By Revanth Ashok (Associate, Prodigy Legal LLP)
This is for educational purposes only and is not legal advice. Please discuss any legal questions with a lawyer.
The Insolvency and Bankruptcy Code, 2016 (“the Act”) was enacted to amend and consolidate the laws relating to reorganisation and insolvency resolution of corporate persons, partnership firms and individuals. The act purports to make the proceedings under the Act efficacious by specifying the timelines by which the proceedings must conclude. IBC, therefore, would help both the creditors and debtors in maximizing and realizing the value of assets through a time-bound and streamlined process.
This is a two-part article. The first part will deal with sections 6 through 12 of the Act and the second part will deal with the rest of the provisions involving CIRP. This article outlines who may apply for a CIRP, when an application can be made, the time limit to complete the CIRP, and how an application can be withdrawn.
The Corporate Insolvency Resolution Process (“CIRP”)
Sections 6 through 32 of the IBC specifically deal with the CIRP. The application to initiate a CIRP is made before the National Company Law Tribunal (“the NCLT”). Such applications can be made by the corporate debtor or the financial creditor or the operational creditor. The application cannot be initiated if there is no default committed by the corporate debtor.
Initiation by the Financial creditor