PETITION FOR CORPORATE INSOLVENCY RESOLUTION PROCESS
WHO CAN GIVE PETITION FOR CORPORATE INSOLVENCY RESOLUTION PROCESS
- A financial creditor
- Operational creditor
- A corporate applicant which include corporate debtor or its shareholders, partners, management personnel or employees
These entire people can give application for initiating resolution process on a company with the authority
Financial creditor is those creditor whose relationship with the company is financial and not of some other sorts ex. Debentures
The operational creditor is those creditors who have any debt in regards to goods and services and employment and also includes legal assignee of that person or any debt arising under any law for the time being a force in India.
How financial creditor can file a petition to adjudicating authority?
A financial creditor either individually or through others financial creditor can file an application in form no. 1 of insolvency and bankruptcy for initiating the resolution process against the corporate debtor. After receiving the application, authority within the 14 days, will ascertain the existence of default if there is not following exception:-
- If the default has occurred and application under is complete and there is no pending proceeding against that resolution professional will admit such application
- If default has not occurred against and application is incomplete and there is pending application against resolution professional then it has to reject the application
- Adjudicating authority if going to reject application have to send notice of 14 days to rectify its mistake
How the operational creditor will file a petition to adjudicating authority
An operational creditor can issue an order of demand in form no. 3 as a notice to pay unpaid debt with a copy of invoice demanding payment of an amount of default in such form
After getting notice, the debtor shall within a period of 10 days of receipt of demand notice show the following things to the operation creditor:-
- If already there is the existence of disputes or any pendency of suit or arbitration
- Repayment of operational debt
If a debtor fails to reply the notice within 10 days of the date of delivery or fail to show any existence of disputes or do not receive payment, he can file an application with the authority in form no. 5 for initiating a resolution process
The adjudicating authority will accept or reject the proposal within 14 days of application received by them and will give 7days notice in case of rejecting the notice and to give rectification of mistake
How corporate applicant will file application to adjudicating authority
The corporate applicant will file application in form number 6 for initiating corporate resolution process. Along with the application relevant documents like books of account and another relevant document may be submitted. Details of resolution professional to be appointed as an interim resolution professional
The adjudicating authority will accept or reject the proposal within 14 days of application received by them and will give 7days notice in case of rejecting the notice and to give time for rectification of mistake.
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