Insolvency and Bankruptcy
- Insolvency and Bankruptcy
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Insolvency and Bankruptcy Lawyer in Delhi
The Insolvency and Bankruptcy Code was introduced in 2016. With this, the Indian legal system has streamlined all insolvency and bankruptcy law. Individuals and businesses can now seek relief from insolvency without long wait times.
If you are looking for the IBC as it applies to companies, they are adjudicated by the National Company Law Tribunal, commonly known as NCLT. An NCLT lawyer in Delhi can provide corporate insolvency services for companies.
If you are looking to learn about insolvency and bankruptcy for individuals, read on.
Insolvency and Bankruptcy Code, 2016
The IBC 2016 brings a time limit to the resolution process. The basic process is as follows:
- The initiation of the insolvency process:
The creditor or debtor may begin the resolution process. An insolvency professional administers the process.
- Decision of the insolvency process:
A Committee of Creditors (CoC) is formed, on the advice of the insolvency professional. There are two possible decisions that come out of the committee. The first is a repayment schedule, that grants flexibility to the debtor to make his payments. The second is a liquidation of the debtor’s assets, to recover some of the debt owed to creditors.
The insolvency professional is an active part of the entire process. It is therefore an important role in the insolvency resolution process.
Debt Recovery Tribunal
As part of the IBC 2016, the Debt Recovery Tribunal (DRT) deals with individuals. The National Company Law Tribunal handles insolvency and bankruptcy for companies and limited liability partnership (LLP).
There are 33 DRTs in India, and 5 Debt Recovery Appellate Tribunals (DRAT). Appeals from DRTs go to DRATs, and further appeals go to the Supreme Court of India.
In the DRT, debtors who qualify can apply to be relieved from debts that are under a certain amount. Alternatively, creditors can apply for a recovery of debts due.
If an insolvency resolution takes place, one of two things can happen. The resolution process can recommend a repayment plan, if approved by the creditors. The DRT then passes a binding order for this repayment plan.
This repayment plan may not be accepted by the creditors or the DRT. In this case, the debtor or creditor may move towards a bankruptcy and liquidation order. The debtor’s assets are then liquidated and distributed in a prescribed manner.
Difference between Insolvency and Bankruptcy
Insolvency is the condition where one has debts greater than their assets. In particular, an individual is insolvent when he is unable to pay off debts from his business when they are due.
Insolvency is determined by two tests. The first test is that the business is unable to pay off its debts in a timely manner. The second is that the business’ liabilities exceed its assets.
It is necessary for insolvency professionals to conduct an investigation for dispute resolution. Due diligence of financial records can determine the exact date of insolvency for the defaulting person or business.
There are two things that can signal a business to be insolvent. The first is that a creditor of the business has begun legal proceedings. This may be in the form of court action or a company liquidation, in order to recover assets. The second is that payments are not being made to creditors on time.
Other common signs of insolvency for a person or company are:
- Dishonoured cheques
- Losses declared every quarter, with no sign of improvement
- Failure to pay taxes
These are some of the most common signs that will tell you about a person or company being or close to being insolvent.
Bankruptcy is a legal status imposed by a court in India. This happens to a company or individual that is unable to repay its debts due to banks and other creditors.
The overhaul of the bankruptcy act was done primarily for efficiency. Before IBC 2016, proceedings required companies to go through courts to wind up.
Streamlining the bankruptcy process does two things. First, companies are able to wind up faster. This allows businessmen to move quicker towards profitable ventures. Second, it prevents borrowing strain on India’s banks and financial institutions.
Insolvency and Bankruptcy Law Firm in New Delhi
Choosing the best lawyer in Delhi for commercial litigation is difficult. This decision is influenced by a range of factors. Your circumstances, budget, and expectations will all define the choice that you make.
That said, RSB & Co. with law offices based in South Delhi has a reputation for IBC cases. We guide clients with a detailed knowledge of the Insolvency and Bankruptcy Code. We help debtors with filing for bankruptcy and debt relief. We also help creditors with debt collection and recovery of debts through bankruptcy law.
The team of corporate and commercial lawyers is led by Advocate Rajbir Singh Bal, LL.B. (DU). Advocate Bal has years of experience in insolvency and bankruptcy in Delhi. In addition, he has practice at all levels of courts including the Delhi High Court and the Supreme Court of India.
The combination of professional success and client care has led to RSB & Co. being thought of a leading law firm in Delhi. RSB & Co. provides full details of the services they offer on request, and can be contacted for legal advice regarding your bankruptcy issue here.