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Insolvency and Bankruptcy: Resolution Code

Insolvency and Bankruptcy: Resolution Code. Organized by EIRC of ICAI. CA Subodh Kumar Agrawal 9830022848 Agrawal Subodh & Co. subodhka@yahoo.com Kolkata, Delhi. Structuring of t h e Code. Part - I. subodhka@yahoo.com Agrawal Subodh & Co. Structuring of t h e Code Contd….

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Insolvency and Bankruptcy: Resolution Code

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  1. Insolvency and Bankruptcy: Resolution Code Organized by EIRC of ICAI CA Subodh Kumar Agrawal 9830022848 Agrawal Subodh & Co. subodhka@yahoo.com Kolkata, Delhi

  2. Structuring of the Code Part-I subodhka@yahoo.com Agrawal Subodh & Co

  3. Structuring of the Code Contd….. subodhka@yahoo.com Agrawal Subodh & Co

  4. Default COC ResolutionProcess Failure to Pay whole or any Part or Installment of the Amount of Debt or Interest due(Minimum INR 1 Lakh) • Consists of Financial Creditors only,Excluding Related Parties • Will Confirm or Replace IRP as RP • To Approve Several Actions of RP • CoC Can Replace IP during CIRP by 75% Approval Corporate Insolvency Resolution Process Default Who can File the Application? Appointment of a Resolution Professional • Financial Creditors • Operational Creditors (including Government and Employees/Workmen) • Corporate Debtor Moratorium Period (180/270 Days) Resolution Plan Interim Resolution Professional/Resolution Professional(IRP/RP) • The Resolution Plan Must Provide For: • Payment of Insolvency Resolution Process Costs • Pay Liquidation Value to operational Creditor Before other Financial Creditors • Liquidation value to dissenting FC • Management of the affairs of the Borrower after the Plan is Approved • Implementation and Supervision of the Approved Plan Formation of Committee of Creditor Financial Creditor and/or Corporate Applicant shall Propose the Name of an IRP in the Application No 66% of the Creditors by value to Approve Resolution Plan All Powers of the Board and Management Shall Vest with the IRP/RP. RP is Responsible to Run the Company as a Going Concern during CIRP. YES Implement the Resolution Plan 4 Goes into Liquidation subodhka@yahoo.com Agrawal Subodh & Co

  5. Corporate Insolvency Resolution Process Contd… Moratorium Voting Power NCLT to Declare Moratorium from the Insolvency Commencement until the Completion of Insolvency • Only Financial Creditors have Voting Power in the Committee in the ratio of Debt owed • All decision of the Committee shall be Approved by 66% of Financial Creditor • If all Members are not Present at a Meeting, a Vote Shall not be taken at, and the RP can Seek Vote by an Electronic Vote System • Directors and Others eligible can Attend the Meeting but Would not have any Voting rights. • Moratorium Shall Prohibit: • Institution of Suits • Transfer of Assets • Foreclosure, Recovery or Enforcement under SARFAESI • Recovery of Assets Fast track Insolvency • For Debtors With: • Assets and Income Below a Level • Such Class of Creditors • Other Categories • As may be Notified by the Central Government (Completed in 90 Days) subodhka@yahoo.com Agrawal Subodh & Co 5

  6. CIRP TIMELINE 6 subodhka@yahoo.com Agrawal Subodh & Co

  7. CIRP TIMELINE 7 subodhka@yahoo.com Agrawal Subodh & Co

  8. CIRP TIMELINE 8 subodhka@yahoo.com Agrawal Subodh & Co

  9. CIRP TIMELINE 9 subodhka@yahoo.com Agrawal Subodh & Co

  10. Corporate Resolution Process : Timeline Appl 21(6A)(b) to AA for AR Prov list within 10 days i.e. 100 days Convene And Hold 1st COC Meeting Say EOI to close Appoint 2 Registered Valuer To calculate Liquidation Value Objection to Prov List 105 days and isue of RFRP Verification of Claims (finally) Admission Of Application Preparation of Complete IM Verification Of Claims By IRP 30 days 90 days Public Announcement No. Of Days 21 days 37 days 44 days 3 days Day –ve 14 0 23 days 0 days Max 14 days 14 days 90 days 75 days Submission Of Proof Of Claim Filing of Application To NCLT IRP To Constitute CoC And File a Report Final list of RA and also determination of Preferential Transaction 115 days Appointment of Resolution Professional Form an opinion on Transaction Audit; Publish EOI Declare Moratorium NCLT To Appoint Interim Resolution Professional EOI to be kept open for at least 15 days subodhka@yahoo.com Agrawal Subodh & Co 10

  11. Corporate Resolution Process: Timeline Approval Of Resolution Plan By NCLT To submit the apprroved resolution plan to AA Receipt of Resolution Plan Extention and completion Filing of petition to AA for forensic 165 days 180 days 135 days 270 days subodhka@yahoo.com Agrawal Subodh & Co 11

  12. CIRP Regulations contd.... subodhka@yahoo.com Agrawal Subodh & Co

  13. CIRP Regulations subodhka@yahoo.com Agrawal Subodh & Co

  14. Avoidance of historical transaction, which can be set aside by NCLT Borrowers are personally liable to contribute where they have carried out any of the following transactions: subodhka@yahoo.com Agrawal Subodh & Co

  15. Offencesand Penalties Contd…. subodhka@yahoo.com Agrawal Subodh & Co

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