Sage-Tips

What is the time limit for an operational creditor to initiate insolvency resolution process?

Notwithstanding anything contained in sections 7, 9 and 10 of Insolvency Code, no application for initiation of corporate insolvency resolution process of a corporate debtor shall be filed, for any default arising on or after 25-3-2020 for a period of six months or such further period, not exceeding one year from such …

What is the voting requirement for approval of resolution plan by creditors as per IBC 2016?

Approval of Resolution Plan by Committee of Creditors (CoC) – The Committee of Creditors (CoC) may approve a resolution plan by a vote of not less than 66\%, of voting share of the financial creditors, after considering its feasibility and viability, and such other requirements as may be specified by the IBBI (Board) – …

Who can be initiate a fast corporate insolvency resolution process?

Who can initiate CIRP? Ans: CIRP may be initiated by a financial creditor under section 7, an operational creditor under section 9 and corporate applicant of corporate debtor under section 10 of the Code.

Can operational creditor submit resolution plan?

Corporate Insolvency Resolution Process (CIRP) refers to insolvency proceedings of corporates whereby any corporate debtor who is not able to pay its debt would thereby allow a financial creditor, operational creditor, or the corporate debtor to initiate corporate insolvency resolution process of the debtor itself.

Can operational creditors initiate IBC?

The Operational Creditors are eligible to initiate the Corporate Insolvency Resolution Process against a Corporate Debtor when there is nonpayment of debt owed by the Corporate Debtor.

When it is required to send a notice to operational creditor?

(1) An operational creditor may, on the occurrence of a default, deliver a demand notice of unpaid operational debtor copy of an invoice demanding payment of the amount involved in the default to the corporate debtor in such form and manner as may be prescribed.

Does financial creditor include a secured creditor?

While the term ‘financial creditor’ has been defined as “any person to whom a financial debt is owed and includes a person to whom such debt has been legally assigned or transferred to” , the term ‘secured creditor’ has been defined as “a creditor in favour of whom security interest is created” .

Who are financial creditors?

Financial creditors are those whose relationship with the entity is a pure financial contract, such as a loan or a debt security. Operational creditors are those whose liability from the entity comes from a transaction on operations.

Who Cannot initiate a fast track corporate insolvency process?

Section 55 of the Code of 2016[vi] (through notification)[vii] states that an application for initiation of Corporate Insolvency Process can be made only against these below-mentioned corporate debtors: Small-sized Companies (As defined under the Companies Act, 2013). Start-up Company other than a Partnership Firm.

Who is eligible for fast track insolvency resolution?

The ambit of the said provision covers Small companies, Start-Ups, Unlisted Companies with a total asset value of below Rupees 1 crore. The application to initiate the process can only be made by the specified Category of Persons. The detailed provisions for the initiated procedure are given under section 55 to 58.

Can operational creditor file under IBC?

Under Section 8(1) IBC, an operational creditor may, on the occurrence of a default, deliver a demand notice of unpaid operational debtor copy of an invoice demanding payment of the amount involved in the default to the corporate debtor in such form and manner as may be prescribed.

Who can submit resolution plan IBC?

Resolution Applicant means a person who individually or jointly with any other person, submits a resolution plan to the resolution professional pursuant to the invitation made under clause (h) of sub-section (2) of Section 25. No changes to the IBC Ordinance have been made.