When it comes to a detailed and again rather complicated legal framework of insolvency law under the Insolvency and Bankruptcy Code, 2016,(IBC) the key point is the commencement of the Corporate Insolvency Resolution Process (CIRP). This process is intended to assist firms that are in deficit and also to aid in avoiding being caught in the financial debt trap.
The Insolvency and Bankruptcy Code, 2016 (IBC) marks a significant milestone in the realm of insolvency and bankruptcy resolution in India. With its passage by Parliament and Presidential assent on May 28, 2016, the IBC revolutionized the legal framework surrounding insolvency and bankruptcy.
The provisions Insolvency and Bankruptcy Code, 2016 specifically provides for treatment for all sums due to any workman or employee from the provident fund
Main reasons for the delay is the spate of litigations by the promoters. Once the CIRP order is passed, the promoters get into the action with the sole objective of getting back the company at a cheaper price.
interim finance can be raised by the resolution professional appointed by the National Company Law Tribunal (NCLT). The resolution professional is authorized to raise interim finance after obtaining approval from the Committee of Creditors (CoC).
A debt arising from an advance payment given to a corporate debtor for the supply of goods or services would be deemed an operational debt.
Homebuyers could only engage in the IBC procedure as a class of financial creditor. Individual homebuyer rights were absorbed by homebuyer rights as a class.
Both operational creditors and financial creditors own certain advantages over each other. But Financial creditors are given some priorities over other creditors such as they are members of the creditor’s committee and have voting power etc and operational is not a member of the creditor’s committee.
NCLT held that the “interest” component alone cannot be claimed or pursued, in absence of the debt, to trigger a CIRP against the corporate Debtor. Further, the application pursued realization of the interest amount alone is against the intent of the IBC, 2016.
The Liquidator has a fiduciary responsibility with the Company and its creditors. The major goal of choosing a Liquidator is to resurrect a failing firm and operate professionally.
The Supreme Court did not agree to the payment of amounts deposited by the promoter to homebuyers on the grounds that it would be preferential payment to one class of creditors.
IBC is economic legislation and that when it comes to economic legislation, flexibility should be given to the legislature because no economic law can be fool proof at its inception.
IBC was introduced to reorganise, restructure or to consolidate the existing framework into a single law for the purpose of Insolvency and Bankruptcy.
The Committee of Creditors (CoC) is the preeminent dynamic body in a Corporate Insolvency Resolution Process (CIRP). Choices with respect to the organization of the corporate borrower are taken at the gatherings of the Committee, in light of a dominant part vote of the individuals.
Homebuyers are now considered financial creditors, whereas operational creditors, who are from the business world, may have a better understanding of the industry but still lack those rights.
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