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04 · Business & Corporate

Insolvency & Bankruptcy

Insolvency proceedings deal with companies, firms and individuals who cannot pay their debts, aiming at resolution or, failing that, liquidation.

Proceedings under the Insolvency and Bankruptcy Code, 2016, when a company or person cannot pay its debts.

What this covers

  1. 01Corporate insolvency resolution process
  2. 02Claims by financial and operational creditors
  3. 03Liquidation proceedings
  4. 04Personal guarantor insolvency
  5. 05Pre-packaged insolvency for small businesses

How it generally works

The Insolvency and Bankruptcy Code, 2016 governs insolvency. For companies, a financial or operational creditor can apply to the National Company Law Tribunal when there is a default of at least one crore rupees; the company itself can also apply.

Once admitted, a moratorium protects the company's assets, an insolvency professional takes over management, and a committee of creditors considers resolution plans.

Insolvency of individuals and partnership firms is dealt with by the Debt Recovery Tribunal.