Insolvency and Bankruptcy Code, 2016

TAKE OVER OF BUSINESS OF CORPORATE DEBTOR

Taking over the Corporate Debtor As
IRP/RP
-Finance
-Labour/Employees
-Security
-Essential Services
-Litigations
2
Letter/ Email to Suspended Directors

 Write a letter/e-mail to suspended directors (Sample

attached)
 Attach certified copy of letter
 Sent email on id as available at available on MCA
website
 Carry hard copy of letter and take
receiving/acknowledgement from Suspended
Directors
 Finance

Back Bone of every organisation

and first thing is to take control
of Finance and Accounts to take
effective take over of entire
organisation.
 Finance

 Preliminary investigation from MCA Site before giving

consent or at the time of appointment as IRP
 Location of operations
 Location of Books of Accounts
 Know completeness of books of Accounts ;from ROC
filings
 Finance……

Get the following Information at the time of first visit to the

CD apart from having organisation chart;
 Officer in charge (CFO, Accounts Manager)
 Nature of operations and current status (closed or going
concern)
 Accounting Software in use
 Completeness of books of Accounts
 Status of Compliances (TDS, GST )
 Status of ROC Compliances
 Finance –Major Action

 Take the backup of books of accounts as soon as possible ,

take the help of IT expert in case IRP/RP or his team is
unable to do so
 Take back up of all emails
 Understand IT system and take control
 Take latest trial balance and ascertain all list of all bank
accounts
 Send intimation to all banks to freeze the debit
transactions in all bank account (Sample letter attached)
 Finance………..

Possibility of bank accounts

in the name of CD but not
appearing in books
 Finance……

 Ascertain the fixed Assets (majorly land and building

) refer claims details of FC
 Status of Inventory and location of all inventory
 Ascertain movable assets like Car etc.
 Get list of Debtors and send letter to them (Sample
letter attached)
 Review the information available
 Make the questioner and meet with entire finance
team to understand process and procedure
 Finance……

 Identify related parties

 Detail of Directors
 Detail of Shareholders
 Detail of major debtors and creditors
 Finance……..Other Source of
Information

 ROC records
 Statutory Authorities
 Statutory Auditor
 Internal Auditors
 Banks /Financial Institutions
 Finance –Power of IRP/RP

 17(1)(d) the financial institutions maintaining accounts of the

corporate debtor shall act on the instructions of the interim
resolution professional in relation to such accounts and furnish
all information relating to the corporate debtor available with
them to the interim resolution professional.

 17(2)(d) IRP shall have the authority to access the books of

accounts, records and other relevant documents of corporate
debtor available with government authorities, statutory
auditors, accountants and such other persons as 1[may be
specified; and]
Finance……….Real Estate Projects

 Number of Projects ,nature and location

 Project plan
 Stage of completion
 Total expenses incurred
 Number of allottees (class of creditors)
 Status of licences
 Status of dues to statutory authorities
 Amount recoverable from allottees
 Ownership or development rights
 Intimation of CIRP

 GST department
 PF/ESI Department
 Income Tax Department
 RERA (in case of Real Estate)
 All bankers
 All Financial Institutions
 Local Administration
 All other Authorities as applicable
 Electricity department
 Other Co-ordinations

 With the person who maintain the website of CD

 E mail service provider
 IT (Infra) service provider
 Accounting software service provider
 Internet service provider
 Labour/Employees

 Get the organisation chart

 Get list of all Labour and employees with Cost to company
and contact details
 Current status of organisation (operational/non-
operational)
 Key persons and their roles
 Pending dues to Labour/Employees
 Issue letter to employees and affix the same on all
locations of (plant/office/site) (Sample of letter attached)
 Labour/Employees

 Get the organisation chart

 Get list of all Labour and employees with Cost to company and
contact details
 Current status of organisation (operational/non-operational)
 Key persons and their roles
 Assess man-power requirement during CIRP
 Pending dues to Labour/Employees
 Issue letter to employees and affix the same on all locations of
(plant/office/site)
 Review the disbursal of salaries in last six months
Labour/Employees (Remember)

 Never be personal with any employee/KMP/Director

etc.
 Never try to sack any employee /labour as it is a very
sensitive thing in every organisation
 No false commitment
 Create confidence among working staff and deal
them diligently
 Never share your things related to CIRP process with
any employee
 Employees (Section 17)

Section 17(1) (c) the officers and

managers of the corporate debtor shall
report to the interim resolution
professional and provide access to such
documents and records of the corporate
debtor as may be required by the interim
resolution professional;
Employees/Auditor (Section 28)

Section 28(1) Notwithstanding anything contained in any other law

for the time being in force, 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: -
(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.
 Non Cooperation (Section 19)

 (1) The personnel of the corporate debtor, its promoters or any

other person associated with the management of the corporate
debtor shall extend all assistance and cooperation to the interim
resolution professional as may be required by him in managing the
affairs of the corporate debtor.
 (2) Where any personnel of the corporate debtor, its promoter or
any other person required to assist or cooperate with the interim
resolution professional does not assist or cooperate, the interim
resolution professional may make an application to the Adjudicating
Authority for necessary directions.

NEVER DELAY
 Security
Section 18 : The interim resolution professional shall
perform the following duties, namely;
(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
including -
(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;
 Security

(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; : -
 Security

 Number of locations
 Current arrangement of security
 Security requirement
 Status of CCTV
 Tender/Quote for Security
 Provision for payment for Security ??
 Help from local administration
 Essential Supplies

Section 14 The supply of essential goods

or services to the corporate debtor as
may be specified shall not be terminated
or suspended or interrupted during
moratorium period. (Major issue
electricity ,where plant and office is at
same location)
 Essential Supplies
32. Essential supplies.
The essential goods and services referred to in section 14(2) shall
mean-
(1) electricity;

(2) water;

(3) telecommunication services; and

(4) information technology services,

to the extent these are not a direct input to the output produced
or supplied by the corporate debtor.
 Essential Supplies

Illustration- Water supplied to a corporate

debtor will be essential supplies for
drinking and sanitation purposes, and not
for generation of hydro-electricity.
Major issue: Electricity, rent, telephone
etc.
 Litigations (Moratorium)

……………Applicability of Section 14………..

Sources to know Pending litigation;
- Get list from CD
- From website of various courts
- Through claims received
- Fresh Litigation
- Communication with department for CIRP
Thank You
Thank You

CA.Pravin Agrawal
Insolvency Professional
Mobile No. 9314516767
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