The Insolvency and Bankruptcy Code 2015 Explained

THE INSOLVENCY AND
BANKRUPTCY CODE 2015
MukeshMukesh ChandChand,,
GM (Legal) SIDBIGM (Legal) SIDBI

JOURNEY SO FAR
Ø Government committees on bankruptcy reforms Year Committee
Outcome :
Ø 1964 24th Law Commission Amendments to the Provincial
Insolvency Act, 1920.
Ø 1981 Tiwari Committee (Department of Company Affairs) SICA,
1985.
Ø 1991 Narasimham Committee I (RBI) RDDBFI Act, 1993.
Ø 1998 Narasimham Committee II(RBI) SARFAESI Act, 2002.Ø 1998 Narasimham Committee II(RBI) SARFAESI Act, 2002.
Ø 1999 Justice Eradi Committee (GOI) Companies (Amendment) Act,
2002, Proposed repeal of SICA.
Ø 2001 L. N. Mitra Committee (RBI) Proposed a comprehensive
bankruptcy code.
Ø 2005 Irani Committee (RBI) Enforcement of Securities Interest and
Recovery of Debts Bill, 2011. (With amendments to RDDBFI and
SARFAESI).
Ø 2008 Raghuram Rajan Committee (Planning Commission)
Ø 2013 Financial Sector Legislative Reforms Commission (Ministry
of Finance) Proposed improvements to credit infrastructure.

ORIGINORIGIN
• Pursuant to the proposal contained in budget of
2014-15 and by order dated 10.11.2014 Committee
headed by Shri T. K. Vishwanathan, a committee
consisting of 15 prominent members from legal and
other fraternity was appointed to make suggestion
for “Entrepreneur Friendly legal bankruptcy
framework. The Committee was to submit its report inframework. The Committee was to submit its report in
two phases:
• 1) Interim Report by February 2015 and
• 2) Final report within 12 months thereafter.
• The Committee submitted its final report in
November, 2015.

BASIC PHILOSOPHY
q The failure of some business plans is integral to the
process of the market economy.
q When business failure takes place, the best outcome for
society is to have a rapid renegotiation between the
financiers, to finance the going concern using a new
arrangement of liabilities and with a new management
team.team.
q If this cannot be done, the best outcome for society is a
rapid liquidation. When such arrangements can be put into
place, the market process of creative destruction will work
smoothly, with greater competitive vigor and greater
competition

EXPECATIONSEXPECATIONS
§ India is in the process of laying the foundations of a
mature market economy.
§ This involves well drafted modern laws, that replace
the laws of the preceding 100 years, and high
performance organisations which enforce these
new laws.new laws.
§ The Committee has endeavored to provide one
critical building block of this process, with a modern
insolvency and bankruptcy code, and the design of
associated institutional infrastructure which reduces
delays and transaction costs.

EXPECTATIONS
¢ We hope that the implementation of this report will
increase GDP growth in India by fostering the
emergence of a modern credit market, and
particularly the corporate bond market.
¢ GDP growth will accelerate when more credit is
available to new firms including firms which lack
tangible capital. While many other things need to be
done in achieving a sound system of finance and
firms, this is one critical building block of that edifice.

ISSUES WITH THE PRESENT SYSTEMISSUES WITH THE PRESENT SYSTEM
¢ Failure of auctions At present, in many public sector settings,
auctions tend to go wrong because some bidders propose
values which are too low. The bidders know that in the absence
of an efficient bankruptcy process, they will not be displaced
from their concession agreement, and they will have the ability
to renegotiate terms from a position of strength.
¢ An efficient bankruptcy code would yield a better answer:¢ An efficient bankruptcy code would yield a better answer:
When a project gets into trouble, it would be resolved using the
formal bankruptcy process.
¢
¢ Corporate bond market development The natural financing
strategy in all countries is for large companies (e.g. the top 500
firms) to obtain all their debt financing from the bond market.
This channel has been choked off in India, partly owing to the
fact that corporate bond holders obtain particularly bad
recovery rates under the present arrangements.

CONFLIT IN CREDITOR DEBTORCONFLIT IN CREDITOR DEBTOR
NEGOTIOATIONNEGOTIOATION
Ø The outcome of such a negotiation is optimal when
the interests of the debtor and creditors are aligned
to maximise economic value of the enterprise.
Ø However, there are several elements in the
negotiation that increase rather than prevent
conflict between the two.conflict between the two.
Ø One conflict arises because the asymmetry of
information between the creditor and the debtor.
Since the debtor will always have more information
about the enterprise than the creditor, they tend to
have the upper-hand in the negotiation.

CONFLIT IN CREDITOR DEBTORCONFLIT IN CREDITOR DEBTOR
NEGOTIOATIONNEGOTIOATION
¢ Another conflict arises in the approach of the
creditors and debtor to preserving the time
value of their own investment.
¢ The creditor has the incentive to close out her
investment quickly so as to avail of alternative
investment opportunities.investment opportunities.
¢ The debtor has the incentive to hold on to the
assets, either to benefit from potentially higher
returns by deploying the assets in more risky
ventures or to benefit by stripping asset value.
¢ Conflicts tend to be exacerbated when there are
multiple levels and types of liabilities in an
enterprise.

NEED FOR HEALTHY RESOLUTIONNEED FOR HEALTHY RESOLUTION
¢ The idea that promoters should be held personally financially
responsible for defaults of the firms that they control. However,
the following perspectives are useful in the context of
enterprises:
1. Some business plans will always go wrong. In a growing
economy, firms make risky plans of which some plans will fail,economy, firms make risky plans of which some plans will fail,
and will induce default. If default is equated to malfeasance,
then this can hamper risk taking by firms. This is an undesirable
outcome, as risk taking by firms is the wellspring of economic
growth. Bankruptcy law must enshrine business failure as a
normal and legitimate part of the working of the market
economy.
2. Control of a company is not divine right. When a firm defaults on
its debt, control of the company should shift to the creditors. In
the absence of swift and decisive mechanisms for achieving
this, management teams and shareholders retain control after
default.

PPRESENTRESENT ARRANGEMENTSARRANGEMENTS ININ IINDIANDIA
¢ Individual bankruptcy and insolvency
Ø The Presidency Towns Insolvency Act, 1909, covers the
insolvency of individuals and of partnerships and
associations of individuals in the three erstwhile Presidency
towns of Chennai, Kolkata and Mumbai.
Ø The 1861 Indian High Courts Act led to the setting up of the
High Court system in place of the Presidency towns Supreme
Courts, which also has jurisdiction over insolvency relatedCourts, which also has jurisdiction over insolvency related
matters in the Presidency towns.
Ø The Provincial Insolvency Act 1920, is the insolvency law for
individuals in areas other than the Presidency towns, deals
with insolvency of individuals, including individuals as
proprietors. Section 3(1) of the Provincial Insolvency Act,
1920, allows the State Government to empower subordinate
courts to hear insolvency petitions, with district courts acting
as the court of appeal.

EXISTING MECHANISM FOR CORPORATE INSOLVENCYEXISTING MECHANISM FOR CORPORATE INSOLVENCY
Ø Corporate bankruptcy and insolvency Companies are
registered under the Companies Act, 2013.
Ø Limited liability partnerships are registered under the
Limited Liability Partnership Act, 2008.
Ø The Micro, Small and Medium Enterprise Development
Act, 2006, registers MSMEs but does not yet have
provisions for resolving insolvency and bankruptcy.
Ø Partnership firms are registered under the Indian
Partnerships Act, 1932, insolvency and bankruptcy
resolution of partnership firms is treated the same as
under individual insolvency and bankruptcy law.

DEBT RECOVERY MECHANISMDEBT RECOVERY MECHANISM
Ø A civil court of relevant jurisdiction is the basic mechanism that
is available to any creditor for debt recovery.
Ø If the loan is backed by security, this is enforced as a contract
under the law.
Ø The Recovery of Debt Due to Banks and Financial Institutions
Act (RDDBFI Act) 1993 gives banks and a specified set ofAct (RDDBFI Act) 1993 gives banks and a specified set of
financial institutions greater powers to recover collateral at
default.
Ø Under certain specified conditions, the Securitisation and
Reconstruction of Financial Assets and Enforcement of
Security Interest Act (SARFAESI) 2002 enables secured
creditors to take possession of collateral without requiring the
involvement of a court or tribunal.

CORPORATE INSOLVENCYCORPORATE INSOLVENCY
Ø Companies Act 2013 contains provisions for rescue and
rehabilitation of all registered entities in Chapter XIX, and
Liquidation in Chapter XX. [ to be notified]
Ø The law for rescue and rehabilitation remains the Sick Industrial
Companies (Special Provisions) Act (SICA), 1985. Under SICA, a
specialised Board of Industrial and Financial Reconstruction (BIFR)
assesses the viability of the industrial company. Once it has been
assessed to be unviable, BIFR refers the company to the High Court
for liquidation.
Ø The SICA was repealed in 2003, but the repealing act could not beØ The SICA was repealed in 2003, but the repealing act could not be
notified as the National Company Law Tribunal proposed by a 2002
amendment to the Companies Act, 1956 got entangled in litigation.
Ø The current legal framework for bankruptcy resolution (called
winding up of a company on inability to pay debt) continues to be
the Companies Act 1956.
Ø Out-of-court mechanisms set up after 2000 for banks to restructure
loan contracts with debtors include Corporate Debt Restructuring
(CDR) and more recently, the Joint Lending Forum and the Strategic
Debt Restructuring.

ISSUES UNDER THE PRESENT ARRANGMENTSISSUES UNDER THE PRESENT ARRANGMENTS
¢ Cases that are decided at the tribunal. often come for review to
the High Courts. This gives rise to two types of problems in
implementation of the resolution framework.
¢ The first is the lack of clarity of jurisdiction. In a situation where
one forum decides on matters relating to the rights of the creditor,
while another decides on those relating to the rights of the
debtor, the decisions are readily appealed against and either
stayed or overturned in a higher court.
¢ Ideally, if economic value is indeed to be preserved, there must be
a single forum that hears both sides of the case and make a
judgement based on both.
¢ A second problem exacerbates the problems of multiple judicial
fora. The fora entrusted with adjudicating on matters relating to
insolvency and bankruptcy may not have the business or financial
expertise, information or bandwidth to decide on such matters.
This leads to delays and extensions in arriving at an outcome, and
increases the vulnerability to appeals of the outcome /BIFR

OTHER ECONOMIESOTHER ECONOMIES
¢ The insolvency resolution framework in the UK is the
Insolvency Act of 1986, which was substantially modified
with the Insolvency Act of 2000, and the Enterprise Act of
2002.
¢ The first Act for bankruptcy resolution in the US that lasted
for a significant time was the Bankruptcy Act of 1989. This
was followed by the Act of 1938, the Reform Act of 1978, thewas followed by the Act of 1938, the Reform Act of 1978, the
Act of 1984, the Act of 1994, a related consumer protection
Act of 2005.
¢ Singapore proposed a bankruptcy reform in 2013, while there
are significant changes that are being proposed in the US and
the Italian bankruptcy framework this year in 2015. Several
of these are structural reforms with fundamental
implications on resolving insolvency.

UNICITRAL LEGISLATIVE GUIDE ON INSOLVENCYUNICITRAL LEGISLATIVE GUIDE ON INSOLVENCY 20052005
It emphasis on the following objectives for a collective
insolvency resolution regime:
1. Provision of certainty in the market to promote efficiency and
growth.
2. Maximization of value of assets.
3. Striking a balance between liquidation and reorganization.
4. Ensuring equitable treatment of similarly situated creditors.
5. Provision of timely, efficient and impartial resolution of5. Provision of timely, efficient and impartial resolution of
insolvency.
6. Preservation of the insolvency estate to allow equitable
distribution to creditors.
7. Ensuring a transparent and predictable insolvency law that
contains incentives for gathering and dispensing information.
8. Recognition of existing creditor rights and establishment of
clear rules forranking priority of claims.
9. Establishment of a framework for cross-border insolvency

UNIVERSAL APPROACHUNIVERSAL APPROACH
¢ These principles are derived from three core
features that most well developed bankruptcy and
insolvency resolution regimes share:
¢ a linear process that both creditors and debtors
follow when insolvency is triggered;follow when insolvency is triggered;
¢ a collective mechanism for resolving insolvency
within a framework of equity and fairness to all
stakeholders to preserve economic value in the
process;
¢ a time bound process either ends in keeping the
firm as a going enterprise, or liquidates and
distributes the assets to the various stakeholders.

MAIN FEATURE OF THE CODEMAIN FEATURE OF THE CODE
¢ Objectives The Committee set the following as
objectives desired from implementing a new Code to
resolve insolvency and bankruptcy:
¢ 1. Low time to resolution.
¢ 2. Low loss in recovery.
¢ 3. Higher levels of debt financing across a wide
variety of debt instruments.
¢ The performance of the new Code in
implementation will be based on measures of the
above outcomes.

PPRINCIPLESRINCIPLES DRIVINGDRIVING THETHE DESIGNDESIGN
The Code will facilitate the assessment of viability of the
enterprise at a very early stage.
1. The viability of the enterprise is a matter of business, and
that matters of business can only be negotiated between
creditors and debtor.
While viability is assessed as a negotiation between creditors
and debtor, the final decision has to be an agreement among
creditors who are the financiers willing to bear the loss in the
insolvency.insolvency.
2. The legislature and the courts must control the process of
resolution, but not be burdened to make business decisions.
3. The law must set up a calm period for insolvency resolution
where the debtor can negotiate in the assessment of viability
without fear of debt recovery enforcement by creditors.
4. The law must appoint a resolution professional as the
manager of the resolution period, so that the creditors can
negotiate the assessment of viability with the confidence that the
creditor will not take any action to erode the value of the
enterprise.

ROLE OF PROFESSIONALSROLE OF PROFESSIONALS
¢ The professional will have the power and
responsibility to monitor and manage the
operations and assets of the enterprise.
¢ The professional will manage the resolution
process of negotiation to ensure balance ofprocess of negotiation to ensure balance of
power between the creditors and debtor, and
protect the rights of all creditors.
¢ The professional will ensure the reduction of
asymmetry of information between creditors
and debtor in the resolution process.

INFORMATION UTILITIESINFORMATION UTILITIES
¢ The Code will enable symmetry of information between
creditors and debtors.
¢ The law must ensure that information that is essential
for the insolvency and the bankruptcy resolution process
is created and available when it is required.is created and available when it is required.
¢ The law must ensure that access to this information is
made available to all creditors to the enterprise, either
directly or through the regulated professional.
¢ The law must enable access to this information to third
parties who can participate in the resolution process,
through the regulated professional.

TIME BOUND PROCESSTIME BOUND PROCESS
¢ The Code will ensure a time-bound process to better
preserve economic value.
¢ Delaying tactics in these negotiations will not extend the
time set for negotiations at the start.
¢ The Code will ensure a collective process.
¢ The law must ensure that all key stakeholders will
participate to collectively assess viability.
¢ The law must ensure that all creditors who have the
capability and the willingness to restructure theircapability and the willingness to restructure their
liabilities must be part of the negotiation process.
¢ The liabilities of all creditors who are not part of the
negotiation process must also be met in any negotiated
solution.
The Code will respect the rights of all creditors
equally.
¢ The law must be impartial to the type of creditor in
counting their weight in the vote on the final solution in
resolving insolvency.

EXPECTED OUTCOMEEXPECTED OUTCOME
It is expected that when the negotiations fail to
establish viability, the outcome of bankruptcy must be
binding
¢ If the liquidation of an enterprise which has been found
unviable. This outcome of the negotiations should be
protected against all appeals other than for very
exceptional cases.
The Code ensure clarity of priority, and that the rights of¢ The Code ensure clarity of priority, and that the rights of
all stakeholders are upheld in resolving bankruptcy.
¢ Lay out the priority of distributions in bankruptcy to all
stakeholders. The priority must be designed so as to
incentivise all stakeholders to participate in the cycle of
building enterprises with confidence.
¢ It incentivise collective action in resolving bankruptcy,
there must be a greater flexibility to allow individual action
in resolution and recovery during bankruptcy compared
with the phase of insolvency resolution.

THE CODETHE CODE
¢ The Insolvency and Bankruptcy Code, 2015
¢ The Insolvency and Bankruptcy Code, 2015 was
introduced by the Minister of Finance, Mr Arun
Jaitley, in Lok Sabha on December 21, 2015.
¢ The Code seeks to create a unified framework for
resolving insolvency and bankruptcy in India.
¢ Insolvency is a situation where individuals or
organisations are unable to meet their financial
obligations.

RREPEALEPEAL ANDAND AAMENDMENTSMENDMENTS
¢ The Code seeks to repeal the Presidency Towns
Insolvency Act, 1909 and Provincial Insolvency Act,
1920. In addition, it seeks to amend 11 laws,
including the Companies Act, 2013, Recovery of
Debts Due to Banks and Financial Institutions Act,
1993 and Sick Industrial Companies (Special
Provisions) Repeal Act, 2003, among others.Provisions) Repeal Act, 2003, among others.
¢ The Code will apply to companies, partnerships,
limited liability partnerships, individuals and
any other body specified by the central
government.

BROAD ARRANGEMENTSBROAD ARRANGEMENTS
¢ Insolvency Resolution: The insolvency resolution process (IRP)
for individuals varies from that of companies. These processes
may be initiated by either the debtor or the creditors.
¢ Resolution process for companies and limited liability
partnerships: The resolution process will have to be completed
within a maximum period of 180 days from the date of
registration of the case. This period may be extended by 90 days
if 75% of the financial creditors agree. The process will involve
negotiations between the debtor and creditors to draft a
resolution plan.resolution plan.
¢ The process will end under two circumstances, (i) when a
resolution plan is agreed upon by a majority of the creditors and
submitted to the adjudicating authority, or (ii) the time period for
negotiation has come to an end. In case a plan cannot be
negotiated upon, the company will go into liquidation.
¢ There will be provision for a fast track insolvency resolution
process for companies with smaller operations. The process will
have to be completed within 90 days, which may be extended if
75% of financial creditors agree.

BROAD ARRANGEMENTSBROAD ARRANGEMENTS
¢ Resolution process for individuals and partnerships: Before
going in for insolvency resolution, the debtor may apply for
forgiveness of a specified amount of debt, provided that his
assets are below a limit set by the central government. This
process will have to be completed within six months.
¢ In case of insolvency resolution, negotiations between the
debtor and creditors will be supervised by an insolvency
professional. If negotiations succeed, a repayment plan, agreedprofessional. If negotiations succeed, a repayment plan, agreed
upon by a majority of the creditors, will be submitted to the
adjudicator. If they fail, the matter will proceed to bankruptcy
resolution.
¢ Insolvency professionals and agencies: The IRP will be
managed by a licensed professional. The professional will also
control the assets of the debtor during the process.
¢ The Code also proposes to set up insolvency professional
agencies. These agencies will admit insolvency professionals
as members and develop a code of conduct and evolve
performance standards for them.

NEW PLAYERSNEW PLAYERS
¢ Information Utilities: The Code proposes to establish
information utilities which will maintain a range of financial
information about firms. These utilities will collect, collate and
disseminate this information to facilitate insolvency resolution
proceedings.
¢ Insolvency regulator: The Code seeks to establish the
Insolvency and Bankruptcy Board of India, to oversee
insolvency resolution in the country. The Board will have 10
members, including representatives from the central
government and Reserve Bank of India. It will register
members, including representatives from the central
government and Reserve Bank of India. It will register
information utilities, insolvency professionals and insolvency
professional agencies under it, and regulate their functioning.
¢ Insolvency and Bankruptcy Fund: The Code creates an
Insolvency and Bankruptcy Fund. Deposits to the Fund will
include: (i) grants made by the central government, (ii) amount
deposited by persons, and (iii) interest earned on investments
made from the Fund. Any person who has contributed to the
Fund may apply for withdrawal, in case of proceedings
against him.

ADJUDICATORSADJUDICATORS
¢ Bankruptcy and Insolvency Adjudicators: The Code
proposes two separate tribunals to adjudicate grievances
related to insolvency, bankruptcy and liquidation of different
entities under the law:
¢ (i) the National Company Law Tribunal will have jurisdiction over
companies and limited liability partnerships, and
¢ (ii) the Debt Recovery Tribunal will have jurisdiction over
individuals and partnership firms.
¢ Appeals against orders of these tribunals may be¢ Appeals against orders of these tribunals may be
challenged before their respective Appellate Tribunals, and
further before the Supreme Court.
¢ Offences and penalties: The Bill specifies that for most
offences committed by a debtor under corporate insolvency (like
concealing property, defrauding creditors, etc.), the penalty will
be imprisonment of up to five years, with a fine of up to one
crore rupees. For offences committed by an individual (like
providing false information), the imprisonment will vary based on
the offence. For most of these offences, the fine will not exceed
five lakh rupees.

THE INSOLVENCY AND BANKRUPTCY CODE,THE INSOLVENCY AND BANKRUPTCY CODE, 20152015
PART -I
¢ TOTAL SECTIONS – 3 (Mainly extent of operation &
definitions.
PART – II
CORPORATE INSOLVENCY RESOLUTION PROCESS
¢ Chapter-I - Application & definitions
¢ Chapter-II - Corporate Insolvency Resolution Process (Sec
6 to 32 total 37)6 to 32 total 37)
¢ Chapter-III - Liquidation Process- (Sec 33 to 54 total 27)
¢ Chapter-IV - Fast Track Corporate Insolvency Resolution
Process- (Sec 55 to 58 total 4)
¢ Chapter-V - Voluntary Liquidation – Section 59
¢ Chapter-VI - Adjudicating Authority-Corporate – (Sec 60 to
67 total 8)
¢ Chapter-VII - Offences & Penalties (Sec 68 to 77 total 10)

INSOLVENCY RESOLUTIONINSOLVENCY RESOLUTION-- INDIVIDUAL /PARTNERSHIP FIRMSINDIVIDUAL /PARTNERSHIP FIRMS
PART-III
¢ Chapter-I - Application & Definitions (Sec 78-79)
¢ Chapter-II - Fresh Start Process (Sec 80 to 93 total 14)
¢ Chapter-III - Insolvency Resolution Process (Sec 94 to
120 total 26)
¢ Chapter-IV - Bankruptcy Orders (Sec 121 to 148 total 29)Chapter-IV - Bankruptcy Orders (Sec 121 to 148 total 29)
¢ Chapter-V - Administration & Distribution of Estate of
Bankrupt (Sec 149 to 178 total 31)
¢ Chapter-VI - Adjudicating Authority (Sec 179 to 183
total 5)
¢ Chapter-VII - Offences & Penalties (Sec 184 to 187
total 4)

REGULATION OF INSOLVENCY PROFESSIONALS,REGULATION OF INSOLVENCY PROFESSIONALS,
AGENCIES AND INFORMATION UTILITIESAGENCIES AND INFORMATION UTILITIES
PART IV
¢ Chapter-I - The Insolvency & Bankruptcy Board of India
(Sec 188 to 195)
¢ Chapter-II - Powers and Functions of the Board (Sec 196
to 197)
¢ Chapter-III - Insolvency Professional Agencies (199 to¢ Chapter-III - Insolvency Professional Agencies (199 to
206)
¢ Chapter-IV - Insolvency Professionals (Sec 207 to 208)
¢ Chapter-V -Information Utilities (Sec 209 to 216)
¢ Chapter-VI- Inspection and Investigation (Sec 217 to
220)
¢ Chapter-VII - Finance, Accounts and Audit

MISCELLANEOUS PROVISIONSMISCELLANEOUS PROVISIONS
PART – V [Sec 224 to 252]
¢ 224 - Insolvency and Bankruptcy Fund
¢ 225 - Power of CG to issue Directions
¢ 226 - Powers of CG to supersede Board
¢ 227 - Power of CG to Notify financial sector providers etc
¢ 228 - Budget
¢ 229 - Annual Report
¢ 230 - Delegation¢ 230 - Delegation
¢ 231 - Bar of Jurisdiction
¢ 232 - Members, officers and employees of Board to be Pub
Servants
¢ 233 - Protection of Action Taken
¢ 234 - Provisions of the Code to override other laws
¢ 235-39 - Powers to make rules/regulations/before
Parliament/remove difficulties/repeals and savings
¢ 240 - Special Courts/ Section 241 – Transitional provisions

SSOMEOME IMPORTANTIMPORTANT DDEFINITIONSEFINITIONS
Section 2 (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;

DDEFINITIONSEFINITIONS CONTDCONTD …..…..
¢ (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;
¢ (20) “operational creditor” means a person to whom an operational
debt is owned and includes any person to whom such debt has been
legally assigned or transferred (including a person resident outside
India);
¢ (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;due from any person and includes a financial debt and operational debt;
¢ (21) “operational debt” means a claim in respect of the provision of
goods or services including employment or a debt in respect of the
repayment of dues arising under any law for the time being in force and
payable to the Central Government, any State Government or any local
authority;
¢ (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 repaid by the debtor or the corporate debtor, as the case may be;

INFORMATION UTILITIESINFORMATION UTILITIES
¢ (21) “information utility” means a person who is registered
with the Board as an information utility under section 210;
¢ (9) “core services” means services rendered by an
information utility for—
¢ (a) accepting electronic submission of financial information
in such form and manner a may be specified;in such form and manner a 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;

IINFORMATIONNFORMATION UUTILITIESTILITIES --FFINANCIALINANCIAL IINFORMATIONNFORMATION
Section 2
(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;(a) records of the debt of the person;
¢ (b) records of liabilities when the person is solvent;
¢ (c) records of assets of person over which security interest
has been created;
¢ (d) records, if any, of instances of default by the person
against any debt; and
¢ (e) records of the balance sheet and cash-flow statements of
the person; and
¢ (f) such other information as may be specified;

DDEFINITIONSEFINITIONS ….….
¢ (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;
¢ (27) “property” includes money, goods, actionable
claims, land and every description of property situated
anywhere and every description of interest including
present or future or vested or contingent interest
arising out of, or incidental to, property;

WHO CAN INITIATE INSOLVENCY PROCESSWHO CAN INITIATE INSOLVENCY PROCESS
CORPORATE
DEFUALT OF >
ONE LAKH
DEFAULT TO
ANY FC
PARTNERSHIP FIRM &
INDIVIDUALS
DEFUALAT > RS 1000
DEBTOR
[FIRM – MAJORITY
PARTNERS]
ADJUDICATING AUTHORITY
CORPORATAE- [SEC 60] &
PERSONAL GUARANTORS
NCLT HAVING
TERRITORIAL
JURISDICTION
[VESTED WITH ALL
POWERS OF DRTS]ANY FC
HIMSELF
FINANCIAL
CREDITOR/ WITH
OTHER FC
OPRN CRED- After
notice of demand
u/s 8
PARTNERS]
CREDITOR/WITH
OTHER CREDITORS
AGAINST FIRM
INDIVIDUAL PARTNER
POWERS OF DRTS]
INDV/FIRM- DRT- HAVING
TERRITORIAL
JURISDICTION OVER
INDIVIDUAL
SECTION 179

PROCESS OF ADJUDICATIONPROCESS OF ADJUDICATION
COMMENCEMENT OF PROCEEDINGS - Order to be communicated within two days of
And/Rejection
DAT OF ADMISSION OF APP /U/S 5 (a)
I R to be completed within 180 days (s. 12) +Max 90 days
by 75% Committee of Creditors (Extn only once)
ADJUDICATING AUTHORITY [WILTHIN 14 DAYS OF RECEIPT OF APP
ACCEPT- Satisfied – Default + Complete + No DP against
IP
REJECT - IF CONDITIONS NOT SATISFIED
15 DAYS NOTICE TO RACTIFY
Management of affairs of corporate debtor by interim resolution professional
[section 17]
MORATORIUM/PUBLIC ANNOUNCEMENT/ APPT IP (Sec 13 to 16)
MORATORIUM – TILL RESOLUTION
(270DAYS)
PUBLIC ANNOUNCEMENT APPT IP+TENURE

MMANAGEMENTANAGEMENT OFOF AFFAIRSAFFAIRS OFOF DEBTORDEBTOR DURINGDURING INTERREGNUMINTERREGNUM
NO FINANCIAL CREDITORS [FC]- COMMITTEE TO BE APPOINTED BY THE
IP (INTRIM) TO MANAGE AFFAIRS AND ASSETS OF DEBTOR AS GOING
CONCERN
COLLATE ALL CLAIMS
AGAINST DEBT
CONSTITUTE
COMMITTEE OF ALL
CRDITORS
NO RELATED PARTY TO
HAVE REP
RP TO CONDUCT AFFAIRS OF THE DEBTOR IN RESOLUTION PROCESS
MANAGE AFFAIRS [SAME AS INTRIM IP] CONDUCT MEETING OF FC
NO FINANCIAL CREDITORS [FC]- COMMITTEE TO BE APPOINTED BY THE
BOARD
DECISION BY 75% OF FINANCIAL
CREDITORS
TO APPOINT RP WITHIN 3 DAYS

MMEETINGEETING OFOF CREDITORSCREDITORS –– CRITICALCRITICAL ASPECTSASPECTS
(1) The members of the committee of creditors may meet in person or by
such other electronic means as may be specified.
(2) All meetings of the committee of creditors shall be conducted by the
resolution professional.
(3) …suspended board of directors or the partners of the corporate person,
as the case may be.
(4) The directors and partners may attend meetings of the committee of
creditors but shall not have any voting right. Absence of any such
director or partner, shall not invalidate proceedings of such meeting.
(5) Any creditor who is a member of the committee of creditors may appoint(5) Any creditor who is a member of the committee of creditors may appoint
an insolvency professional other than the resolution professional to
represent such creditor in a meeting of the committee of creditors. The
fees payable to such insolvency professional shall be borne by such
creditor.
(6) Each creditor shall vote in accordance with the voting share assigned to
him based on the financial debts owed to such creditor.
(7) The resolution professional shall determine the voting share to be
assigned to each creditor in the manner specified by the Board. (8) The
meetings of the committee of creditors shall be conducted in such
manner as may be specified.

PPRIORRIOR APPROVALAPPROVAL OFOF COMMITTEECOMMITTEE REQUIREDREQUIRED FORFOR
(a) raise any interim finance in excess of the amount as may be
decided by the committee of creditors in their first meeting;
(b) create any security interest
(c) change the capital structure
(d) any change in the ownership interest of the corporate debtor;
(e) give instructions to financial institutions maintaining accounts for
a debit transaction from any such accounts in excess of the
amount as may be decided by the committee of creditors in their
first meeting;
amount as may be decided by the committee of creditors in their
first meeting;
(f) undertake any related party transaction;
(g) amend any constitutional documents of the corporate debtor;
(h) delegate its authority to any other person;
(i) dispose of or permit the disposal of shares of any shareholder of
the corporate debtor or their nominees to third parties;
(j) make any change in the management of the corporate debtor or
its subsidiary;

APPROVAL OF CR COM REQUIRED SECAPPROVAL OF CR COM REQUIRED SEC --2828
(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.
(2) RP shall convene a meeting of the committee of creditors and seek the
vote of the creditors prior to taking any of the actions under sub-section
(1).
(3) No action under sub-section (1) shall be approved by the committee of
creditors unless approved by a vote of seventy-five per cent. of the voting
shares.
(4) action under sub-section (1) without seeking the approval of the
committee of creditors in the manner as required in this section, shall be
void.
(5) The committee of creditors may report the actions of the RP under sub-
section (4) to the Board for removal of RPf or undertaking such actions.

SSTEPSTEPS REQUIREDREQUIRED BYBY INSOLVENCYINSOLVENCY PROFESSIONALPROFESSIONAL
Sections
¢ 29 - PREPARATION OF INFO MEMO
¢ 30 - APPROVAL OF RESOLUTION PLAN BY COMMITTEE OF CREDITORS
¢ 31 - APPROVAL OF RESOLUTION PLAN BY ADJUDICATING AUTHORITY [AA]
¢ May Approve: It will be binding on the Corp Debtr, its employees, members, creditors, guarantors and
other stakeholders involved in resolution plan.
¢ -The Moratorium order passed by AA u/s 14 shall cease to have effect
¢ May Reject: AA may reject RP if it does not conform to the requirement ref to in clauses (a) and (b) of sub-
section (l).
¢ 32- Grounds of Appeal against the order of AA- on the ground of Section 61 (3)¢ 32- Grounds of Appeal against the order of AA- on the ground of Section 61 (3)
¢ (i) the approved resolution plan is in contravention of the provisions of any law for the time being in
force;
¢ (ii) there has been material irregularity in exercise of the powers by the resolution professional during the
corporate insolvency resolution period;
¢ (iii) the debts owed to operational creditors of the corporate debtor have not been provided for in the
resolution plan in the manner specified by the Board;
¢ (iv) the insolvency resolution process costs have not been provided for repayment in priority to all other
debts; or
¢ (v) the resolution plan does not comply with any other criteria specified by the Board.
¢ (4) An appeal against a liquidation order passed under section 33 may be filed on grounds of material
irregularity or fraud committed in relation to such a liquidation order.

FFASTAST TRACKTRACK PROCEDUREPROCEDURE
¢ 57. An application for fast track corporate insolvency resolution
process may be initiated by a creditor or corporate debtor as the
case may be, by furnishing: [For this assets & income & category
as to be notified]
¢ (a) the proof of the existence of default as evidenced by records
available with an information utility or such other means as may
be specified by the Board; and
¢ (b) such other information as may be specified by the Board to
establish that the corporate debtor is eligible for fast track
¢ (b) such other information as may be specified by the Board to
establish that the corporate debtor is eligible for fast track
corporate insolvency resolution process. Manner of initiating
fast track corporate insolvency resolution process. [To be
completed within 90 days+45 days (only once) by AA with 75% of
Creditors consent]
¢ 58. The process for conducting an corporate insolvency
resolution process under Chapter II and the provisions relating to
offences and penalties under Chapter VII shall apply to this
Chapter as the context may require.

LLIQUIDATIONIQUIDATION PROCESSPROCESS TOTO BEGINBEGIN WHENWHEN
¢ NO RESOLTION PLAN SUBMITED
¢ AA REJECTED RP FOR NON COMPLIANCE WITH
REQUIREMENTS
¢ PASS AN ORDER THAT CORP DEBTOR TO BE
LIQUIDATED
¢ COMINITTEE CREDITORS DECIDE TO LIQUIDATE
¢ CORPORATE DEBT RESOLUTION PLAN IS
CONTRAVENED [PERSON WHOSE INTT ARE
AFFECTED)

RRIGHTIGHT OFOF SECUREDSECURED CREDITORCREDITOR
¢ A] Relinquish its security interest to the liquidation estate and receive
proceeds from the sale of assets by the liquidator and accept distribution as per
section 53.
¢ B] Realize its security interest in the manner specified in section 52 [subject to
verification by liquidator and prove by (a) by record with IU or (b) by means
specified by Board.
¢ C] A secured creditor may enforce, realise, settle, compromise or deal with the
secured assets in accordance with such law as applicable to the security
interest being realised and to the secured creditor and apply the proceeds to
recover the debts due to it.
¢ If secured creditor faces resistance from the corporate debtor or any¢ If secured creditor faces resistance from the corporate debtor or any
person connected therewith in taking possession of, selling or otherwise
disposing off the security, the secured creditor may make an application to the
Adjudicating Authority to facilitate the secured creditor to realise such security
interest which may pass such order as may be necessary to permit a secured
creditor to realise security interest in accordance with law for the time being in
force.
¢ The amount of insolvency resolution process costs, due from secured creditors
shall be deducted from the proceeds of any realisation by such secured
creditors,
¢ Where the proceeds of the realisation of the secured assets are not adequate to
repay debts owed to the secured creditor, the unpaid debts of such secured
creditor shall be paid by the liquidator in the manner specified in section
53.

PPROCESSROCESS OFOF LIQUIDATIONLIQUIDATION SECTIONSECTION 3333
¢ Moratorium - No suit or legal proceedings to be initiated by and against the corporate debtor.
Moratorium shall not prevent a secured creditor from realising its security in accordance with
Section 52.
¢ Discharge of staff - Shall be deemed to be a notice of discharge to the officers, employees and workmen
of the corporate debtor, except when the business of the corporate debtor is continued during the
liquidation process by the liquidator.
¢ Liquidator - Resolution Professional appt under Chap II shall act as liquidator. All power of
BoD/KPM/Partner shall cease and be vested in liquidator.
¢ Personnel of Cop Debt to extend cooperation to liquidator
¢ Fee - In proportion to the value of the liquidation estate assets¢ Fee - In proportion to the value of the liquidation estate assets
¢ Powers - Verify claim/custody of all assets etc/evaluate assets/preserve/carry on business for beneficial
liquidation/sell property/actionable claims by public auction or private contract, draw negotiable
insts/obtain professional assistance/institute and defend suits/ investigate financial affairs to evaluate
undervalued or preferential transaction/ obtain orders from AA and other order
¢ Fiduciary capacity - The liquidator shall hold the liquidation estate as a fiduciary for the benefit of all the
creditors.
¢ Access to information - shall have the power to access any information systems for the purpose of
admission and proof of claims and identification of the liquidation estate assets relating to the corporate
debtor
¢ Claim in 30 days - shall receive or collect the claims of creditors within a period of thirty days from the
date of the commencement of the liquidation process.
¢ Vary claim- A creditor may withdraw or vary his claim under this section within fourteen days of its
submission.

PPROCESSROCESS OFOF LIQUIDATIONLIQUIDATION
¢ Admission / rejection - The liquidator may, after verification of claims under section 39, either
admit or reject the claim, in whole or in part. Where a claim is rejected he shall record in writing
the reasons for such rejection and communicate decision of admission or rejection of claims to
the creditor and corporate debtor within three days
¢ Valuation - Determine the value of claims admitted under section 40 in such manner as may be
specified by the Board
¢ Appeal - A creditor may appeal to the Adjudicating Authority against the decision of the liquidator
rejecting the claims within fourteen days of the receipt of such decision.
¢ Avoidance of Preferential transaction - shall apply to the Adjudicating Authority for avoidance of
preferential transactions and for, one or more of the orders referred to in section 44.
¢ Exempted assets (sec 36)
¢ (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) contributions in respect of¢ (i) assets held in trust for any third party; (ii) bailment contracts; (iii) contributions in respect of
employee pensions;
¢ ( 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 may be avoided
under this Chapter;
¢ (d) assets of any Indian or foreign subsidiary of the corporate debtor; or (e) any other assets as
may be specified by the Board, including assets which could be subject to set-off on account of
mutual dealings between the corporate debtor and any creditor;

DISTRIBUTION OF ESTATE (PRIORITY)
¢ 53. (1) 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 as may be specified, namely:—
¢ (a) the insolvency resolution process costs and the liquidation
costs paid in full;
¢ (b) the following debts which shall rank equally between and
among the following:—among the following:—
¢ (i) debts owed to a secured creditor in the event such secured
creditor has relinquished security
¢ (ii) workmen’s dues for the period of twelve months preceding the
liquidation commencement date;
¢ (c) wages and any unpaid dues owed to employees other than
workmen for the period of twelve months preceding the
¢ (d) financial debts owed to unsecured creditors;

DDISTRIBUTIONISTRIBUTION OFOF ESTATEESTATE
¢ (e) 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 in
respect of the whole or any part of the period of two years preceding the
¢ (ii) debts owed to a secured creditor for any amount unpaid following the
enforcement of security interest;
¢ (f) any remaining debts and dues;
¢ (g) preference shareholders, if any; and (h) equity shareholders or partners,
as the case may be.as the case may be.
¢ (2) Any contractual arrangements
¢ (3) The fees payable to the liquidator shall be deducted proportionately from
the proceeds payable to each class of recipients.
¢ Explanation.—For the purposes of this section,— (i) it is hereby clarified that
at each stage of the distribution of proceeds in respect of a class of recipients
that rank equally, each of the debts will either be paid in full, or will be paid
in equal proportion within the same class of recipients, if the proceeds are
insufficient to meet the debts in full; and (ii) the term “workmen’s dues”
shall have the same meaning as assigned to it in section 326 of the
Companies Act, 2013.

AAVOIDANCEVOIDANCE OFOF CERTAINCERTAIN TRANSACTIONSTRANSACTIONS

PPREFERENTIALREFERENTIAL TRANSACTIONSTRANSACTIONS
¢ The preference must have been given during
¢ the two years preceding the insolvency commencement date if
given to related parties and
¢ one year preceding the insolvency commencement date if given
to all other persons.
¢ Providing longer time periods for preferences given to related
parties would be important for avoiding such transactions as a
Providing longer time periods for preferences given to related
parties would be important for avoiding such transactions as a
number of transactions diminishing creditor wealth entered into
with related parties occur not only in the 'zone of insolvency' but
as soon as early signals of trouble are visible.
¢ Related parties often have superior information of the corporate
debtor's financial affairs and may collude with the corporate
debtor to siphon off assets with the knowledge that the
corporate debtor may become insolvent in the near future.

XCEPTIONSXCEPTIONS
¢ For the purposes of sub-section (2) of Section 43, a preference shall not include the following
transfers—
¢ (a) transfer made in the ordinary course of the business or financial affairs of the corporate
debtor or the transferee;
¢ (b) any transfer creating a security interest in property acquired by the corporate debtor to the
extent that—
¢ (i) such security interest secures new value and was given at the time of or after the signing of a
security agreement that contains a description of such property as security interest, and was
used by corporate debtor to acquire such property; and
¢ (ii) such transfer was registered with an information utility on or before thirty days after the
corporate debtor receives possession of such property:corporate debtor receives possession of such property:
¢ Provided that any transfer made in pursuance of the order of a court shall not preclude such
transfer to be deemed as giving of preference by the corporate debtor.
¢ Explanation.—For the purpose of sub-section (3) of this section, “new value” means money or its
worth in goods, services, or new credit, or release by the transferee of property previously
transferred to such transferee in a transaction that is neither void nor voidable by the liquidator
or RP under this Code, including proceeds of such property, but does not include a financial debt
or operational debt substituted for existing financial debt or operational debt.
¢ (4) A preference shall be deemed to be given at a relevant time, if — (a) it is given to a related
party (other than by reason only of being an employee), during the period of two years preceding
the insolvency commencement date; or (b) a preference is given to a person other than a related
party during the period of one year preceding the insolvency commencement date.

UUNDERVALUEDNDERVALUED TRANSACTIONSTRANSACTIONS
¢ 45 provides for the avoidance of transactions at undervalue such
as (a) gifts, or (b) transactions where the value of the
consideration received by the corporate debtor is significantly less
than the value provided by such corporate debtor.
¢ A transaction shall be considered undervalued where the
corporate debtor—corporate debtor—
¢ (a) makes a gift to a person; or
¢ (b) enters into a transaction with a person which involves the
transfer of one or more assets by the corporate debtor for a
consideration the value of which is significantly less than the
value of the consideration provided by the corporate debtor, and
such transaction has not taken place in the ordinary course of
business of the corporate debtor.

UUNDERVALUEDNDERVALUED TRANSACTIONSTRANSACTIONS CONTDCONTD....
¢ 46. (1) In an application for avoiding a transaction at
undervalue, the liquidator or the resolution professional,
as the case may be, shall demonstrate that—
¢ (i) such transaction was made with any person within the
period of one year preceding the insolvency
commencement date; or
¢ (ii) such transaction was made with a related party within
the period of two years preceding the insolvency
commencement date.
¢ (2) The Adjudicating Authority may require an
independent expert to assess evidence relating to the
value of the transactions mentioned in this section.

TTRANSACTIONSRANSACTIONS DEFRAUDINGDEFRAUDING CREDITORSCREDITORS
¢ 49. Where the corporate debtor has entered into an
undervalued transaction as referred to in sub-section (2) of
section 45 and the Adjudicating Authority is satisfied that
such transaction was deliberately entered into by such
corporate debtor—
¢ (a) for keeping assets of the corporate debtor beyond the¢ (a) for keeping assets of the corporate debtor beyond the
reach of any person who is entitled to make a claim against
the corporate debtor; or
¢ (b) in order to adversely affect the interests of such a
person in relation to the claim
[NO TIME LIMIT FIXED]

EEXTORTIONATEXTORTIONATE TRANSACTIONSTRANSACTIONS
¢ 50. (1) Where the corporate debtor has been part of a credit
transaction involving the receipt of financial or operational debt
during the period within two years preceding the insolvency
commencement date, the liquidator or the resolution
professional as the case may be, may make an application for
avoidance of such transaction to the Adjudicating Authority if the
terms of such transaction required exorbitant payments to be
made by the corporate debtor.made by the corporate debtor.
¢ (2) The Board may specify the circumstances in which a
transactions which shall be covered
¢ Explanation.—For the purpose of this section, it is clarified that
any debt extended by any person providing financial services
which is in compliance with any law for the time being in force
in relation to such debt shall in no event be considered as an
extortionate credit transaction.

JJURISDICTIONURISDICTION OFOF ADJUDICATINGADJUDICATING AUTHORITYAUTHORITY
¢ Notwithstanding anything to the contrary contained in
any other law for the time being in force, the National
Company Law Tribunal shall have jurisdiction to
entertain or dispose of -
¢ (a) any application or proceeding by or against the
corporate debtor or corporate person;corporate debtor or corporate person;
¢ (b) any claim made by or against the corporate
debtor or corporate person, including claims by or
against any of its subsidiaries situated in India; and
¢ (c) any question of priorities or any question of law or
facts, arising out of or in relation to the insolvency
resolution or liquidation proceedings of the
corporate debtor or corporate person under this Code

EEXTENSIONXTENSION OFOF LIMITATIONLIMITATION PERIODPERIOD
¢ In computing the period of limitation specified for
any suit or application in the name and on behalf of
a corporate debtor for which an order of moratoriuma corporate debtor for which an order of moratorium
has been made under this Part, the period during
which such moratorium is in place shall be
excluded.

AAPPEALPPEAL FROMFROM THETHE ORDERORDER OFOF AAAA
GROUNDS
APPEAL TO CLAT
WITHIN 45 DAY MAX ADDL TIME 15 DAYS
Debts owed to operational creditors of the corporate debtor have not been provided for in
the resolution plan in the manner specified
IR process costs have not been provided
for
repayment in priority to all other debts
RP does not comply with any other criteria
specified by the Board
Approved resolution plan is in contravention
of the provisions of any law
Material irregularity in exercise of the powers
by the resolution professional

ADJUDICATION BY AAADJUDICATION BY AA
COMMENCEMENT OF PROCEEDINGS - Order to be communicated within two days of
And/Rejection
DAT OF ADMISSION OF APP /U/S 5 (a)
I R to be completed within 180 days (s. 12) +Max 90
days by 75% Committee of Creditors (Extn only once)
ADJUDICATING AUTHORITY [WILTHIN 14 DAYS OF RECEIPT OF APP
ACCEPT- Satisfied – Default + Complete + No DP
against IP
REJECT - IF CONDITIONS NOT SATISFIED
15 DAYS NOTICE TO RACTIFY
Management of affairs of corporate debtor by interim resolution professional
[section 17]
MORATORIUM/PUBLIC ANNOUNCEMENT/ APPT IP (Sec 13 to 16)
MORATORIUM – TILL
RESOLUTION (270DAYS)
PUBLIC ANNOUNCEMENT APPT IP+TENURE

AAPPEALPPEAL FROMFROM CLATCLAT TOTO SC (62)/TSC (62)/TIMEIME BOUNDBOUND DISPOSALDISPOSAL
To Supreme Curt - Appeal from an order of the NCLAT on a question of law arising out of such
¢ order under this Code within sixty days from the date of receipt of such order.- May
be allowed to file appeal on sufficient ground l within ninety days, allow the appeal
to be filed within a further
period not exceeding thirty days.
¢ No civil court or authority shall have jurisdiction to entertain any suit or proceedings
in respect of any matter on which NCLT/NCLAT has jurisdiction under this Code
(Section 63)
¢ Timebound Disposal of cases : If an application is not disposed of or order is not
passed within the period specified in this Code, NCLT/NCLAT shall record the reasons
for not doing so.
¢ President of NCLT/NCLAT may, after taking into account the reasons so recorded,
extend the period specified in the Act but not exceeding ten days.
¢ No Injunction : No injunction shall be granted by any court, tribunal or authority in
respect of any action taken, or to be taken, in pursuance of any power conferred on
NCLT/NCLAT by or under this Code.

DDUTIESUTIES OFOF INTERIMINTERIM INSOLVENCYINSOLVENCY PROFESSIONALPROFESSIONAL
(a) collect all information relating to the assets, finances and operations of the corporate debtor for
determining the financial position of the corporate debtor, including information relating to —
(i) business operations for the previous two years; (ii) financial and operational payments for the previous
two years;
(iii) list of assets and liabilities as on the initiation date; and (iv) such other matters as may be specified;
(b) receive and collate all the claims submitted by creditors to him, pursuant to the public announcement
made under sections 13 and 15; (c) constitute a committee of creditors;
¢ (d) monitor the assets of the corporate debtor and manage its operations until a resolution professional
is appointed by the committee of creditors; (e) file information collected with the information utility, if
necessary; and (f) take control and custody of any asset over which the corporate debtor has ownership
rights as recorded in the balance sheet of the corporate debtor, or with information utility or the
depository of securities or any other registry that records the ownership of assets (i) assets over which
the corporate debtor has ownership rights which may be located in a foreign country;
¢ (ii) assets that may or may not be in possession of the corporate debtor; (iii) tangible assets, whether
movable or immovable; (iv) intangible assets including intellectual property; (v) securities including
shares held in any subsidiary of the corporate debtor, financial instruments, insurance policies; (vi) assets
subject to the determination of ownership by a court or authority; (g) to perform such other duties as
may be specified by the Board.
¢ Explanation.—For the purposes of this sub-section, the term “assets” shall not include the following,
namely:—
¢ (a) assets owned by a third party in possession of the corporate debtor held under trust or under
contractual arrangements including bailment ; (b) assets of any Indian or foreign subsidiary of the
corporate debtor; and
¢ (c) such other assets as may be notified by the Central Government in consultation with any financial
sector regulator.

OOFFENCESFFENCES ANDAND PENALTIESPENALTIES
OFFENCES AND PENALTIES
¢ 68. Punishment for concealment of property.
¢ 69. Punishment for transactions defrauding creditors.
¢ 70. Punishment for misconduct in course of corporate
insolvency resolution process.
¢ 71. Punishment for falsification of books of corporate debtor.
¢ 72. Punishment for wilful and material omissions from72. Punishment for wilful and material omissions from
statements relating to affairs of corporate debtor.
¢ 73. Punishment for false representations to creditors.
¢ 74. Punishment for contravention of moratorium or the
resolution plan.
¢ 75. Penalties for false information furnished in application.
¢ 76. Penalty for non-disclosure of dispute or repayment of debt
by operational creditor.
¢ 77. Penalty for providing false information in application made
by corporate debtor.

PART III INSOLVENCY RESOLUTION AND BANKRUPTCY FORPART III INSOLVENCY RESOLUTION AND BANKRUPTCY FOR
INDIVIDUALS AND PARTNERSHIP FIRMSINDIVIDUALS AND PARTNERSHIP FIRMS
FRESH START PROCESS
¢ 80. Eligibility for making an application.
¢ 81. Application for fresh start order.
¢ 82. Appointment of resolution professional.
¢ 83. Examination of application by resolution professional. 84.
Admission or rejection of application by Adjudicating Authority.
¢ 85. Effect of admission of application.
¢ 86. Objections by creditor and their examination by resolution86. Objections by creditor and their examination by resolution
professional.
¢ 87. Application against decision of resolution professional. 88.
General duties of debtor.
¢ 89. Replacement of resolution professional.
¢ 90. Directions for compliances of restrictions, etc.
¢ 91. Revocation of order admitting application.
¢ 92. Discharge order.
¢ 93. Standard of conduct.

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