and (vi) Forensic Audit
  • 9.
    9 Case Laws &Case study- (25 questions of 2 marks each) 7. Case Laws- Important decisions of Supreme Court and High Courts, Decisions of NCLAT and NCLT relating to Corporate Insolvency Resolution, Corporate Liquidation, Voluntary Liquidation and Fast Track Resolution Process. – 10 Marks (5 Questions of 2 marks each) 8. Case Study on Corporate Insolvency Resolution and Liquidation. 1 case study-10 questions of 2 marks each- 20 Marks 9. Case Study on Individual Insolvency Resolution and Bankruptcy. 1 case study-04 questions of 2 marks each-08 Marks 10. Case Study on Companies/Partnership firms/ Limited Liability Partnerships. 1 case study-03 questions of 2 marks each- 06 Marks 11. Case Study on Business and Professional Ethics. 1 case study-03 questions of 2 marks each- 06 Marks Strategies for preparing for exam  Create study plan  Prepare memory techniques  Be updated  Be aware of all the notifications issued by IBBI and other authorities  More and more revision  Prepare objective questions  Read all MCQs available  Attend group study sessions or webinars  Study for the exam pattern How many Insolvency Professional Agencies are there? (Currently 3)
  • 10.
    10  The IndianInstitute of Insolvency professionals of ICAI -‘IIIPI’  ICSI Institute of Insolvency Professionals  Insolvency Professional Agency of Institute of Cost Accountants of India Registered since November, 2016 The Insolvency and Bankruptcy Code, 2016 The Insolvency and Bankruptcy Code, 2016 has come up with an ultimate solution to an old regime. It was enacted with the intention to establish regulatory framework for liquidation and insolvency resolution in India. The main feature of the Insolvency and Bankruptcy Code, 2016 is that it provides time bound process for resolution of insolvency and bankruptcy in the country. It was enacted with a view to promote ease of doing business and facilitation of more investments for higher economic growth. Various committees formed on Bankruptcy reforms 1. 24th Law Commission – 1964 2. Tiwari Committee (Department of Company Affairs) – 1981 3. Narasimham Committee I (RBI) – 1991 4. Narasimham Committee II (RBI) – 1998 5. Justice V. B. Balakrishna Eradi Committee – 1999 6. L. N. Mitra Committee (RBI) – 2001 7. Irani Committee (RBI) – 2005 8. Shri Raghuram Rajan Committee (Planning Commission) – 2008 9. Financial Sector Legislative Reforms Commission (Ministry of Finance) – 2013 10. Bankruptcy Law Reforms Committee – 2014 Background of the Insolvency and Bankruptcy Code, 2016
  • 11.
    11  The BankruptcyLaw Reforms Committee was formed on August 22, 2014 under the Chairmanship of Dr. T. K. Viswanathan.  Interim Report of the BLRC – February 5, 2015 on which comments were open till  February 20, 2015  Final Report of the BLRC – November 4, 2015  Introduction in the Parliament –December 21, 2015  Formation of Joint Committee (Parliament) on the Insolvency and Bankruptcy Code,  2015 – December 23, 2015  Report of the Joint Committee (of Parliament) – April 28, 2016  Passed in the Lok Sabha on – May 5, 2016  Passed in the Rajya Sabha on – May 11, 2016  President’s Assent on – May 28, 2016  Formation of the Insolvency and Bankruptcy Board of India – October 1, 2016 Contents The Code is divided into 5 parts, 255 sections and 12 corresponding schedules. Note: THE TWELFTH SCHEDULE: ACTS FOR THE PURPOSES OF CLAUSE (d) OF SECTION 29A- inserted by Act No. 26 of 2018, sec. 38 (w.e.f. 6-6-2018) Five Parts of the Code: 1. Preliminary (Sections: 1-3) 2. Insolvency Resolution and Liquidation for Corporate Persons (Sections: 4-77) 3. Insolvency Resolution and Bankruptcy for Individuals and Partnership Firms (Sections: 78-187) 4. Regulation of Insolvency Professionals, Agencies and Information Utilities (Sections: 188-223) 5. Miscellaneous (Sections: 224-255) Division of Parts, Chapters and applicable Rules & Regulations (Section wise) Part I- Preliminary contains 3 sections providing for Short title, Application and Definition
  • 12.
    12 Applicable Regulation- TheInsolvency and Bankruptcy Board of India (Bankruptcy Process for Personal Guarantors to Corporate Debtors) Regulations, 2019 Applicable Rules-  The Insolvency and Bankruptcy (Application to Adjudicating Authority for Bankruptcy Process for Personal Guarantors to Corporate Debtors) Rules, 2019 (w.e.f. 1st day of December, 2019)  The Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019 (w.e.f. 1st day of December, 2019) Part II – Insolvency Resolution and Liquidation for Corporate Persons (Section 4-77) (74 sections) S. No. Chapter’s Name Sections Applicable Rules Applicable Regulations I Preliminary 4-5 - - II Corporate Insolvency Resolution Process (CIRP) 6-32 The Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 The Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 III Liquidation Process 33-54 - The Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016
  • 13.
    13 IIIA Pre-packaged insolvency resolution process 54A-54PThe Insolvency and Bankruptcy (prepackaged insolvency resolution process) Rules, 2021 The Insolvency and Bankruptcy Board of India (Pre-packaged Insolvency Resolution Process) Regulations, 2021 IV Fast Track Corporate Insolvency Resolution Process 55-58 - The Insolvency and Bankruptcy Board of India (Fast Track Insolvency Resolution Process for Corporate Persons) Regulations, 2017 V Voluntary Liquidation of Corporate Persons 59 - The Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017 VI Adjudicating Authorities for Corporate Persons 60-67 - The Insolvency and Bankruptcy Board of India (Bankruptcy Process for Personal Guarantors to Corporate Debtors) Regulations, 2019 VII Offences and Penalties 68-77 - -
  • 14.
    14 Part-III-Insolvency Resolution andBankruptcy for Individuals and Partnership Firms S. No. Chapter’s Name Sections Applicable Rules Applicable Regulations I Preliminary 78-79 (notified on 15th November, 2019, effective date-1st December, 2019. The Insolvency and Bankruptcy (Application to Adjudicating Authority for Bankruptcy Process for Personal Guarantors to Corporate Debtors) Rules, 2019 (w.e.f. 1st day of December, 2019)& The Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019 (w.e.f. 1st day of December, 2019) -
  • 15.
    15 II Fresh StartProcess 80-93 - - III Insolvency Resolution Process (IRP) 94-120 (notified Sections 94 to 187 on 15th November- effective date-1st December, 2019 - - IV Bankruptcy Order for Individuals and Partnership Firms 121-148 - - V Administration and Distribution of the Estate of the Bankrupt 149-178 - - VI Adjudicating Authority (AA) for Individuals and Partnership Firms 179-183 - - VII Offences and Penalties 184-187 - - Part IV - Regulation of Insolvency Professionals, Agencies and Information Utilities S. No. Chapter’s Name Sections Applicable Rules Applicable Regulations 1 The Insolvency and Bankruptcy Board of India 188-195 The Insolvency and Bankruptcy Board of India (Medical Facility to Chairperson and Whole -time Members) Scheme Rules, 2019& The Insolvency and Bankruptcy Board of The Insolvency and Bankruptcy Board of India (Engagement of Research Associates and Consultants) Regulations, 2017&
  • 16.
    16 India (Salary, Allowances and otherTerms and Conditions of Service of Chairperson and members) Rules, 2016 The IBBI (Procedure for Governing Board Meetings) Regulations, 2017 II Powers and Functions of the Board 196-198 - The Insolvency and Bankruptcy Board of India (Advisory Committee) Regulations, 2017 III Insolvency Professional Agencies 199-205 - The Insolvency and Bankruptcy Board of India (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016 &The Insolvency and Bankruptcy Board of India (Insolvency Professional Agencies) Regulations, 2016 IV Insolvency Professionals 206-208 - The Insolvency and Bankruptcy
  • 17.
    17 Board of India (Insolvency Professionals) Regulations,2016 V Information Utilities 209-216 - The Insolvency and Bankruptcy Board of India (Information Utilities) Regulations, 2017 VI Inspection and Investigation 217-220 - The Insolvency and Bankruptcy Board of India (Inspection and Investigation) Regulations, 2017 VII Finance, Accounts and Audit 221-223 The Insolvency and Bankruptcy Board of India (Form of Annual Statement of Accounts) Rules, 2018 PART V- Miscellaneous (Sections: 224-255) Applicable Rules-  The Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019  The Insolvency and Bankruptcy Board of India (Annual Report) Rules, 2018 Applicable Regulations-under Section 240
  • 18.
    18  The Insolvencyand Bankruptcy Board of India (Grievance and Complaint Handling Procedure) Regulations, 2017  The Insolvency and Bankruptcy Board of India (Employees’ Service) Regulations, 2017  The Insolvency and Bankruptcy Board of India (Mechanism for Issuing Regulations) Regulations, 2018. Sections notified till date S. No. Notification No. Notification Date w.e.f. Sections 1 S.O. 2618(E) 05.08.2016 05.08.2016 Sections 188 to 194 (both inclusive) 2 S.O. 2746(E) 19.08.2016 19.08.2016 -Clauses (1), (5), (22), (26), (28) and (37) of Section 3; -Sections 221, 222, 225, 226, 230, 232 and 233; -Sub-section (1) and clause (zd) of sub-section (2) of Section 239; -Sub-section (1) and clause (zt) of sub-section (2) of Section 240; -Sections 241 and 242 3 S.O. 3355(E) 01.11.2016 01.11.2016 -Clause (2) to clause(4), clause (6) to clause (21), clause (23) to clause (25), clause (27)clause (29) to clause (36) of Section 3; -Sections 196, 197 and 223; -Clause(ze) to clause (zh) and clause (zl) to clause (zm) of sub- section (2) of Section 239; -Clause (a) to clause (zm) and clause (zu) to clause (zzzc) of sub- section (2) of Section 240;
  • 19.
    19 -Section 244; -Section 246to Section 248 (both inclusive); -Sections 250 and 252 4 S.O. 3453(E) 15.11.2016 15.11.2016 -Section 199 to Section 207 (both inclusive); -Clause (c) and clause (e) of sub- section (1)of Section 208; -Sub-section (2) of Section 208; -Section 217 to Section 220 (both inclusive); -Sections 251, 253, 254 and 255 5 S.O. 3594(E) 30.11.2016 01.12.2016 -Clause (a) to clause (d) of Section 2 (except with regard to voluntary liquidation or Bankruptcy; -Section 4 to Section 32 (both inclusive); -Section 60 to Section 77 (both inclusive); -Section 198, Section 231; -Section 236 to Section 238 (both inclusive) and -Clause (a) to clause (f) of sub- section (2) of Section 239 6 S.O. 3687(E) 09.12.2016 15.12.2016 Section 33 to Section 54 (both inclusive) 7 S.O. 1005(E) 30.03.2017 01.04.2017 -Section 59; - Section 209 to 215 (both inclusive); -Sub-section (1) of Section 216 and -Section 234 and Section 235
  • 20.
    20 8 S.O. 1570(E)15.05.2017 01.04.2017 -Clause (a) to clause (d) of section 2 relating to voluntary liquidation or bankruptcy 9 S.O. 1910(E) 14.06.2017 14.06.2017 -Section 55 to Section 58 (both inclusive) 10 S.O. 3393(E) 18.10.2017 18.10.2017 -Section 247 11 S.O. 1817(E) 01.05.2018 01.05.2018 -Section 227 to Section 229 (both inclusive) 12 S.O. 4126(E) 15.11.2019 01.12.2019 Following provisions of the Code only in so far as they relate to personal guarantors to corporate debtors: -Section 2(e); -Section 78 (except with regard to fresh start process) and section 79; -Sections 94 to 187 (both inclusive); -Clause (g) to clause (i) of sub- section (2) of section 239; -Clause (m) to clause (zc) of sub- section (2) of section 239; -Clause (zn) to clause (zs) of sub- section (2) of section 240 and -Section 249 Sections not notified till date Section 195: Power to designate financial sector regulator Section 224: Insolvency and Bankruptcy Fund Section 243: Repeal of certain enactments and savings Section 245: Amendment to the Indian Partnership Act, 1932
  • 21.
    21 Schedules to theAct-12 Amendments to other Acts-11 Schedule Section Act Amended 1st 245 The Indian Partnership Act,1932 2nd 246 The Central Excise Act, 1944 3rd 247 The Income-Tax Act, 1961 4th 248 The Customs Act, 1962 5th 249 The Recovery of Debts Due to Banks and Financial Institutions Act, 1993 6th 250 The Finance Act, 1994 7th 251 The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 8th 252 The Sick Industrial Companies (Special Provisions) Repeal Act, 2003 9th 253 The Payment and Settlement Systems Act, 2007 10th 254 The Limited Liability Partnership Act, 2008 11th 255 The Companies Act, 2013 Note: THE TWELFTH SCHEDULE: ACTS FOR THE PURPOSES OF CLAUSE (d) OF SECTION 29A- inserted by Act No. 26 of 2018, sec. 38 (w.e.f. 6-6-2018) Section 29A deals with person not eligible to be a resolution applicant who has been convicted for any offence punishable with imprisonment –for two years or more under any Act specified under the Twelfth Schedule Act specified under the Twelfth Schedule- (26 Acts) (1) The Foreign Trade (Development and Regulation) Act, 1922 (22 of 1922);
  • 22.
    22 (2) The ReserveBank of India Act, 1934 (2 of 1934); (3) The Central Excise Act, 1944 (1 of 1944); (4) The Prevention of Food Adulteration Act, 1954 (37 of 1954); (5) The Essential Commodities Act, 1955 (10 of 1955); (6) The Securities Contracts (Regulation) Act, 1956 (42 of 1956); (7) The Income-tax Act, 1961 (43 of 1961); (8) The Customs Act, 1962 (52 of 1962); (9) The Water (Prevention and Control of Pollution) Act, 1974 (6 of 1974); (10) The Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (52 of 1974); (11) The Air (Prevention and Control of Pollution) Act, 1981 (14 of 1981); (12) The Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986); (13) The Environment (Protection) Act, 1986 (29 of 1986); (14) The Prohibition of Benami Property Transactions Act, 1988 (45 of 1988); (15) The Prevention of Corruption Act, 1988 (49 of 1988); (16) The Securities and Exchange Board of India Act, 1992 (15 of 1992); (17) The Foreign Exchange Management Act, 1999 (42 of 1999); (18) The Competition Act, 2002 (12 of 2003); (19) The Prevention of Money-laundering Act, 2002 (15 of 2003); (20) The Limited Liability Partnership Act, 2008 (6 of 2009); (21) The Foreign Contribution (Regulation) Act, 2010 (42 of 2010); (22) The Companies Act, 2013 (18 of 2013) or any previous company law;
  • 23.
    23 (23) The BlackMoney (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (22 of 2015); (24) the Insolvency and Bankruptcy Code, 2016 (31 of 2016); (25) The Central Goods and Services Tax Act, 2017 (12 of 2017) and respective State Acts imposing State goods and services tax; (26) Such other Acts as may be notified by the Central Government. Rules and Regulations Rules- S. No. Rules Amended up to No. of Rules 1 The Insolvency and Bankruptcy (pre- packaged insolvency resolution process) Rules, 2021 09 April, 2021 4 2 The Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 24 September, 2020 10 3 The Insolvency and Bankruptcy Board of India (Annual Report) Rules, 2020 16 September, 2020 4 4 The Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019 15 November, 2019 10 5 The Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019 15 November, 2019 11
  • 24.
    24 6 The Insolvencyand Bankruptcy (Application to Adjudicating Authority for Bankruptcy Process for Personal Guarantors to Corporate Guarantors) Rules, 2019 15 November, 2019 16 7 IBBI (Medical Facility to Chairperson and Whole -time Members) Scheme Rules, 2019 05 August, 2019 6 8 The Insolvency and Bankruptcy Board of India (Form of Annual Statement of Accounts) Rules, 2018 01 May, 2018 4 9 IBBI (Salary, Allowances and other Terms and Conditions of Service of Chairperson and Members) Rules, 2016 09 February, 2018 21 Other applicable Rules 1. The National Company Law Tribunal Rules, 2016 - notified on 21st July, 2016 2. The National Company Law Appellate Tribunal Rules, 2016 - notified on 21st July, 2016 3. The Companies (Transfer of Pending Proceedings) Rules, 2016 - notified on 7th December, 2016, w.e.f. 15th December, 2016, except rule 4 which come into effect from 1st April, 2017 4. The Companies (Registered Valuers and Valuation) Rules, 2017 (up to 13-11-2018) Regulations S. No. Regulations Amended up to No. of Regulations 1 IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 30 September, 2021 40 (10 Chapters) 2 IBBI (Liquidation Process) Regulations, 30 September, 2021 47 (7 Chapters, 2
  • 25.
    25 2016 Schedules) 3 IBBI(Insolvency Professionals) Regulations, 2016 22 July, 2021 15 (5 Chapters, 2 Schedules) 4 IBBI (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016 22 July, 2021 7 (3 Chapters& a Schedule) 5 IBBI (Information Utilities) Regulations, 2017 13 April, 2021 42 (7 Chapters, & a Schedule) 6 IBBI (Pre-packaged Insolvency Resolution Process) Regulations, 2021 09 April, 2021 50 (10 Chapters & A Schedule) 7 IBBI (Voluntary Liquidation Process) Regulations, 2017 05 August, 2020 41 (7 Chapters, 2 Schedules) 8 IBBI (Bankruptcy Process for Personal Guarantors to Corporate Debtors) Regulations, 2019 20 November, 2019 37 (6 Chapters) 9 IBBI (Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Regulations, 2019 20 November, 2019 22 (5 Chapters) 10 IBBI (Insolvency Professional Agencies) Regulations, 2016 23 July, 2019 15 (5 Chapters, 2 Schedules) 11 IBBI (Procedure for Governing Board Meetings) Regulations, 2017 23 July, 2019 18 (6 Chapters, 2 Schedules) 12 IBBI (Engagement of Research Associates and Consultants) Regulations, 2017 23 July, 2019 9 (1 Schedule) 13 IBBI (Mechanism for Issuing Regulations) Regulations, 2018 22 October, 2018 9 (4 Chapters) 14 IBBI (Employees' Service) Regulations, 2017 26 March, 2018 63(7 Chapters, 2 Schedules) 15 IBBI (Fast Track Insolvency Resolution Process for Corporate Persons) Regulations, 07 February, 2018 39 (10 Chapters & a Schedule)
  • 26.
    26 2017 16 IBBI (Grievanceand Complaint Handling Procedure) Regulations, 2017 07 December, 2017 8 (5 Chapters) 17 The Insolvency and Bankruptcy Board of India (Inspection and Investigation) Regulations, 2017 14 June, 2017 7 (3 Chapters) 18 Insolvency and Bankruptcy Board of India (Advisory Committee) Regulations, 2017 31 Jan, 2017 14 (5 Chapters) Points to remember:  Total No. of Rules till 30.09.2021-9  Total No. of Regulations till 30.09.2021-18  First Rules notified on 29 August, 2016 i.e. The Insolvency and Bankruptcy Board of India (Salary, Allowances and other Terms and Conditions of Service of Chairperson and Members) Rules, 2016  First 2 Regulations notified on 21st November, 2016 i.e. The Insolvency and Bankruptcy Board of India (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016. & the Insolvency and Bankruptcy Board of India (Insolvency Professional Agencies) Regulations, 2016 Guidelines-13 S. No. Guidelines Date of issue/ last updated 1 Insolvency Professionals to act as Interim Resolution Professionals, Liquidators, Resolution Professionals and Bankruptcy Trustees (Recommendation) Guidelines, 2021 01 June, 2021 2 Guidelines for Association for Summer/Winter/Short Term/Certificate Courses with Academic Institutions/ Civil 05 May, 2021
  • 27.
    27 Services Academies/ JudicialAcademies, 2021 3 Guidelines for Appointment of Insolvency Professionals as Administrators under the Securities and Exchange Board of India (Appointment of Administrator and Procedure for Refunding to the Investors) Regulations, 2018 09 March, 2021 4 IBBI (Use of Caveats, Limitations, and Disclaimers in Valuation Reports) Guidelines, 2020 01 September, 2020 5 The Insolvency and Bankruptcy Board of India Research Initiative, 2019 (Updated as on 31st July, 2020) 01 August, 2020 6 IBBI (Online Delivery of Educational Course and Continuing Professional Education by Insolvency Professional Agencies and Registered Valuers Organizations) Guidelines, 2020 03 September, 2021 7 Guidelines for Technical Standards for the Performance of Core Services and Other Services under the Insolvency and Bankruptcy Board of India (Information Utilities) Regulations, 2017 (Updated up to 22-1-2020) 22 January, 2020 8 Insolvency and Bankruptcy Board of India (Continuing Professional Education for Insolvency Professionals) Guidelines, 2019 06 August, 2019 9 Guidelines for Empanelment of Advocates 01 November, 2018 10 Insolvency Professionals to act as Interim Resolution Professionals or Liquidators (Recommendation) Guidelines 2018 31 May, 2018 10 Insolvency Professionals to act as Interim Resolution Professionals or Liquidators (Recommendation) Guidelines, 2017 15 December, 2017 11 Guidelines on Essay Competition 13 October, 2017 12 Guidelines for Internships with IBBI 16 August, 2017 13 Insolvency Professionals to act as Interim Resolution 25 May, 2017
  • 28.
    28 Professionals (Recommendation) Guidelines,2017 Regulator Insolvency and Bankruptcy Board of India-https://www.ibbi.gov.in/ Date of establishment- 1st October, 2016 Regulates- i. Insolvency Professionals, ii. Insolvency Professional Agencies, iii. Insolvency Professional Entities and iv. Information Utilities. Governing Board 1. Chairperson- 2. Whole-time Members- i. Dr. Navrang Saini (Department-Registration and Monitoring Wing) ii. Dr. Ms. MukulitaVijayawargiya (Department-Administrative Law Wing) iii. Sh. Sudhaker Shukla (Department- Research and Regulation Wing) 3. Ex-officio Members-
  • 29.
    29 i. Dr. ShashankSaksena (Department of Economic Affairs, Ministry of Finance) ii. Sh. Gyaneshwar Kumar Singh (Joint Secretary and Legal Adviser, Department of Legal Affairs, Ministry of Law & Justice. iii. Dr. Rajiv Mani (Joint Secretary and Legal Adviser, Department of Legal Affairs Ministry of Law & Justice.) iv. Sh. Unnikrishnan A(Legal Adviser, Reserve Bank of India) 4. Part-time Members i. Dr. Krishnamurthy Subramanian (Chief Economic Advisor) ii. Sh. B. Sriram (Former Managing Director & CEO of IDBI Bank Ltd.) Various committees under Insolvency and Bankruptcy Board of India 1. Disciplinary Committee under Section 220 of the Insolvency and Bankruptcy Code, 2016  1 Feb 2017- Dr. M. S. Sahoo  23 Aug 2017- Dr. (Ms.) MukulitaVijayawargiya, Whole Time Member  09 Apr 2018- a) Dr. M. S. Sahoo, Chairperson/ Mrs. Suman Saxena, Whole Time Member  b) Dr. (Ms.) MukulitaVijayawargiya, Whole Time Member  17 Oct 2018- Dr. Navrang Saini, Whole Time Member  15 Jun 2020- Dr. (Ms.) MukulitaVijayawargiya, Whole Time Member 2. Advisory Committee (Section 197) on- A. Individual Insolvency and Bankruptcy (15th September, 2017 to 15th September, 2020) (Section 197)- 1 chairperson & 9 Members Chairperson- Justice B. N. Srikrishna Former Justice, Supreme Court of India Member-
  • 30.
    30 i. Mr. C.B. Bhave Chairperson, Indian Institute for Human Settlements and Former Chairman, SEBI ii. Professor Dipankar Gupta Sociologist and Author iii. Mr. Prithvi Haldea Founder Chairman, Prime Database iv. Dr. (Mrs.) Poornima Advani Former Chairperson, National Commission for Women and Advocate v. Mr. R. V. Verma Former CMD, National Housing Bank vi. Mr. Sanjeev Sanyal Principal Economic Advisor, Ministry of Finance vii. Representative, Ministry of Corporate Affairs viii. President, Society of Insolvency Practitioners of India ix. CEO, Indian Institute of Insolvency Professionals of ICAI B. Service Providers (26th May, 2020 to 25th May, 2023) Chairperson- Mr. T. V. Mohandas Pai, Chairman, Manipal Global Education Services Member-11 i. A representative of the Ministry of Corporate Affairs ii. Mr. Akhil Gupta, Chairman, Bharti Infratel Ltd. iii. Dr. Bimal N. Patel, Director General, Raksha Shakti University iv. Dr. Binoy J. Kattadiyil, Managing Director, ICSI Institute of Insolvency Professionals v. Mr. Chinna Veerappan Rajendran, MD & CEO, CSB Bank vi. Mr. J. Ranganayakulu, Former ED, SEBI vii. Mr. P. R. Ramesh, Former Chairman, Deloitte India viii. Dr. Punam Sahgal, Former Dean & Professor, Indian Institute of Management, Lucknow ix. Dr. Sameer Sharma, DG & CEO, Indian Institute of Corporate Affairs x. Mr. Shrikrishna Kulkarni, Chairman, Board of Governors, Indian Institute of Management, Calcutta xi. Mr. Vellayan Subbiah Murugappa, Managing Director, Tube Investments of India Ltd. Previous committees- Earlier dates
  • 31.
    31  18th October2016  30th August 2017  11th Dec 2017  6th May 2019 C. Corporate Insolvency and Liquidation (24th September, 2020 to 11th June, 2023) Chairperson- Mr. Uday Kotak, Executive Vice Chairman and Managing Director, Kotak Mahindra Bank Member-12 i. A representative of the Ministry of Corporate Affairs ii. Mr. Ashish Kumar Chauhan, Managing Director and CEO, BSE Limited iii. Ms. AshuSuyash, Managing Director & Chief Executive Officer, CRISIL iv. Mr. M. V. Nair, Chairman, Credit Information Bureau (India) Limited v. Mr. Nirmal Mohanty, Formerly Chief Economist, National Stock Exchange of India Limited vi. Prof (Dr.) Ranbir Singh, Vice Chancellor, National Law University, Delhi vii. Mr. R. K. Nair, Formerly Whole Time Member, IRDAI viii. Mr. R. Shankar Raman, Whole-time Director & Chief Financial Officer, Larsen & Toubro Limited ix. Rashesh Shah, Chairman & CEO, Edelweiss Group x. Mr. SomasekharSundaresan, Legal Counsel xi. Chairman, Indian Banks’ Association xii. MD, Insolvency Professional Agency of Institute of Cost Accountants of India Previous committees- Earlier dates  18th October, 2016 to 24th August, 2017
  • 32.
    32  25th August,2017 to 11th June, 2020  12th June, 2020 to 13th September, 2020 3. Technical Committee in accordance with Regulation 14 of the IBBI (Information Utilities) Regulations, 2017 Chairperson- Dr. R.B. Barman, Former Chairman, National Statistical Commission Member-3 i. Dr. N.L. Sarda, Professor (Ret'd), IIT Bombay & Visiting Professor, IIT Dharwad ii. Dr. Pulak Ghosh, IIMB Chair of Excellence, IIM Bangalore iii. Mr. V.G.Kannan, Former Managing Director, State Bank of India 4. Internal Complaints Committee for Prevention of Sexual Harassment at Workplace dated 11th November, 2020 i. Presiding Officer- Dr. (Ms.) MukulitaVijayawargiya, Whole Time Member, Insolvency and Bankruptcy Board of India ii. External Expert- Ms. Bina Jain, Managing Trustee, AIWC Education Trust iii. Member- v- Mr. RiteshKavdia, Executive Director, Insolvency and Bankruptcy Board of India iv. Member Secretary- Dr. Anuradha Guru, Executive Director, Insolvency and Bankruptcy Board of India Detailed provisions under the Insolvency and Bankruptcy Code, 2016 It comprises of 5 Parts, 255 Sections and 12 Schedules. Applicability of the Code It extends to the whole of India. Earlier, Part III which provides the provisions for Partnership firms and Individual was not applicable for the State of Jammu and Kashmir. Now it applies to whole of India. Note: This was omitted by the Jammu and Kashmir Reorganisation (Adaptation of Central Laws) Order, 2020 No.SO1123(E) dated 18th March, 2020. The IBC 2016 Applies for….
  • 33.
    33 I. For Companyand LLP, personal guarantors to corporate debtors-  Insolvency Resolution Process  Liquidation Process  Fast Track Insolvency Resolution Process  Voluntary Liquidation Process II. For Individual & Partnership-  Fresh Start Process  Insolvency Resolution Process  Bankruptcy Order Definitions involved under Section 3- Section 3(1)- “Board” means the Insolvency and Bankruptcy Board of India established under sub-section (1) of section 188 Section 3(2) - "bench" means a bench of the Adjudicating Authority; Section 3(3) - "bye-laws" mean the bye-laws made by the insolvency professional agency under section 205; Section 3(4) - "charge" means an interest or lien created on the property or assets of anyperson or any of its undertakings or both, as the case may be, as security and includes a mortgage; Section 3(6) - "claim" means— (a) a right to payment, whether or not such right is reduced to judgment, fixed, disputed, undisputed, legal, equitable, secured or unsecured; (b) right to remedy for breach of contract under any law for the time being in force, if such breach gives rise to a right to payment, whether or not such right is reduced to judgment, fixed, matured, unmatured, disputed, undisputed, secured or unsecured;
  • 34.
    34 Section 3(7) -"corporate person" means a company as defined in clause (20) of section 2of the Companies Act, 2013, a limited liability partnership, as defined in clause (n) ofsub-section (1) of section 2 of the Limited Liability Partnership Act, 2008, or any other person incorporated with limited liability under any law for the time being in force but shall not include any financial service provider; Section 3(8) - "corporate debtor" means a corporate person who owes a debt to any person; Section 3(9) "core services" means services rendered by an information utility for— (a) Accepting electronic submission of financial information in such form and manner as may be specified; (b) Safe and accurate recording of financial information; (c) Authenticating and verifying the financial information submitted by a person; and (d) Providing access to information stored with the information utility to persons as may be specified; Section 3(10) - "creditor" means any person to whom a debt is owed and includes a financial creditor, an operational creditor, a secured creditor, an unsecured creditor and a decree holder; 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; Section 3(12) - "default" means non-payment of debt when whole or any part or installment of the amount of debt has become due and payable and is not paid by the debtor or the corporate debtor, as the case may be; 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;
  • 35.
    35 (d) Records, ifany, 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. Section 3(14) "financial institution" means— (a) A scheduled bank; (b) Financial institution as defined in section 45-I of the Reserve Bank of India Act, 1934; (c) Public financial institution as defined in clause (72) of section 2 of the Companies Act, 2013; and (d) Such other institution as the Central Government may by notification specify as a financial institution; Section 3(15) - "financial product" means securities, contracts of insurance, deposits, credit arrangements including loans and advances by banks and financial institutions, retirement benefit plans, small savings instruments, foreign currency contracts other than contracts to exchange one currency (whether Indian or not) for another which are to be settled immediately, or any other instrument as may be prescribed; Section 3(16) - "financial service" includes any of the following services, namely:— (a) Accepting of deposits; (b) Safeguarding and administering assets consisting of financial products, belonging to another person, or agreeing to do so; (c) Effecting contracts of insurance; (d) Offering, managing or agreeing to manage assets consisting of financial products belonging to another person;
  • 36.
    36 (e) Rendering oragreeing, for consideration, to render advice on or soliciting for the purposes of— (i) buying, selling, or subscribing to, a financial product; (ii) availing a financial service; or (iii) Exercising any right associated with a financial product or financial service; (f) Establishing or operating an investment scheme; (g) Maintaining or transferring records of ownership of a financial product; (h) Underwriting the issuance or subscription of a financial product; or (i) selling, providing, or issuing stored value or payment instruments or providing payment services; Section 3(17) - "financial service provider" means a person engaged in the business of providing financial services in terms of authorization issued or registration granted bya financial sector regulator; Section 3(18) - "financial sector regulator" means an authority or body constituted under any law for the time being in force to regulate services or transactions of financial sector and includes the Reserve Bank of India, the Securities and Exchange Board of India, the Insurance Regulatory and Development Authority of India, the Pension Fund Regulatory Authority and such other regulatory authorities as may be notified by the Central Government; Section 3(19) - "insolvency professional" means a person enrolled under section 206 within insolvency professional agency as its member and registered with the Board as an insolvency professional under section 207; Section 3(20) - "insolvency professional agency" means any person registered with the Board under section 201 as an insolvency professional agency; Section 3(21) - "information utility" means a person who is registered with the Board as an information utility under section 210;
  • 37.
    37 Section 3(23) "person"includes— (a) an individual; (b) a Hindu Undivided Family; (c) a company; (d) a trust; (e) a partnership; (f) a limited liability partnership; and (g) any other entity established under a statute, and includes a person resident outside India; Section 3(24) - "person resident in India" shall have the meaning assigned to such terming clause (v) of section 2 of the Foreign Exchange Management Act, 1999; Section 3(25) - "person resident outside India" means a person other than a person resident in India; Section 3(27) "property" includes money, goods, actionable claims, land and every description of property situated in India or outside India and every description of interest including present or future or vested or contingent interest arising out of, or incidental to, property; Section (30) "secured creditor" means a creditor in favor of whom security interest is created; Section 3(31) - "security interest" means right, title or interest or a claim to property, created in favor of, or provided for a secured creditor by a transaction which secures payment or performance of an obligation and includes mortgage, charge, hypothecation, assignment and encumbrance or any other agreement or arrangement securing pay mentor performance of any obligation of any person: Note: security interest will not include a performance guarantee; Section 3(33) - "transaction" includes a agreement or arrangement in writing for the transfer of assets, or funds, goods or services, from or to the corporate debtor; Section 3(34) - "transfer" includes sale, purchase, exchange, mortgage, pledge, gift, loaner any other form of transfer of right, title, possession or lien; Section 3(35) - "transfer of property" means transfer of any property and includes a transfer of any interest in the property and creation of any charge upon such property; Section 3(36) - "workman" shall have the same meaning as assigned to it in clause (s) of section 2 of the Industrial Disputes Act, 1947; Insolvency Resolution and Liquidation for Corporate Persons (Section 4)
  • 38.
    38 i. For mattersrelating to the insolvency and liquidation of corporate debtors-Minimum amount of default- 1 Lakh rupees ii. Note: The Central Government may, by notification, specify the minimum amount of default of higher value which shall not be more than one crore rupees. iii. For matters relating to thepre-packaged insolvency resolution process of corporate debtors- minimum amount of default-10 Lakh rupees (Note: amended by the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2021 (3 of 2021) by notification S.O. 1543(E) dated 9th April, 2021) The Central Government may, by notification, specify the minimum amount of default of higher value which shall not be more than one crore rupees. Note-The Ministry of Corporate Affairs (MCA) has raised the threshold of default under Section 4 of the Insolvency and Bankruptcy Code, 2016 to Rs. 1 crore (from the existing threshold of Rs. 1 lakh) vide Notification dated 24th March, 2020. This step was taken, inter alia, to assist and aid the functioning of Corporate Persons which might face default owing to the economic slowdown and unprecedented situation due to COVID19. Important definitions under Section 5 Adjudicating Authority- National Company Law Tribunal Auditor- a chartered accountant certified to practice as such by the Institute of Chartered Accountants of India. Base resolution plan- a resolution plan provided by the corporate debtor under clause (c) of sub- section (4) of section 54A Constitutional document- includes-  articles of association  memorandum of association of a company  incorporation documents of a Limited Liability Partnership
  • 39.
    39 Corporate applicant – (a)Corporate debtor; or (b) a member or partner of the corporate debtor who is authorized to make an application for the corporate insolvency resolution process or the pre-packagedinsolvency 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; Corporate guarantor- a corporate person who is the surety in a contract of guarantee to a corporate debtor Dispute - 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- any person to whom a financial debt is owed and includes a person to whom such debt has been legally assigned or transferred to. Information memorandum- a memorandum prepared by resolution professional. Initiation date- the date on which a financial creditor, corporate applicant or operational creditor, as the case may be, makes an application to the Adjudicating Authority for initiating corporate insolvency resolution process or pre-packaged insolvency resolution process, as the case may be.
  • 40.
    40 Insolvency commencement date-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. Insolvency resolution process costs– (a) The amount of any interim finance and the costs incurred in raising such finance; (b) The fees payable to any person acting as a resolution professional; (c) Any costs incurred by the resolution professional in running the business of the corporate debtor as a going concern; (d) Any costs incurred at the expense of the Government to facilitate the insolvency resolution process; and (e) Any other costs as may be specified by the Board; Insolvency resolution process period- the period of 180 days starting from the insolvency commencement date and ending on 180th day. Interim finance- any financial debt raised by the resolution professional during the insolvency resolution process period or by the corporate debtor during the prepackaged insolvency resolution process period, as the case may bean such other debt as may be notified. Operational creditor- a person to whom an operational debt is owed and includes any person to whom such debt has been legally assigned or transferred. Preliminary information memorandum” means a memorandum submitted by the corporate debtor under clause (b) of sub-section (1) of section 54G. Pre-packaged insolvency commencement date- means the date of admission of an application for initiating the pre-packaged insolvency resolution process by the Adjudicating Authority. Pre-packaged insolvency resolution process costs- (a) The amount of any interim finance and the costs incurred in raising such finance;
  • 41.
    41 (b) the feespayable to any person acting as a resolution professional and any expenses incurred by him for conducting the pre-packaged insolvency resolution process during the pre-packaged insolvency resolution process period, (c) Any costs incurred by the resolution professional in running the business of the Corporate debtor as a going concern pursuant to an order under sub-section (2) of section 54J; (d) Any costs incurred at the expense of the Government to facilitate the prepackaged insolvency resolution process; and (e) Any other costs as may be specified Pre-packaged insolvency resolution process period- the period beginning from the pre- packaged insolvency commencement date and ending on the date on which an order under sub- section (1) of section 54L, or sub-section (1) of section 54N, or sub-section(2) of section 54-O, as the case may be, is passed by the Adjudicating Authority. Related party, in relation to a corporate debtor - (a) A director or partner of the corporate debtor or a relative of a director or partner of the corporate debtor; (b) A key managerial personnel of the corporate debtor or a relative of 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 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 debtors a director and holds along with relatives, more than two per cent. Of its paid- up share capital; (f) anybody corporate whose board of directors, managing director or manager, in the ordinary course of business, acts on the advice, directions or instructions of 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;
  • 42.
    42 (I) a bodycorporate 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 Isa subsidiary; (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 (I) participation in policy making processes of the corporate debtor; or (ii) Having more than two directors in common between the corporate debtor and such person; or (iii) Interchange of managerial personnel between the corporate debtor and such person; or (iv) Provision of essential technical information to, or from, the corporate debtor; Related party, in relation to an individual- (a) A person who is a relative of the individual or a relative of the spouse of the individual; (b) A partner of a limited liability partnership, or a limited liability partnership or a partnership firm, in which the individual is a partner; (c) a person who is a trustee of a trust in which the beneficiary of the trust includes the individual, or the terms of the trust confers a power on the trustee which may be exercised for the benefit of the individual; (d) A private company in which the individual is a director and holds along with his relatives, more than two per cent. Of its share capital; (e) A public company in which the individual is a director and holds along with relatives, more than two per cent. Of its paid-up share capital; (f) A body corporate whose board of directors, managing director or manager, in the ordinary course of business, acts on the advice, directions or instructions of the Individual; (g) A limited liability partnership or a partnership firm whose partners or employees in the ordinary course of business, act on the advice, directions or instructions of the individual; (h) A person on whose advice, directions or instructions, the individual is accustomed to act;
  • 43.
    43 (I) a company,where the individual or the individual along with its related party, own more than fifty per cent. Of the share capital of the company or controls the appointment of the board of directors of the company. Resolution applicant- a person, who individually or jointly with any other person, submits a resolution plan to the resolution professional pursuant to the invitation made. Resolution plan- a plan proposed by resolution applicant for insolvency resolution of the corporate debtor as a going concern in accordance with Part II. Initiation of corporate insolvency resolution process Section 6 prescribes that on the event of default, an application for initiating corporate insolvency resolution process in respect of such corporate debtor may be made by the following persons- a) financial creditor under Section 7 b) an operational creditor under Section 9 or c) the corporate debtor itself under Section 10 Suspension of initiation of corporate insolvency resolution process The Insolvency and Bankruptcy Code (Second Amendment) Act, 2020 with effect from 5th June 2020 provides for insertion of Section 10A to the Code for temporary suspension of initiation of corporate insolvency resolution process (CIRP) under Section 7, 9 and 10 of the Code for a period of six months or such further period not exceeding one year from 25th March 2020, as follows:. i. The benefit of the suspension is applicable to all those defaults of the corporate debtor that occur from 25th March, 2020 and till the end of period of suspension. ii. The provisions of this section shall not apply to any default committed under the said sections before 25th March, 2020. iii. Section 66 has been amended to provide protection to directors from personal liability for COVID period defaults.
  • 44.
    44 The time periodunder section 10A of the code has been extended vide notification no. SO- 4638 (E) dated 22nd December, 2020 for a further period of three months from 25th December, 2020. Persons not entitled to make application (a) a corporate debtor undergoing a corporate insolvency resolution process or a pre- packaged insolvency resolution process]; or (aa) a financial creditor or an operational creditor of a corporate debtor undergoing a pre- packaged insolvency resolution process; or; (b) a corporate debtor having completed corporate insolvency resolution process twelve months preceding the date of making of the application; or (ba) a corporate debtor in respect of whom a resolution plan has been approved under ChapterIII-A, twelve 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 twelve months before the date of making of an application under this Chapter; or (d) A corporate debtor in respect of whom a liquidation order has been made. Is there any time limit prescribed for completion of insolvency resolution process? Insolvency Resolution is a time bound process and shall be completed within 180 days of insolvency commencement date (date of admission of application). This period can be further extended by NCLT on an application supported by 66% voting share of Committee of Creditors. It should also be noted that, only one such grant is allowed under the Insolvency and Bankruptcy Code, 2016. The period of extension shall not be more than 90 days. Time bound resolution The corporate insolvency resolution process shall mandatorily be completed within a period of three hundred and thirty days from the insolvency commencement date, including any extension
  • 45.
    45 of the periodof corporate insolvency resolution process granted under this section and the time taken in legal proceedings in relation to such resolution process of the corporate debtor. Where the insolvency resolution process of a corporate debtor impending and has not been completed within the staid period, such resolution process shall be completed within a period of ninety days from the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2019. Detailed corporate insolvency resolution process under the Code On Account of default, financial creditor either by itself or jointly with 2[other financial creditors, or any other person on behalf of the financial creditor, operational creditor or corporate applicant may file application to NCLT. An application by financial creditor against the corporate debtor shall be filed jointly by not less than one hundred of such creditors in the same class or not less than ten per cent. Of the total number of such creditors in the same class, whichever is less? Operational Creditor shall file application only after 10 days from the date of delivery of the notice or invoice demanding payment, on account of non-receipt of payment from the corporate debtor or notice of the dispute. The application can be withdrawn before admission of application. On receipt of application, NCLT may accept or reject the application within 14 days of receipt. While rejecting the application, NCLT shall give 7-day period for rectification of, mistakes in the application. The NCLT may allow the withdrawal of application admitted under section 7 or section 9 or section 10, on an application made by the applicant with the approval of ninety per cent. Voting share of the committee of creditors. On admission of application,  NCLT shall declare a moratorium,
  • 46.
    46  appoint aninterim resolution professional within 14 days of insolvency commencement date During moratorium period A license, permit, registration, quota, concession, clearance or a similar grant or right given by the Central Government, State Government, local authority, sect oral regulator or any other authority constituted under any other law for the time being in force, shall not be suspended or terminated on the grounds of insolvency, subject to the condition that there is no default in payment of current dues arising for the use or continuation of the license or a similar grant or right during moratorium period. The order of moratorium shall have effect from the date of such order till the completion of the corporate insolvency resolution process Public announcement Interim resolution professional shall cause a public announcement of the initiation of corporate insolvency resolution process and call for the submission of claim not later than 3 days of his appointment. Appointment and tenure of interim resolution professional On appointment of interim resolution professional (on the insolvency commencement date), all powers of management go to interim resolution professional and he shall strive to keep the business of corporate debtor as going concern. The term of the interim resolution professional shall continue till the date of appointment of the resolution professional. Duties of interim resolution professional. - (a) Collect all information relating to the assets, finances and operations of the corporate debtor for determining the financial position of the corporate debtor, including information relating to - (i) business operations for the previous two years;
  • 47.
    47 (ii) Financial andoperational payments for the previous two years; (iii) List of assets and liabilities as on the initiation date; and (iv) Such other matters as may be specified; (b) Receive and collate all the claims submitted by creditors to him, pursuant to the public announcement; (c) Constitute a committee of creditors; (d) Monitor the assets of the corporate debtor and manage its operations until are solution professional is appointed by the committee of creditors Procedure after appointment of interim resolution professional Within 7 days of appointment, interim resolution professional shall appoint two registered values. On or before 14 days of appointment of interim resolution professional, resolution professional shall collect claims of creditors in specified forms. Financial creditor can submit his claim only in electronic form. IRP shall verify claims within 7 days of receipt. Creditor shall bear the cost of proving the debt due to such creditor. After collation of claims, IRP shall constitute committee of creditors. Meeting of committee shall be held within 7 days of constitution. IRP shall file a report certifying constitution of the committee to the Adjudicating Authority on or before the expiry of thirty days from the date of his appointment. Committee of creditors  The committee of creditors shall comprise all financial creditors of the corporate debtor.  It is noted that financial creditor or the authorized representative of the financial creditor, if it is a related party of the corporate debtor, shall not have any right of representation, participation or voting in a meeting of the committee of creditors.
  • 48.
    48  All decisionsof the committee of creditors shall be taken by a vote of not less than fifty- one per cent. Of voting share of the financial creditors.  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 first meeting of the committee of creditors shall be held within seven days of the constitution of the committee of creditors. Committee of Creditors may appoint interim resolution professional as resolution professional or may propose a new resolution professional. It is done by a majority vote of not less than sixty-six per cent. Of the voting share of the financial creditors. Approval of committee of creditors for certain actions The 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 maybe 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;
  • 49.
    49 (i) dispose ofor 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. Resolution Professional Resolution Professional shall prepare an information memorandum comprising of assets and liabilities, latest financial statements, liquidation value etc. of corporate debtor. On the basis of information memorandum, resolution applicant shall prepare a resolution plan and submit to the resolution professional. A resolution applicant may submit a resolution plan along with an affidavit stating that he is eligible under section 29A to the resolution professional prepared on the basis of the information memorandum. Resolution plan The committee of creditors may approve a resolution plan by a vote of not less than sixty-six per cent. Of voting share of the financial creditors, after considering its feasibility and viability, the manner of distribution proposed, which may take into account the order of priority. Resolution on after certifying that the plan is in accordance with the Code may put such plan before committee of creditors of approval. The resolution applicant shall, pursuant to the resolution plan approved, 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 NCLT or within such period as provided for in such law, whichever is later.
  • 50.
    50 Resolution Professional shallsubmit the approved resolution plan to the NCLT.NCLT may approve the plan if the plan is in accordance with the Code. On order of approval of resolution plan:  the moratorium order passed by the Adjudicating Authority shall cease to have effect; and  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. Liquidation Process Liquidation process is governed by Part II, Chapter III covering Sections 33-54 read with the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 under the Insolvency and Bankruptcy Code, 2016. ‘Company Liquidator’ means a person appointed by the Tribunal as a Company Liquidator in accordance with the provisions of section 275 for the winding up of a company under this Act. ‘Winding up’ means winding up under this act or liquidation under the Insolvency and Bankruptcy Code, 2016, as applicable. When Liquidation order can be passed by Adjudicating Authority?  Before the expiry of the insolvency resolution process period or the maximum period permitted for completion of the corporate insolvency resolution process under or the fast track corporate insolvency resolution process, as the case may be, does not receive a resolution plan.  rejects the resolution plan for the non-compliance of the requirements specified by the Code.  Where the resolution professional, at any time during the corporate insolvency resolution process but before confirmation of resolution plan, intimates the Adjudicating Authority
  • 51.
    51 of the decisionof the committee of creditors approved by not less than sixty-six per cent. Of the voting share to liquidate the corporate debtor, the Adjudicating Authority shall pass a liquidation order to liquidate the corporate debtor.  Where the resolution plan approved by the Adjudicating Authority under section31 or under sub-section (1) of section 54L,is contravened by the concerned corporate debtor, any person other than the corporate debtor, whose interests are prejudicially affected by such contravention, may make an application to the Adjudicating Authority for a liquidation order. On happening of above circumstances, Adjudicating Authority shall:  pass an order requiring the corporate debtor to be liquidated in the manner as laid down in this Chapter;  issue a public announcement stating that the corporate debtor is in liquidation; and  Require such order to be sent to the authority with which the corporate debtor is registered. Powers and duties of liquidator Following are the powers and duties of the liquidator provided under Section 35- (a) To verify claims of all the creditors; (b) To take into his custody or control all the assets, property, effects and actionable claims of the corporate debtor; (c) To evaluate the assets and property of the corporate debtor in the manner as may be specified by the Board and prepare a report; (d) To take such measures to protect and preserve the assets and properties of the corporate debtor as he considers necessary; (e) To carry on the business of the corporate debtor for its beneficial liquidation as he considers necessary;
  • 52.
    52 (f) Subject tosection 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. (g) 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; (h) 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; (i) to obtain any professional assistance from any person or appoint any professional, in discharge of his duties, obligations and responsibilities; (j) To invite and settle claims of creditors and claimants and distribute proceeds in accordance with the provisions of this Code; (k) to institute or defend any suit, prosecution or other legal proceedings, civil or criminal, in the name of on behalf of the corporate debtor; (l) To investigate the financial affairs of the corporate debtor to determine undervalued or preferential transactions; (m) 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;
  • 53.
    53 (n) to applyto 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 (o) To perform such other functions as may be specified by the Board. What is Liquidation Estate? It includes: 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; 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 realized. Not included in liquidation estate
  • 54.
    54 The following shallnot 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 - (i) Assets held in trust for any third party; (ii) Bailment contracts; (iii) All sums due to any workmen or employee from the provident fund, the pension fund and the gratuity fund; (iv) Other contractual arrangements which do not stipulate transfer of title but only use of the assets; and (v) 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 maybe 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. Detailed provision under Liquidation process  Resolution professional appointed shall act as Liquidator after passing of order of liquidation by the NCLT unless replaced by the NCLT.  Liquidator’s fee shall be approved by the Committee of Creditors if order of liquidation is passed on the grounds of non-receipt of resolution plan within time specified or approval
  • 55.
    55 of liquidation bythe committee of creditors. In all other cases fee, shall be as prescribed in the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016  Liquidator has powers to access the information of corporate debtor and may appoint professionals for the purpose.  The liquidator shall make a public announcement in Form B of Schedule II within five days from his appointment to call upon stakeholders to submit their claims as on the liquidation commencement date.  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.  The liquidator shall verify the claims and after verification of claims, either admit or reject the claim, in whole or in part, as the case may be.  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.  Liquidator shall form an estate of the assets which will be called the liquidation estate in relation to the corporate debtor. o On forming the liquidation estate, the liquidator shall prepare an asset memorandum within seventy-five days from the liquidation commencement date.  The liquidator shall submit a Preliminary Report to the Adjudicating Authority within seventy-five days from the liquidation commencement date comprising of capital structure, asset and liabilities of corporate debtor etc.  Any time after the preparation of the Preliminary Report, if it appears to the liquidator that the realizable properties of the corporate debtor are insufficient to cover the cost of the liquidation process and the affairs of the corporate debtor do not require any further investigation, he may apply to the Adjudicating Authority for early dissolution of the corporate debtor and for necessary directions in respect of such dissolution.  Liquidator shall submit progress reports- (a) The first Progress Report within fifteen days after the end of the quarter in which he is appointed;
  • 56.
    56 (b) Subsequent ProgressReport(s) within fifteen days after the end of every quarter during which he acts as liquidator.  And specified in Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016.  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. o The liquidator shall verify the claims submitted within thirty days from the last date for receipt of claims and may either admit or reject the claim, in whole or in part, as the case may be.  The liquidator shall prepare a list of stakeholders, category-wise, on the basis of proofs of claims submitted and accepted.  The liquidator shall file the list of stakeholders with the Adjudicating Authority within forty-five days from the last date for receipt of claims, and the filing of the list shall be announced to the public.  Order may be passed by NCLT on application by resolution professional for preferential transactions and extortionate credit transactions.  Secured creditor may relinquish his interest.  Liquidator may sale assets by auction or private mode of sale.  The liquidator may sell- (a) An asset on a standalone basis; (b) The assets in a slump sale; (C) A set of assets collectively; (d) The assets in parcels; (e) The corporate debtor as a going concern; or (f) The business(s) of the corporate debtor as a going concern  Where the valuation has been conducted under regulation 35 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons)Regulations, 2016 or regulation 34 of the Insolvency and Bankruptcy Board of India(Fast Track Insolvency Resolution Process for Corporate Persons) Regulations, 2017,as the case may be, the liquidator shall consider the average of the estimates of the
  • 57.
    57 values arrived underthose provisions for the purposes of valuations under these regulations.  In cases not covered under above provision or where the liquidator is of the opinion that fresh valuation is required under the circumstances, he shall within seven days of the liquidation commencement date, appoint two registered values to determine the realizable value of the assets or businesses.  On sale of an asset, the liquidator shall prepare an asset sale report in respect of said asset, to be enclosed with the Progress Reports.  A liquidator may assign or transfer a not readily realizable asset through a transparent process, in consultation with the stakeholders’ consultation committee in accordance with Regulation 31A, for a consideration to any person, who is eligible to submit a resolution plan for insolvency resolution of the corporate debtor.  The liquidator shall realize any amount due from any contributory to the corporate debtor.  The liquidator shall open a bank account in the name of the corporate debtor followed by the words ‘in liquidation’, in a scheduled bank, for the receipt of all moneys due to the corporate debtor.  The liquidator shall not commence distribution before the list of stakeholders and the asset memorandum has been filed with the Adjudicating Authority.  Notwithstanding anything to the contrary contained in any law enacted by the Parliament or any State Legislature for the time being in force, 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: - 1. the insolvency resolution process costs and the liquidation costs paid in full; 2. the following debts which shall rank equally between and among the following: - i. workmen's dues for the period of twenty-four months preceding the liquidation commencement date; and ii. debts owed to a secured creditor in the event such secured creditor has relinquished security; 3. wages and any unpaid dues owed to employees other than workmen for the period of twelve months preceding the liquidation commencement date;
  • 58.
    58 4. financial debtsowed to unsecured creditors; 5. the following dues shall rank equally between and among the following: - i. 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; ii. debts owed to a secured creditor for any amount unpaid following the enforcement of security interest; 6. any remaining debts and dues; 7. preference shareholders, if any; and 8. equity shareholders or partners, as the case may be. Pre-packaged insolvency resolution process (Chapter III-A-Section 54A-54P) Governing Framework:  Chapter III -A, Section 54A-54P has been inserted by Act No. 26 of 2021, sec.8 (w.e.f. 04-04-2021).  Also, the Insolvency and Bankruptcy (prepackaged insolvency resolution process) Rules, 2021 notified on 9th Aril, 2021 and  the Insolvency and Bankruptcy Board of India (Pre-packaged Insolvency Resolution Process) Regulations, 2021- notified on 9th Aril, 2021 Pre-packaged insolvency resolution processes available for resolution of stress of corporate MSMEs. Eligibility for Pre-packaged insolvency resolution process (ii) is eligible to submit a resolution plan under section 29A of the Code; (iii) Has not undergone a Pre-packaged insolvency resolution process during the three years preceding the initiation date;
  • 59.
    59 (iv) Has notcompleted a CIRP during the three years preceding the initiation date; (v) Is not undergoing a CIRP; and (vi) Is not required to be liquidated by an order under section 33 of the Code. Fast Track Insolvency Process Sections 55-58 under Chapter IV of Part II of the Code read with the Insolvency and Bankruptcy Board of India (Fast Track Insolvency Resolution Process for Corporate Persons) Regulations, 2017 deals with the Fast Track Insolvency Process. What categories of corporate debtors can make application for fast track corporate insolvency resolution process? -a small company, or -a startup (other than the partnership firm), or -an unlisted company with total assets, not exceeding Rs.1 crore Time Limit This process shall be completed in 90 days from the insolvency commencement date. Resolution professional may apply to the Adjudicating Authority for extension for a period of maximum 45 days. This application shall be supported by resolution passed by committee of creditor by 75% voting share. Voluntary Liquidation Process Chapter V of Part II of the Code covering section 59 of the Code read with the Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017 under the Insolvency and Bankruptcy Code, 2016 deals with the voluntary liquidation. Earlier, Voluntary Winding Up was dealt with under Chapter XX of Part II of the Companies Act, 2013. Who can make application for voluntary liquidation? A corporate person who intends to liquidate itself voluntarily and has not committed any default may initiate voluntary liquidation proceedings.
  • 60.
    60 When commencement ofVoluntary Liquidation takes place? Voluntary liquidation of a company shall commence from passing of resolution by members. Voluntary liquidation for a corporate person other than a company shall be deemed to have commenced from the date of passing of the resolution partners or contributories. [Regulation 3(3) of the Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017] The company shall notify the Registrar of Companies and the Board about the resolution passed by members to liquidate the company within seven days of such resolution or the subsequent approval by the creditors, as the case may be. Adjudicating Authorities for Corporate Persons (Companies & LLPs)- Section 60 of the Insolvency and Bankruptcy Code, 2016 prescribes that National Company Law Tribunal (NCLT) y having territorial jurisdiction over the place where the registered office of the corporate person is located, is the adjudicating authority in relation to insolvency resolution and liquidation for corporate persons including corporate debtors and personal guarantors thereof. An insolvency resolution process or liquidation or bankruptcy proceeding of a corporate guarantor or personal guarantor, as the case may be, of the corporate debtor pending in any court or tribunal shall stand transferred to the Adjudicating Authority dealing within solvency resolution process or liquidation proceeding of such corporate debtor. National Company Law Tribunal (NCLT) having territorial jurisdiction over the place where the registered office of the corporate person is located. The NCLT has 16 benches. The principal bench of the NCLT is located at New Delhi, with 15 other benches at New Delhi, Mumbai, Kolkata, Chennai, Bangalore, Chandigarh, Allahabad, Ahmedabad,Amaravati, Cuttack, Indore, Jaipur, Kochi, Hyderabad and Guwahati. Appellate Authorities for Corporate Persons (Companies & LLPs)- Any person aggrieved by order of NCLT may file appeal to National Company Law Appellate Tribunal (NCLAT) within 30 days of order of the NCLT.
  • 61.
    61 Insolvency Resolution Processfor Individual and Partnership Firms Part III, 7 Chapters, Sections 78 to 187 deals with Insolvency Resolution Process for Individual and Partnership Firms. Part III - Insolvency Resolution and Bankruptcy for Individuals and Partnership Firms S. No. Chapter’s Name Sections 1 Preliminary 78-79 2 Fresh Start Process 80-93 3 Insolvency Resolution Process 94-120 4 Bankruptcy Order for Individuals and Partnership Firms 121-148 5 Administration and Distribution of the Estate of the Bankrupt 149-178 6 Adjudicating Authority for Individuals and Partnership Firms 179-183 7 Offences and Penalties 184-187 Application for insolvency resolution process may be filed by any individual or partnership firm who has committed default. Application can be filed by the creditor or by the debtor itself. When an application is filed by debtor or creditor an interim-moratorium shall commence on the date of the application in relation to all the debts and shall cease to have effect on the date of admission of such application.
  • 62.
    62 The different processesinvolved are: A. Fresh Start Process B. Insolvency Resolution Process C. Bankruptcy Procedure involved in Fresh Start Process  Filing of Application  Commencement of Interim Moratorium  Appointment of Resolution Professional  Examination of application by Resolution Professional  Consideration of report on application for fresh start process by Resolution Professional by the Adjudicating Authority  Commencement of Moratorium Period on Acceptance of Application  Objections by creditor and their examination by Resolution Professional  Revocation of order passed by Adjudicating Authority for accepting the application for fresh start  Process  Discharge order Adjudicating Authorities for Individuals and Partnership Firms- Debt Recovery Tribunal (DRT) having territorial jurisdiction over the place where the individual debtor actually and voluntarily resides or carries on business or personally works for gain and can entertain an application under IBC 2016 regarding such person. Appellate Authorities for Individuals and Partnership Firms- Any person aggrieved by order of DRT may file appeal to Debt Recovery Appellate Tribunal (DRAT) within 30 days of such order. Regulation of Insolvency Professionals, Agencies and Information Utilities
  • 63.
    63 Following authorities involvedfor conduct of insolvency resolution process: (i) Insolvency and Bankruptcy Board of India (IBBI) (ii) Insolvency Professional Agencies (IPAs) (iii) Insolvency Professionals (IPs) (iv) Information Utilities (IUs) Insolvency Professionals (IPs) Insolvency Professionals who are registered as member of an insolvency professional agency and registered with the Board are regulated by Insolvency Professional Agency. Insolvency Professional plays a vital role in Insolvency and bankruptcy Process. Insolvency professional acts a resolution professional under the Code. Also, an insolvency professional shall be abided by the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016. Information Utilities (IUs) Information Utilities are in the place for having centralized database of the Country regarding to such cases. It shall be abided by the Insolvency and Bankruptcy Board of India (Information Utilities) Regulations, 2017-come into force on 1st April, 2017. National E-Governance Services Limited (NeSL)-Information Utility registered with IBBI NeSL works towards  Time-bound resolution by providing verified information to creditors and to Adjudicating Authorities that do not require further authentication.  Default intimation to Creditors linked to a debtor when any creditor files a default against a debtor  Mitigation of information asymmetry between parties to a debt  Superior credit monitoring by creditors
  • 64.
    64  An agreedstatement of outstanding balance between parties to a debt  Facilitate all stakeholders of the IBC ecosystem by leveraging Information Technology to achieve objective of code INSOL International https://www.insol.org/ Useful website https://iica.nic.in/gip/- https://www.iiipicai.in/-Indian Institute of Insolvency Professionals of ICAI https://icsiiip.in/-ICSI Institute of Insolvency Professionals (ICSI IIP) https://www.ipaicmai.in/- Insolvency Professional Agency of Institute of Cost Accountants of India ("IPAICAI") www.nesl.co.in