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IMPORTANT ASPECTS OF INSOLVENCY AND BANKRUPTCY CODE, 2016

IMPORTANT ASPECTS OF INSOLVENCY AND BANKRUPTCY CODE, 2016. What is a Code?. What is Insolvency and Bankruptcy?. What is Insolvency and Bankruptcy Code?. Applicability. 1. Adjudicating Authority. Who Can be an Insolvency Professional?

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IMPORTANT ASPECTS OF INSOLVENCY AND BANKRUPTCY CODE, 2016

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  1. IMPORTANT ASPECTS OF INSOLVENCY AND BANKRUPTCY CODE, 2016

  2. What is a Code?

  3. What is Insolvency and Bankruptcy?

  4. What is Insolvency and Bankruptcy Code?

  5. Applicability

  6. 1. Adjudicating Authority

  7. Who Can be an Insolvency Professional? An individual shall be eligible for registration, if he • Has passed the Limited Insolvency Examination within twelve months before the date of his application for enrolment with the insolvency professional agency; • Has completed a pre-registration educational course, as may be required by the Board, from an insolvency professional agency after his enrolment as a professional member; and • Has:- i) Successfully completed the National Insolvency Programme, as may be approved by the Board; ii) Successfully completed the Graduate Insolvency Programme, as may approved by the Board; iii) Fifteen years of experience in management, after receiving a Bachelor’s degree from a university established or recognised by law; “or” iv) Has ten years of experience as- i) Chartered Accountant registered as a member of the Institute of Chartered Accountants of India. ii)Company Secretary registered as a member of the Institute of Company Secretaries of India. iii)Cost Accountant registered as a member of the Institute of Cost Accountants of India, or iv)An Advocate enrolled with the Bar Council.

  8. Corporate Debtor- means a corporate person who owes a debt to any person. [section 3 (8) of IBC, 2016]

  9. Committee of Creditors comprise all financial creditors The committee of creditors shall comprise all financial creditors of the corporate debtor. (Provided that a [financial creditor or the authorised representative of the financial creditor in class, if it is a related party of the corporate debtor,] shall not have any right of representation, participation or voting in a meeting of the committee of creditors:). • Committee with only Operational Creditors. The Committee shall consist of members: • 1. Eighteen Largest Operational Creditor by Value • 2. One Representative elected by workmen • 3. One representative elected by Employees • Where any person is a financial creditor as well as an operational creditor • 1.such person shall be a financial creditor to the extent of the financial debt owed by the corporate debtor, and shall be included in the committee of creditors, with voting share proportionate to the extent of financial debts owed to such creditor • 2.such person shall be considered to be an operational creditor to the extent of the operational debt owed by the corporate debtor to such creditor Committee with only creditors in a class. Where the corporate debtor has only creditors in a class and no other financial creditor is eligible to join the committee, the committee shall consist of only the AuthorisedRepresentative*(s) who is Resolution Professional selected by the IRP on the bases of choice of the highest number of financial creditors in the class, made in their Form CA. *Inserted by Notification No. IBBI/2018-19/ GN/ REG031, dated 3rd July, 2018 (w.e.f. 04.07.2018)

  10. Who Can Initiate Corporate Insolvency Resolution Process?

  11. Initiation of Corporate Insolvency Resolution Process by Home buyers and allottees in Real esate Development Project: As per the Explanation, inserted under sub-section 8, of section 5 of The Insolvency and Bankruptcy Code, 2016, now homebuyer and allottee under the Real estate Project, can file application in NCLT for initiating corporate insolvency resolution process against the defaulting promoters. The homebuyer and allottee, can Claim their Debts and select their desired Authorised representative in Form CA. They can also participate in Committee of Creditor through an Authorised representative, who shall be an Insolvency Professional. The interim resolution professional shall select the Authorised representative, who is the choice of the highest number of financial creditors in the class in Form CA received under sub-regulation (1) of regulation 12, to act as the authorised representative of the creditors of the respective class

  12. CIRP PROCESS

  13. A declaration from majority of the designated partners, if a corporate person is a limited liability Partnership, or individuals constituting the governing body in case of other corporate Persons, as the case may be, verified by an affidavit stating that- they have made a full inquiry into the affairs of the corporate person and they have formed an opinion that either the corporate person has no debt or that it will be able to pay its debts in full from the proceeds of assets to be sold in the liquidation and, (ii) the corporate person is not being liquidated to defraud any person the declaration under sub-clause (a) shall be accompanied with the following documents, namely: — audited financial statements and record of business operations of the corporate person for the previous two years or for the period since its incorporation, whichever is later; a report of the valuation of the assets of the corporate person, if any prepared by a registered valuer

  14. within four weeks of a declaration under sub-clause (a), there shall be- a resolution passed by a special majority of the partners or contributories, as the case may be, of the corporate person requiring the corporate person to be liquidated and appointing an insolvency professional to act as the liquidator; or a resolution of the partners or contributories, as the case may be, requiring the corporate person to be liquidated as a result of expiry of the period of its duration, if any, fixed by its constitutional documents or on the occurrence of any event in respect of which the constitutional documents provide that the corporate person shall be dissolved, as the case may be, and appointing an insolvency professional to act as the liquidator The corporate person shall notify the Registrar and the Board about the resolution under sub-regulation (1) to liquidate the corporate person within seven days of such resolution or the subsequent approval by the creditors, as the case may be. Subject to approval of the creditors, the liquidation proceedings in respect of a corporate person shall be deemed to have commenced from the date of passing of the resolution.

  15. A presentation by: Jitesh Gupta FCS, PGD-TL, MIMA, MBA, IP J. K. Gupta & Associates ( Company Secretaries ) 257, Vardhman City Center-II, Shakti Nagar Extension, New Delhi-110052. Contact Nos. : 011-23644447/ 49 / 9810043622 Email: jitesh@jkgupta.com Website: www.jkgupta.com

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