Article. Checklist on Corporate Insolvency Resolution Process- Financial Creditors

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1 Article Checklist on Corporate Insolvency Resolution Process- Financial Creditors Corporate Law Services Group 19 th January, 2017 Check at: for more write ups. Copyright: This document is the property of Vinod Kothari & Company and no part of it can be copied, reproduced or distributed in any manner. Disclaimer: This document is intended to initiate academic debate on a pertinent question. It is not intended to be a professional advice and should not be relied upon for real life facts.

2 Checklist on Corporate Insolvency Resolution Process [From the point of view of Financial Creditor] Select the Insolvency X day professional out of the list of Insolvency professional as registered with the IBBI. Take consent letter from the X+1 day selected IP to act as IRP in Form 2 of the AAA rules, 'Section 7(3) of Financial creditor, either by X+2. Rule himself or jointly, shall make 4 of the AAA application for initiating the rules, corporate insolvency resolution process against the corporate debtor in Form-1. The application shall be accompanied by the following: 1. Attachments as provided in Form 1 (Proof of claim) 2. Form 2 (Consent letter) along with Certificate confirming eligibility of the IP 'Section 7 (4) and (5) of the Code 'Section 7 (7) of The Adjudicating Officer shall, within 14 of the receipt of the application, ascertain the existence of default as evidenced by the financial creditor. Once satisfied, shall admit such application. The Adjudicating authority shall communicate the order x+2+14 or Y day (Hereinafter Y has been taken as date of Commencement of Resolution plan) Y+7 The resolution process shall commenced from the date of admission of the application.

3 on admission within 7 of admission to the Corporate Debtor and the Financial Creditor 'Section 16 of The Adjudicating authority Y+14 shall appoint interim resolution professional within 14 from the insolvency commencement date. 'Section 15 of Insolvency Professional Y+14+3 and shall make public Rule 6 of the announcement of the IRP Rules, corporate insolvency resolution process within 3 from the date of his appointment in Form A. The same shall be published in 2 newspapers i.e. one in English and one in regional language. The same shall also be published on the website of the Corporate debtor and the website designated by the board for the purpose. Rule 27 of the The IRP shall within 7 Within Y+7 IRP rules of his appointment, appoint 2 registered valuer to determine liquidation value of the Corporate debtor Rule 35 of the IRP rule The Registered valuer shall submit the an estimate of liquidation value computed in accordance with the rule after physically verifying the The expenses of the public announcement shall not form part of the insolvency resolution process and then same shall be borne by the applicant.

4 assets of the Corporate debtor 'Rule 6 (2), 7, 8 and 9 of the IRP Rules, 'rule 13 of the IRP rules, Rule 14 of the IRP rules, 'Section 21 of rule Submission of proof of claim to the interim resolution professional within 14 from the date of appointment of the Insolvency professional as IRP: By the Operational Creditors: In Form B By Financial Creditors: In Form C By Workmen and Employees: In Form D or in case of numerous employees in Form E The interim Resolution Professional shall verify every claim as on insolvency commencement date within 7 from the last date of receipt of the claim and thereupon shall maintain a list of creditor containing name of the creditor, amount claimed by them, the amount of their claim admitted and the security interest. The list of creditors shall be displayed on the website of the Company ( the same shall be presented at the first meeting of the Committee) Interim resolution professional shall after Y i.e. Y+28 Within Within Y+28+7 Y+28+7 Within Y Creditor shall bear Cost of proof The claims in foreign currency shall be valued in Indian Currency at the rate published by RBI The Committee shall comprise of

5 17 of the IRP, Collation of the claims, constitute a Committee of the creditors within 30 from the date of appointment of the resolution professional 'Rule 17 of IRP rules, Rule 19 of IRP rules, 'Rule 17 and 22 of IRP rules, Section 22 of Rule 35 of the IRP rule Interim Resolution Professional shall file a report of Constitution of Committee to the Adjudicating Authority on or before the expiry of 30 from the date of his appointment Drafting and Sending Notice of Committee Meeting by IRP to every participants (7 before the meeting) Interim Resolution Professional shall convene first meeting of the Committee within 7 of filing of report Committee may, by majority vote, appoint the IRP as RP or replace the IRP by another RP The Committee shall communicate its decision to the IRP, Corporate Debtor and to the Adjudicating authority. The Resolution professional shall finalise the liquidation value and submit the same to the Committee. Within Y Within Y within Y i.e. Y+51 all the financial creditors. Notice may be sent by hand delivery or Post and electronic means IRP shall act as a chairperson of the meeting Quorum is 1/3 Assuming that the Company has appointed IRP as RP

6 Section 29 opf The Resolution professional and shall prepare Information rule 36of the memorandum in such Form IRP rules as may be prescribed Section 30 of Section 30(2) of Section 30(4) of Section 30(6) of A resolution applicant shall submit Resolution plan to the RP prepared on the basis of IM. (within 30 before the expiry of maximum period permitted to complete corporate insolvency resolution process) The RP shall verify each resolution plan received by him and thereafter shall present to the committee his approval for the Resolution plan Committee to approve the Resolution plan by a vote of not less than seventy five per cent. of voting share of the financial creditors. The RP shall submit the Resolution plan as approved by the Committee to the Adjudicating Authority Say within Y =Y+160 RP shall share the IM with the Committee after receiving and undertaking from them that they will maintain confidentiality of the IM and shall not use the same for other purpose. Section 12 of the Code provides that the CRP process shall be completed within 180 from the date of admission of the process. Resolution applicant may attend the meeting in which the resolution plan is to be considered by the Committee

7 Section 31 of After satisfying with the and content of resolution plan the Rule 39 of the Adjudicating Authority shall IRP rules approve the resolution plan In case the Adjudicating Authority Rejects the Resolution plan The Adjudicating Authority shall pass the order requiring the Corporate Debtor to be liquidated in the manner as prescribed in Chapter III of The Order shall be binding on the corporate debtor and its employees, members, creditors, Guarantors and other stakeholders involved in the resolution plan. To read our other resources click here