Question: What Is Insolvency Resolution Plan?

What happens after resolution plan is approved?

Once the resolution plan is approved by the Adjudicating Authority, the Corporate debtor is discharged and the said decision is binding on the creditor.

Thus, the guarantor cannot be said to be discharged of its liability towards the creditor on the discharge of Principal Debtor’s liability under the IBC..

What happens in insolvency proceedings?

Insolvency proceedings against a firm: Step 1: An application may be made either by the company or creditors of the company before the National Company Law Tribunal (NCLT). … Step 3: If insolvency professional fails to come up with a plan then the company goes into liquidation. The board of directors is also suspended.

Who is resolution applicant?

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.

What is the time limit for completion of insolvency resolution process?

one hundred and eighty daysIBC Section 12-Time-limit for completion of insolvency resolution process. (1) Subject to sub-section (2), the corporate insolvency resolution process shall be completed within a period of one hundred and eighty days from the date of admission of the application to initiate such process.

What is insolvency resolution process?

The Corporate Insolvency Resolution Process (CIRP) is a recovery mechanism made available to creditors as under the Insolvency and Bankruptcy Code, 2016 (IBC). In case a corporate entity becomes insolvent (unable to repay debt), the concerned creditor or the corporate entity (the debtor) itself, may initiate CIRP.

What is a resolution plan?

A resolution plan is a comprehensive document, which details the characteristics of a bank and describes the preferred resolution strategy for that bank, including which resolution tools to apply.

How many stages are there in the process of insolvency?

The IBC envisages resolution of such corporate insolvencies in a two-stage procedure. The first stage being the corporate insolvency resolution process (“CIRP”) and the second being the liquidation process.

Who approves resolution plan?

[Sec 31(1)] Approval: The responsibility of approving a resolution plan rests with the CoC, which will approve it with not less than 66 percent voting in favor of it. 1. The amount due to the operational creditors under a resolution plan shall be given priority in payment over financial creditors. 2.

What is the time limit for resolution process under Cirp?

330 daysAs per the provisions of the amended Act, CIRP has to be completed within a period of 330 days from the insolvency commencement date, including any extension of the period granted under the section by Adjudicating Authority, and the time taken in legal proceedings in relation to such resolution process.

Who can initiate insolvency resolution process?

Initiation of Insolvency Proceedings. Section 6 of the Code provides that a financial creditor, operational creditor, or a corporate debtor itself can initiate insolvency proceedings upon any default made by the corporate debtor.

When a company goes into liquidation who gets paid first?

After the costs of liquidation, secured creditors and preferential creditors are paid first, and then unsecured creditors. Creditors with valid specific security over stock and equipment (such as retention of title clauses or leases) generally have priority to recover those items where they can be clearly identified.

What happens in corporate insolvency resolution process?

Corporate Insolvency Resolution Process (CIRP) Corporate Insolvency Resolution Process is a recovery mechanism for creditors. If a corporate becomes insolvent, a financial creditor, an operational creditor, or the corporate itself may initiate CIRP. After making an application then CIRP is initiated.

Who Cannot initiate corporate insolvency process?

Wherein NCLAT held that as per Section 11 of the Code, Liquidator on behalf of Corporate Debtor can not initiate Insolvency proceedings under the Code against other Corporate Debtor, but he can initiate other proceedings against such Corporate Debtor like recovery proceedings etc.

What is corporate insolvency process?

CORPORATE INSOLVENCY RESOLUTION PROCESS: Corporate Insolvency Resolution Process (CIRP) is a recovery mechanism for creditors. If a corporate becomes insolvent, a financial creditor, an operational creditor, or the corporate itself may initiate CIRP.

What is the minimum amount of default in case of individual to initiate insolvency process?

2020, the Government, in exercise of its powers under section 4 of the Insolvency and Bankruptcy Code, 2016 (“Code”)[1] has specified Rs. 1,00,00,000 (Rupees One Crore) as the minimum amount of default for the purposes of triggering insolvency.