INSOLVENCY AND BANKRUPTCY CODE 2016
OPPORTUNTY TO COMPANY SECRETARIES
BY
OMKAR V DEOSTHALE
COMPANY SECRETARY IN PRACTICE
[email protected]
1. No single umbrella legislation for Insolvency In India
2. Instead slew of legislations like:
1.
2.
3.
4.
5.
6.
7.
Companies Act
SICA
RDDBFIA
SARFAESI
Presidency Town Insolvency Act, 1909
Provincial Insolvency Act ,1920
Various forums like DRT, High Court, BIFR, Civil Courts, etc.
3. Official Liquidator system is failure
4. DRT does not bring early results
5. Vicious Circle:
Increase in troubled corporates – ripple effect of less recovery – results in delayed
recovery – results in loss of money and its value and thereby result in availability
of less credit – results in slow recovery
Preamble of Code
AN ACT TO CONSOLIDATE AND AMEND THE LAWS
RELATING TO REORGANISATION AND INSOLVENCY
RESOLUTION OF CORPORATE PERSONS, PARTNERSHIP
FIRMS AND INDIVIDUALS IN A TIME BOUND MANNER FOR
MAXIMISATION OF VALUE OF ASSETS OF SUCH PERSONS,
TO PROMOTE ENTREPRENEURSHIP, AVAILABILITY OF
CREDIT AND BALANCE THE INTERESTS OF ALL THE
STAKEHOLDERS, INCLUDING ALTERATION IN THE ORDER
OF PRIORITY OF PAYMENT OF GOVERNMENT DUES AND
TO ESTABLISH TO AN INSOLVENCY AND BANKRUPTCY
BOARD OF INDIA, AND FOR METTERS CONNECTED
THEREWITH OR INCIDENTAL THERETO.
SCHEME OF THE ACT
 DEVIDED INTO 5 PARTS
 Part I – Preliminary
 Part II – Insolvency Resolution and Liquidation of
Corporate Persons
 Part III - Insolvency Resolution and Liquidation of
Partnerships and Individuals
 Part IV – Insolvency Professionals, Agencies and
Information Utilities
 Part V - Miscellaneous
REGULATIONS
• The Insolvency and Bankruptcy Board of India (Insolvency Professional
Agencies) Regulations 2016
• Insolvency and Bankruptcy Board of India (Model Bye Laws and Governing
Board of Insolvency Professional Agencies) Regulations, 2016
• The Insolvency and Bankruptcy Board of India (Insolvency Professionals)
Regulations, 2016
• The Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules,
2016
• The Insolvency and Bankruptcy Board of India (Insolvency Resolution Process
for Corporate Persons) Regulations, 2016
• The Insolvency and Bankruptcy Board of India (Liquidation process)
Regulations, 2016
INSOLVENCY RESOLUTION PROCESS
 Sections 6 to 32 of Code.
 IP Process - Cr and Dr.xls
 Resolution professional and Creditors Committee
Driven process
 75% of Financial Creditors are KINGS
Liquidation
 Section 33 of the Code
 Section 44 – Beware of Preferential Transactions
 Section 45 Undervalued Transaction
 Section 50 Extortionate Arrangement
 Distribution – Section 52 (Secured Creditors) Section
53 general
OTHER PROCESSES
 Fast Track Insolvency Process – 55 to 58
 Voluntary Liquidation – Sections 59
 Only if default has not occcured
Important Terms
 Financial Creditor
 Operational Creditor
 Default
 Applicant
 Adjudicating Authority – NCLT (for Corporates and
LLPs)
 Resolution Professional and Liquidator
OPPORTUNITY FOR CS –
DISCUSSION FORUM
 Resolution Professional
 Consultant
 NCLT Appearance
 Restructuring Strategist (either for Creditor or
Debtor)
 Filling to Information Utility
 Transactions to be entered into needs to be
checked to avoid being banned transactions in
Insolvency process
SPECIAL SKILLS TO BE ACQUIRED
 Knowledge of functioning of Bank is must
 Working Knowledge of Accounts and Finance
 RP – Knowledge of management is must
 Do a Due Diligence before getting into RP of any
Company.
 Company Secretary posses the required skills, Courage
to enter in this area is must.
THANK YOU.
[email protected]