Insolvency

and code
Bankruptcy
2016
,
.

Insolvency
state where the Liabilities > Assets

If treated
If Untreated

It lead to
may

Liquidation Bankruptcy
for corporates for Non -

corporates

code which
repealed and amended
many
laws .

into
force
28th
May
came on 2016

see (1-3) Short title

Application
Division
Preliminary
Part I ,

Definition
Part II for Gec 4-77)
Definition ,
Liquidation
CIRP .
,

corporates fast track CIRP ,

voluntary Liquidation ,

AA , Offences & penalties .

Part II Individual
Sec 78-187
4 firms
.

Part II Professional ,

Utilities Sec 188 -223

Agency
.

Part I
Miscellaneous Sec .
224-225

Parties under 113C

Loan to
CO .

FINANCIAL CREDITOR

CORPORATE
DEBTOR 900dg to co .

who
defaults
in
payment
OPERATIONAL CREDITOR

© CA Shivangi Agrawal
 CIRP Overview

commitment
of Default
filing of Application with AA

Appointment of
IRP

Formation
of
COC

of
RP
Appointment
Preparation of Information Memorandum

of
Invitation Plans

submission
of Resolution Plans

Plans
Evaluation
of by
Coc

Approved
COC
by Rejected
COC
by

Approved Rejected
AA
by AA
by

Liquidation
CIRP
Corporate Insolvency Resolution Process

IP
Professional
InsolvencyResolution
IRP Interim
Professional
RP Resolution
Professional
Coc Committee
of creditors

CD
corporate Debtor

A- A
Adjudicating Authority MCLT
-

Board IBBI
RP can
©mean Resolution
CA Shivangi Agrawal Plan also
 (Sec 7)
Initiation
of CIRP
by financial
creditor .

Default by
owed to
Applicant OR

corporate owed
financial
to other creditor
Debtor any
OR
= Financial creditor
on
behalf
of creditor -

By itself Jointly
with
or
•
Guardian
financial Creditors
• Executor/
Administrator
Attachments
✗
of Estate
of
Record
of file Application creditor
default Trustee
t
•

Name
of
Resolution
,
• Person

Adjudicating Authority
to authorised
professional by Board
of
Information
company
within 14
specified by days
Board basis
of
evidence
furnished
on the

AA shall admit AA shall

application applicationreject
if satisfied ifsidisfieo
-

Default Application No
Default Application
has AND is
disciplinary has not or is
Disciplinary
occurred complete Proceeding occurred
incomplete Proceeding
pending pending
against RP
against RP

after giving Notice

to
to
DATE OF
Applicant rectify
COMMENCEMENT
OF CIRP
(Date of
within >
days defect
Admission)

Order
of AA

Application No order
admitted Rejected passed within

days
within 7 14

days
Communicate
.

within 7
communicate daysto .

to financial creditor Record

reasons in

Financial
AND corporate writing for
same
creditor Debtor
© CA Shivangi Agrawal
.
 Initiation (see 9)
of by Operational
CIRP creditor .
8 + see >

Invoice + Demand
Operational
creditor
sends
Notice

to
corporate
Debtor ( C D) demanding Payment
within 10
days of
such
receipt ,
CD

Pays
the intimates does None
OR OR
amount about
Dispute of these
4. intimates or record
Evidence
of of any Pending
Payment .

proceedings
Application forCDinitiating be
CIRP
Attachments

of invoice & against may filed

copy
Demand Notice Within 14

Affidavit ( No days
dispute) AA
satisfied that
Proposed IRP
( optional)
Record with Iu Application Application not

from
certificateinstitution complete complete
financial Demand Notice Demand Notice not
that debt not
paid delivered
given to c. ☐ to CD
Other
Proof
Prescribed
.

info paid off

Debt
Debt
paid
not

of dispute
Notice
No Notice received
of dispute
pendingProposed Pending Proceedings
proceedings against
No

against
RP
RP .

Give Notice to

ADMIT
Rectified applicant to
rectify
1
default within 7
days
DATE OF COMMENCEMENT Not
rectified
OF CIRP
( Admission
of
Date
REJECT

© CA Shivangi Agrawal
 Initiation
of CIRP
by corporate Applicant Gee )
-10

Default by
CD
corporate Applicant Attachments

Information
Aks
of
of
books

may
send
Application Proposed IRP

SR / 314th resolution

for CIRP to AA
approval .

Within 14
days
AA
satisfied that
pendingProposed Pending Proceedings
proceedings against against
No
RP
RP .

Give Notice to

ADMIT
Rectified applicant to
rectify
1
default within 7
days
DATE OF COMMENCEMENT Not
rectified
OF CIRP
( Date
of
Admission ) REJECT

canA-jpmbeEG.ec . 12A )
YES

Before admission
with AA
After admission

with Permission

Before After After

of
AA
constitution constitution EOL

of ooo
of
coc

Application to Application to same

Approved} ith
through
Coc →
AA IRP
with 90% → reasons

within 3
days
ApplicationAA
to

Approved by of
order AA

© CA Shivangi Agrawal
 can't be made ? Gee ID
When
Application
.

If
CD is
0 CD
completed Approved CIRP
violate,
Liquidation
undergoing for
pean was order
clap within
CIRP
proceeding
months
12 in
12
proceeding
months
CD
passed
.

Time Gec
for completion of
Limit CIRP . 12 )

days from
to
completed
CIRP be within 180 commencement

if
not
possible then -

Meeting of
Coc
by 66% Votes

approval
-

shall
file pup
instruct RP to
apply
for
extension
application
time
May grant of
to AA one extension not
than
days
more 90

CIRP to be
completed within 330
days including
( extension
and time in
legal proceedings)

If Not -

Within 90
days from
16.08.2019 (Amendment Act 2019

After admission
of Application
AA 3 Orders
passes

Public
IRP
Announcement
Declaration
of
Moratorium
appointed
as
per for
Claims
calling ofas
as
per Sec .

Sec .
16 .
14
per 15
.

Sec .

© CA Shivangi Agrawal
 Moratorium ( Sec .
I 4)

Delay on
suspension of an
activity
.

On
Insolvency commencement date AA
,

shall
prohibit
-

Institution
of Transferring // Recovery of
suits / any property
continuation encumbering by owner

of Pending disposing of
Assets /
in
possession
of
CD
legal
against
suits CD
.

right of CD

Execution
of any
Action to
foreclose/
Order recover / enforce
of court
/
security interest

Authority
of / $
goodssuspended
services not
supply Terminated
essential to be

by Regulator interrupted
License also or .

N A
-

→ Transaction
notified by CG
given guarantee for
who
Surety has CD
→ .

Tenure
of Moratorium

Resolution
If If liquidation Otherwise
Pean
approved order
passed
Till Tiel date
of of end
date such such Tiel
order
of CIRP
.

approval
Public Announcement (Sec .
15 )

)
days
within 3
Immediately ( IRP to make Public Announcement
of appointment of IRP

contents

Name
Address
& Authority
under which
Details
of
Last date
for
Penalty
+
CIRP

false
Irp
°" end
submission date
of registered
CD claims .

claims
© CA ShivangiofAgrawal
 (see 6)
Appointment of IRP .
I

CIRP
application is made
by
-

financial corporate operational

creditor ( see 7) creditor Gec 9)
-

Debtor Csec . to ) .

Whether IRP is
proposed?
If disciplinary proceeding
no
in
Application or not

fending against Proposed

RP

Yes
No

He shall be
appointed as
"A
foes
I RP " the
matter to 113131
If disciplinary proceeding
no

fending against Proposed

RP
within to
days
He shall be
IRP
appointed as IBBI recommends
name .

1
I

Person shall
so
appointed continue till
appointment of
RP

ufs 22 .

Powers
of IRP : -

Board Powers
Management of suspended Officers to
report
affairs of CD and to be exercised to IRP and
provide
by
IRP
by IRP .

all does .

Execute Deeds / Documents

financial
Take actions Institutions to
specified
by Board act on instructions

Access electronic records

Of IRP
and
from IU

Access books
of AK 's ,
record
furnish information
with Authorities to IRP .

Compliance with Law

IRP shall endeavor to

protect and
preserve property of
and
manage operations going
CD as a concern .

© CA Shivangi Agrawal
 of
Duties
key
IRP

assets
info finances
collect about ,
etc .

Collate claims

constitute Coc

Monitor assets

file info
with IU

and
custody of
Take control assets

Perform duties
specified
Manner
of submission
of
claims

By financial
creditor
By Operational By Employees /
creditor workmen

in FORM in én FORM D
C FORM B

Proof before
with Last date mentioned in Public Announcement

clays of
within 7 last date

shall
IRP
verify claims
& within 2
days
-

File
report to AA .

Committee
of creditors ( Sec . 21)
Determination
After collation
claims
of and of financial
position

shall constitute ( co c)
of
IRP committee creditors -

If Financial
exist
Creditors
If No
financial creditor
-
exist

with all
financial
Largest
18
loeefsresentative
creditors I
of corporate
Debtor
Operational Representative
creditors by by
workmen
But Related
Party
-
No
by
value
Employee .

right of representation ,

Participation Voting in total

If
,
less than 18
, ,

If all
financial creditors then All
operational creditors
are Related
Party © CA Shivangi Agrawal
 sfoecialcae.es:2
or

financial
more
person is operational
financial creditors
assigns
well
creditor
as as
as a
part of operational
his debt to
creditor
consortium creditor
financial
Each
financial
creditor shall voting share
Assignee
considered
to be
proportionate as
operational
be a
part
COC of
to
financial
debt creditor to the
owed to him
CD
extent
debt owed
of operational
by
voting
be in
right
proportion
of financial
debts owed .

Meeting of creditors

of
constitution committee 7
days
within

meeting of
Notice to conduct 1st Coc
5
days
.

Every beParticipant
.

otiee
May
reduced
by Representing 33% of
Voting rights
Coc to not less than in

24/48 Hrs .

Quorum person or
by
AV

Actions
requiring approval
If not
shall be
approved
66% voting adjourned next
Meeting time
to
of
vote
by .

same peace
day
-

demand
any info from
to RP and
Coc
relating
CD
may
furnish
within
RP to it 7
days
( Sec )
Appointment of RP . 22

In the 1st
meeting of By 66% Appoint
COC .
votes -

IRP as RP Replace IRP

written Coo sends Application (Proposed AA

If obtained
consent
IRP + his consent)

days
within 10
Coc communicates
decision to -
to Board
forwards it

IRP
confirms
Board doesn't
confirm
corporate Debtor
IRP continue as RP
Proposed RP
Adjudicating Authority appointed
.

until Board
confirms other

© CA Shivangi Agrawal
 of
Duties RP

conduct
of conduct Duties
Preparation
CIRPGEC )
of
'

meetings .2D
-23
as
per of
IRP coffee Csec . )
25 Information
memorandum (Sega)
Does
gives
/Info 1st
meeting
+
to RP
subsequent
RP to have
meetings
powers in
same manner

& Duties
IRP
as
specified by
Board

Manage Notice to be

operations given members

to

/expiry Authorised
until Coc

of
CIRP

Liquidation
order
representatives
suspended
.

Directors

ting
share to be operational
creditors
determined
of
-

10%
if
Dues >
RP in
by manner
Debt

Board
by

Replacement of Resolution Professional Csec .2D

During
URP

of opinion of replacing
cocés RP

66% votes resolve to

replace
forward ofRP
Obtain consent New

Name
of Proposed
RP
Apply to AA

forward to 113131
for confirmation
If no
disciplinary If
pending
proceeding pending Board recommends and

He shall be
appointed appoints
Old RP continues till then

© CA Shivangi Agrawal
 Duties / Actions Gee -25) -

subject to
Approval Csec .

2s)
Preserve Take
CD and
,
protect assets
of custody
assets
and control
of
continue its business .

Exercise
rights for
CD 's
filing of application for
benefit transactions
in

proceedings avoidance

Chapter
(
of
HD
Maintain
updated list
Appoint required
accountants ,

of claims .

professionals etc
.

3rd
Represent CD while Other actions as

specified
party dealings
Board
by
.

Invite
Prospective resolution
applicants to submit resolution

plan from eligible

resolution
Applicants
section 29A

Person not
eligible
Undischarged
insolvent wilful
to
defaulter
RBI
according
Prohibited
Disqualified director
as a
by SEBI
for
undue
companies Act trading
-

convicted
Has account
classified for offence
an as -

imprisonment years / more

NPA and 1 or more 2
year
-

such date ( Twelfth

elapsed from .
schedule)
Promoter lien
mgmt of corporate Executed Guarantee in
favour
Debtor in which
Preferential / Under of creditor in
respect of CD
valued / fraudulent transaction which
convicted
for offence against
for resolving
application
insolvency admitted
-

imprisonment -7 years / more invoked

( under other law)
any
and such
guarantee
and remains
by creditor unpaid
under
Disability as above connected Person not

foreign
Law
eligible

© CA Shivangi Agrawal
 )
Submission
of Resolution Plan Csec .
30

Resolution On the basis

submit
Applicant Information
of Memorandum Resolution
Plan +
Affidavit
Resolution
shall examine Plans
Professional pp of eligibility
received

RP to ensure that each Plan -

Resolution contravention
Management conforms
No to
Process
provided
cost
of affairs of Law
guidelines of
after 113131
approval of Pean
Debts
of operational Implementation
creditor
what
of Plan
(Atleast
they
will
getufs
if liquidation 533

Present Resolution
before
Plan COC

submitted
By 66% votes
AA
Reject
to Plan
Pean
I
Approve
Approve Reject Liquidation Other

Grounds
Cease Moratorium include -

Implementation of Plan If Pean not submitted

within time limit

To be
applicable on

COC resolved
for
everyone 66%
.

liquidation
value votes
by
Approved Plan
in contravention
Appeal of Law
CD contravenes the
Irregularity in exercise
of powers

of during Plan & affected person

one RP CIRP

grounds operational
provided
creditors debts
for
not
files application
order
to NCLT

& it
CIRP costs not provided for passes
of Rejection of
Resolution Plan
Plan doesn't with criteria
comply IBBI

PROCESS OF
LIQUIDATION STARTS

© CA Shivangi Agrawal
 of Liquidation
Order
grounds
be
passed
above
may
on

Deemed be notice
of discharge Employees
to to etc .

where
except business
Appointment of Liquidator is continued

Resolution
Professional
to

shall have all

act as
Liquidator KMP
written
powers BOD
of
his
subject consent
to ,

and extend
personnel to
all assistance to
If
Liquidator
Plan was
Board
RP doesn't
rejected recommends
on
OR or

failure to
replacement give written
RP
meet
of for consent

requirements reasons in

writing
AA
Board Name
directs within such IP

to
propose a 10
days
is
Photoed is
appointed
with
name
written
as
Liquidator
consent

Powers )
of
and Duties
Liquidator Csec -35

settle claims
Verify
claims
,
Invite and

custody/
Take into all assets etc .

Evaluate Assets
Property & prepare report
protect /
assets
properties
business
Carey auction / transfer / in
specified manner
sell
by
property make Instrument
Negotiableadministration
endorse
Draw ,
accept ,
,

to
Take out in
official name letter
of
deceased contributory
assistance
Obtain
professional
suits
Institute
undervalued/ transactions
Investigate affairs
-

Preferential
to actions to / execute / verify deed document
sign
take all ,

bond etc .

Apply © CA Shivangi Agrawal specified functions

for necessary
to AA orders Other
,
Liquidator also has power to
info Creditor
may
access .

require Liquidator to provide any financial info to

them -

Provide
info /
within
Liquidator days
AND → 7 →

for doing
reasons not so .

Liquidation Estate

Inclusions Exclusions

Assets which has 3rd

party
over CD Owned in
by
ownership
Encumbered
rights
Assets
CD 's
possession
/ Assets
Collateral held
by
Tangible Intangible financial service providers
Ownership of Assets
determined court Personal assets
of
by shareholder / partner
Assets recovered
through
proceedings Assetsof Indian/ foreign
Assets
over
issued
which
as collateral

creditors have
subsidiary
Other assets
specified
relinquished right
Proceeds
Liquidation
by Board

of
Property Insolvency
at commencement

Gee -38)
consolidation
of claims

commencement
of Liquidation Proceedings
days
within 30

Liquidator to claims
of/ creditors Doc
collect with

Information utility supporting

record with

withdraw
Verity claims within
days from
30
May within
last date
of receipt of claims vary
or

days of
14
other document
May require it
and then . submission

may
-

Admit Record
Reject reasons

Appeal
such
within 14
Decision to
daysAA of receipt of

Liquidator shall determine value

© CA Shivangi
specified by Agrawal
of
Board
claims
.
in manner
After collation
claims
of ,
Preferential
transactions

check
for undervalued Transactions

and
Apply to Extortionate credit Transactions
AA
accordingly
for appropriate passed
orders to be

(see 533
of
Distribution Assets -

I IRP
Liquidation
and costs in
full
Liquidation
for
proceeding
workmen's Dues 24 months
2

commencement date
AND

Debts secured creditor

of
other than
3
Wages
and
Unpaid
dues to
employees
months
for preceding
12
workmen

to unsecured creditor
4 financial Debts

5
Amt due to
CG / SG
AND

Debts
of
secured
Interest
creditor
unpaid following enforcement
of security
Debts and Dues

Remaining
6

shareholders
7
Preferenceshareholders / Partners
8
Equity
Any contractual
arrangement
with
equal ranking if disrupting
disregarded
shall
of priority
order be

Liquidator shall distribute

proceeds within 90
days
from receipt of Amount to stakeholders

completely liquidated
when assets

Liquidator shall make

application
to AA
for
dissolution

© CA Shivangi Agrawal