Liquidation under Insolvency and Bankruptcy Code

Earlier the winding up of the company was initiated and conducted under the Companies Act, 1956 while the same has got annulled after the advent of Insolvency and Bankruptcy Code.

Exemption from the strict adherence to the timeline of 270 days of the Insolvency and Bankruptcy Code, 2016

The Corporate Insolvency Resolution Process has to be completed in 180 days along with the provision of 90 days of extension or maximum allowed time is 270 days.

Persons upon whom the Insolvency code is applied

The code is not applicable to corporates in finance sector. Thus no petition shall be entertained by NCLT filed against Banks, Financial Institutions, Insurance Company, Asset Reconstruction Company, Asset Reconstruction Company, Mutual Funds, Collective Investment Schemes or Pension Funds.

When can Insolvency proceedings commence?

When the corporate debtor starts making default in the payment of the amount to its creditors and it goes on for some time, subsequently that corporate debtor/company is deemed as insolvent.

Defense by the Corporate Debtor

In case of financial creditor being an applicant to the insolvency process, an application would be made to Adjudicating Authority and a copy of such application would be sent to the corporate debtor.