Steps For Corporate Insolvency Resolution Process

Perturbed & Distressed By Bad Debt?

It is a known fact that bad debt is an adverse factor and if not recovered, it becomes detrimental to the financial health of the Creditor, be it an individual or a corporate.

In pursuing the recovery of your debt, many a time, the debtor evades or dodges, making it obvious that he is not interested or capable of repaying the debt.

Effective Way & Means To Recover Debt

As a creditor, you should be aware of your rights in order to recover debt from a corporate debtor in various ways. Insolvency and Bankruptcy Code, 2016, is a very effective instrument if the amount owed to you is one lakh or more. The Code is an amalgam of different earlier codes & provides a single window clearance system.

Muds (Loan Recovery)

Be Acquainted Of Corporate Insolvency Resolution Process

In case of initiation of the insolvency process, there are certain eligibility criteria laid down by the Insolvency and Bankruptcy Code, 2016.

  • If a default has occurred.
  • The Creditor should owe the debt.
  • The debt should be legally assigned to the debtor and transferred.

There are two different Sections in the Code that caters to the Financial and Operational creditors respectively.

Factors:-

Section of I & B Code, 2016, applicable!

  • People who can avail
  • Claim Amount
  • Time Frame

Financial Creditors:-

Section 7!

  • Financial Institutions, Banks, homebuyers, etc
  • One lakh or more
  • Six months (approximately)

Operational Creditors:-

 Section 9!

  • Traders, manufacturers, Employees, etc.
  • One lakh or more
  • Six months (approximately)

Decode The Code: Step-By-Step

Step 1. Issuance of Notice: A Notice shall be served by the creditor to the corporate debtor, granting him 10 days and requesting to pay the dues.

Step 2. Initiation of Insolvency Resolution Process: In case of failure of any positive response by the debtor, the creditor can file an application in NCLT against the corporate debtor and initiate insolvency.

Step 3. Admittance of the Application: Within 14 days of submitting the duly filled application, it shall be accepted and the corporate insolvency process shall begin from the date.

Step 4. In Case of Rejection of Application: In case of rejection, the applicant shall have to remove the errors pointed out by the authority, within 7 days.

Step 5. Name of Proposed Resolution Professional: The name of the resolution professional has to be proposed along with the application.

Once the application is accepted, the adjudicating authority proceeds with the process of insolvency in full earnestness.

On average, it takes around six months for this process to be completed.

Can You Do It Independently?

Frankly, if you are a layman, it is an arduous task to accomplish. There are many legalities that have to be followed and if any discrepancy remains, your application shall be rejected.

Only a professional sound company, firm or individual can help you in successfully recovering your dues legally and in a stipulated time.

There are extensive paperwork and a prompt follow up that needs to be taken up, after the initiation of the insolvency process.

Muds (Insolvency)

Where To Seek Help?

Obviously, your best bet would be to select a firm that has an exemplary track record in this field, that which hires the best of professionals and has successfully closed many deals.

You would surely not want to increase your anxiety by relying on someone who is novice and inexperienced, for the simple reason that your problem might not be solved and your debt may keep hanging.

The intricacies of such legal matters as insolvency can be best tackled by professional firms who possess the infrastructure, resources and tons of experience.

“Take MUDS advantage which will be with you, from the initiation to the closure of the matter, saving your time, energy and money.”
-Shweta Gupta, Founder, and CEO, MUDS

By | 2019-04-18T11:45:57+00:00 April 10th, 2019|Insolvency Education Series|0 Comments

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