Insolvency and Bankruptcy Code [CS Tanuj Saxena]

Sr No




Applicability of the Code

 - any company incorporated under the Companies Act, 2013 or under any previous company law;

 - any other company governed by any special Act for the time being in force, except in so far as the said provisions are inconsistent with the provisions of such special Act;

 - any Limited Liability Partnership incorporated under the Limited Liability Partnership Act, 2008;

 - such other body incorporated under any law for the time being in force, as the Central Government may, by notification, specify in this behalf;

 - personal guarantors to corporate debtors;

 - partnership firms and proprietorship firms; and

 - Individuals, other than personal guarantors.


Non Applicability of the Act

 - Financial Service Providers (e.g. NBFC’s, (Registered with the RBI) MFI’s banks)

 - Individual Personal Guarantors of Individual


Core Services means

 - Services rendered by an information utility


Security Interest

 - right, title or interest or a claim to property, created in favour of, or provided for a secured creditor by a transaction which secures payment or performance of an obligation; and

 - includes mortgage, charge, hypothecation, assignment and encumbrance or any other agreement or arrangement securing payment or performance of any obligation of any person;

 - Security Interest shall not include a performance guarantee.


When Person is eligible to make application under Code

 - Matters relating to the insolvency and liquidation of corporate debtors where the minimum amount of the default is one lakh rupees.

 - The Central Government may, by notification, specify the minimum amount of default of higher value which shall not be more than one crore rupees.


Adjudicating Authority

National Company Law Tribunal


“Initiation Date” means

the date on which application to the Adjudicating Authority is made by a financial creditor/corporate applicant/operational creditor or initiating corporate insolvency resolution process;


Interim finance

 - Any financial debt raised by the resolution professional during the insolvency resolution process period

 - Prior consent of creditors whose debt is secured by an asset before creating any security interest on any encumbered property of the corporate debtor

 - No prior consent of the creditor shall be required where the value of such property is not less than the amount equivalent to twice the amount of the debt.


Persons who may initiate corporate insolvency resolution process

 - Financial Creditor (Section 7)

 - Operational Creditor (Section 9)

 - Corporate Applicant on behalf of Corporate Debtor (Section 10)


Application by Financial Creditor



Annexure to Application Form

 - record of the default recorded with the information utility or such other record or evidence of default as may be specified;

 - the name of the resolution professional proposed to act as an interim resolution professional; and

 - any other information as may be specified by the Board.


Ascertainment of Default by AA

 - Within 14 days of the receipt of the application from the records of an information utility; or

 - on the basis of other evidence furnished by the financial creditor


In case of defect in application ____ days are given to rectify the defect in application

7 days


Communication of acceptance of application to

 - Financial Creditor

 - Corporate Debtor


Communication of rejection of application to

 - Financial Creditor


Application by Operation Creditor




 - Serving of Demand Notice by Operational Creditor to Corporate Debtor

 - Notice of Dispute by Corporate Debtor to Operational Creditor within 10 days of receipt of demand notice

 - After expiry of 10 days if Operational creditor does not receive Notice of Dispute or payment of due, he can file application before adjudicating authority


Mandatory Enclosures

 - Copy of Invoice or demand notice

 - Affidavit to the effect that no dispute of unpaid operational debt

 - Copy of certificate from Financial institution

 - Copy of record with Information Utility

 - Other Proof confirming that there is no payment of unpaid operational debt


Order by Adjudicating Authority

 - Within 14 days of receipt of application


In case of defect in application ____ days are given to rectify the defect in application

7 days


Commencement of CIRP

 - From the date of admission of Application


Application by Corporate Applicant



Mandatory Enclosures

 - Books of Account

 - Information relating to Interim Resolution Professional

 - Special Resolution Passed by Shareholder of the Corporate Debtor or the resolution passed by at least 3/4th of the total number of partners


Order by Adjudicating authority 

 - Within 14 days


Communication of acceptance of application to

 - Financial Debtor

 - Corporate Debtor


Communication of rejection of application to

 - Financial Creditor


In case of defect in application ____ days are given to rectify the defect in application

7 days


Person not entitle to make application

 - Corporate debtor undergoing CIRP

 - Corporate Debtor completed CIRP in last 12 months

 - Corporate Debtor or Financial Creditor who has violated any of the terms of resolution plan approved before 12 months

 - Corporate Debtor under Liquidation


Withdrawal of Application

 - Allow by Adjudicating Authority

 - with the 90% voting share of the committee of creditors


Mandatory actions by Adjudicating Authority after accepting application of CIRP

 - Declare Moratorium

 - Appoint interim resolution professional

 - Public announcement of CIRP and call for submission of claim


Moratorium with respect to

 - Institution of suits or continuation of pending suits

 - transferring, encumbering, alienating or disposing off any of its assets or any legal right or beneficial interest therein

 - any action to foreclose, recover or enforce any security interest in respect of its property including any action under the SARFAESI,2002

 - the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor.

 - Surety in a contract of guarantee to a corporate debtor


Exception to Moratorium

 - Supply of essential goods or services


Effect of Moratorium

 - From the date of order till the completion of CIRP

 - Cease to effect on oder of Liquidation


Appointment of interim Resolution Professional

 - Appointment by Adjudicating Authority

 - Within 14 days from insolvency commencement date

 - Appointment of Proposed RP as IRP


No proposal of RP by Operational Creditor

 - Adjudicating authority make referance to the board to remmend IP

 - Board shall recommend within 10 days


Term asset shall not include following

 - Assets owned by a third party in possession of the corporate debtor held under trust or under contractual arrangements including bailment;

 - Assets of any Indian or foreign subsidiary of the corporate debtor; and

 - Such other assets as may be notified by the Central Government in consultation with any financial sector regulator.


Committee of Creditors




 - By IRP

 - Mandatory to be constituted

 - After collation of all claims received against the corporate debtor and determination of the financial position of the corporate debtor.


Composition of CoC

 - Comprise Financial Creditors of Corporate Debtor


Who can not be part of COC

 - Financial Creditor or Authorised Representative of financial creditor if it is related party of corporate debtor

 - Not applicable if regulated by financial sector regulator if it is related party solely on account of conversion of debt into equity shares, prior to inslolvency commencement date


Voting in COC

All decisions of the committee of creditors shall be taken by a vote of at least 51% of voting share of the financial creditors.


The resolution professional shall make available any financial information so required by the CoC within a period of _______________ of such requisition.

7 days


First meeting of COC

Within 7 days of its constitution


Appointment of Resolution Professional

 - In First meeting

 - by majority vote of not less than 66% of voting share of financial creditors


IRP to continue as resolution professional:

Where the Board does not confirm the name of the proposed resolution professional within ten days of the receipt of the name of the proposed resolution professional, the Adjudicating Authority shall, by order, direct the IRP to continue to function as the resolution professional until such time as the Board confirms the appointment of the proposed resolution professional


Replacement of Resolution Professional by Committee of Creditors

 - Approval by COC by a vote of 66% of voting share

 - Written consent from Proposed Resolution Professional

 - CoC forward name to Adjudicating Authority

 - Adjudicating authority forward name to Board


To whom Notice for meeting of committee of creditors sent

 - Members of the Committee of creditors

 - Members of the suspended Board of Directors or the partners

 - Operational Creditors and their representative if aggregate amount of due is greater than or equal to 10% of the debt


Whether Resolution Applicant can attend meeting of COC

The resolution applicant may attend the meeting of CoC in which the resolution plan of the applicant is considered. But the resolution applicant shall not have a right to vote at the meeting of the committee of creditors unless such resolution applicant is also a financial creditor.


After approval in COC, Resolution Plan shall be submitted to the ___

Adjudicating Authority


Effect of Approval of Resolution Plan by Adjudicating Authority

 - Resolution Plan biding on Corporate Debtor, Employees, members, creditors, guarantors, and other stakeholders involved in resolution plan

 - Moratorium Period shall cease to have effect

 - Forwarding all records to IBBI

 - The resolution applicant shall obtain the necessary approval required under any law for the time being in force within a period of one year from the date of approval of the resolution plan by the Adjudicating Authority or within such period as provided for in such law, whichever is later.

 - Where the resolution plan contains a provision for combination, as referred to in section 5 of the Competition Act, 2002, the resolution applicant shall obtain the approval of the Competition Commission of India under that Act prior to the approval of such resolution plan by the committee of creditors.







Situations when liquidation order is passed by Adjudicating Authority

 - does not receive Resolution plan approved by COC

 Before expiry of Insolvency Resolution Process (180 Days or 180 + 90 days) (90 Days or 90 + 45 Days)

  - Reject resolution plan under Section 31 for non compliance of requirement specified therein


Liquidation order by Adjudicating Authority

 - Decision by COC for liquidation of corporate debtor with 66% voting

 - “Resolution Professional” shall intimate the decision of the CoC to AA at any time during the CIRP but before confirmation of resolution plan,

 - the Adjudicating Authority shall pass a liquidation order.


Contravention of approved resolution plan by the concerned corporate debtor:

 - Any person other than the corporate debtor, whose interests are prejudicially affected by such contravention, may make an application to AA for a liquidation order.

 - On receipt of such application, if AA determines that the corporate debtor has contravened the provisions of the resolution plan, it shall pass a liquidation order.


Consequences of Liquidation Order

Suit or Legal Proceeding

 - no suit of other legal proceedings shall be instituted by or against the Corporate Debtor


 - With the prior approval of the Adjudicating Authority, a suit or other legal proceeding may be instituted by the liquidator, on behalf of the corporate debtor.

 - Legal proceedings may be initiated in relation to such transactions as may be notified by the Central Government in consultation with any financial sector regulator.

Deemed Notice of Discharge

 - The order for liquidation under this section shall be deemed to be a notice of discharge to the officers, employees and workmen of the corporate debtor.

 - Except when the business of the corporate debtor is continued during the liquidation process by the liquidator.


Fees of Liquidator

Fees of the liquidator shall be, for the conduct of the liquidation proceedings, in such proportion to the value of the liquidation estate assets, as may be specified by the Board.


The liquidator shall receive or collect the claims of creditors within a ___________ days from the date of the commencement of the liquidation process.

30 days


A creditor may withdraw or vary his claim under this section within _____days of its submission.

14 Days


Communication of Acceptance or Rejection of claim to be made to creditor and corporate debtor within ________ days

7 Days of Decision


Appeal Against decision of acceptance or rejection by Liquidator within ____ days of receipt of such decision

14 days


Preferential Transaction and Relevant Time

 - With related party (other than by reason only of being an employee), - during the period of two years preceding the insolvency commencement date;

 - other than a related party  - during the period of one year preceding the insolvency commencement date.


Avoidance of Undervalued Transaction

 - With related party  - during the period of two years preceding the insolvency commencement date;

 - other than a related party  - during the period of one year preceding the insolvency commencement date.


Priority order and period for distribution of the proceeds from the sale of the liquidation assets

1. the insolvency resolution process costs and the liquidation costs paid in full

2. the following debts which shall rank equally between and among the following

 - Workmen’s dues for the period of twenty-four months preceding the liquidation commencement date;

 - Debts owed to a secured creditor in the event such secured creditor has relinquished security

3. Wages and any unpaid dues owed to employees other than workmen for the period of twelve months preceding the liquidation commencement date

4. Financial debts owed to unsecured creditors

5. the following dues shall rank equally between and among the following

 - Any amount due to the CG and the SG including the amount to be received on account of the Consolidated Fund of India and the Consolidated Fund of a State, if any, in respect of the whole or any part of the period of two years preceding the liquidation commencement date;

 - Debts owed to a secured creditor for any amount unpaid following the enforcement of security interest

6. Any remaining debts and dues;

7. Preference shareholders

8. Equity shareholders or partners,


Payment of fees of the liquidator

Statutorily deducted proportionately from the proceeds payable to each class of recipients and the proceeds to the relevant recipient shall be distributed after such deduction.


A copy of an liquidation order shall within ________days from the date of such order, be forwarded to the authority with which the corporate debtor is registered i.e. Ministry of Corporate Affairs (MCA)

7 days



Fast track corporation insolvency resolution process




Corporate Debtor Eligible for Fast Track CIRP

 - On the basis of Assets and income: notified by the Central Government; or

 - On the basis of creditors: notified by the Central Government; or

 - Such other category  : notified by the Central Government.


Time period for completion of fast track corporate insolvency resolution process

90 days from Insolvency Commencement Date + 45 days (one time extension)


Where the company owes any debt to any person, creditors representing…………. in value of the debt in company shall approve the resolution passed for voluntary liquidation within seven days of such resolution?

Two Third



Adjudicating Authority

National Company Law Tribunal


Appellate Trinbunal

National Company Law Appellate Tribunal


Time limit for filling appeal to appellate authority

Within 30 days - max 15 days extension


Appeal to Supreme Court

 - Against the order of NCLAT

 - For question of law

 - Within 45 days from date of receipt of order

 - Max extension of 15 days


Civil court not to have jurisdiction

No civil court or authority shall have jurisdiction to entertain any suit or proceedings in respect of any matter on which National Company Law Tribunal or the National Company Law Appellate Tribunal has jurisdiction under this Code. Civil court not to have jurisdiction


Class of Creditors means

A class with at least ten financial creditors


Extortionate credit transaction

If following conditions are satisfied

(i) If transaction require the corporate debtor to make exorbitant payments in respect of the credit provided;


(ii) If transaction is unconscionable under the principles of law relating to contracts.


Time Limit of Public Announcement

Within 3 days from the date of his appointment as Interim Resolution Professional


Last date of submission of proof of claim

fourteen days from the date of appointment of the interim resolution professional.


Late Submission of Claims:

On or before the ninetieth day of the insolvency commencement date.


Valuation where debt is foreign debt

The claims denominated in foreign currency shall be valued in Indian currency at the official exchange rate as on the insolvency commencement date.


Committee with only operational creditors



When it is formed

 - When Corporate Debtor has no financial debt

 - When all financial creditors are related party



 - 18 largest operational creditors by value. If < 18 then all operational creditors

 - 1 representative appointed by all workmen

 - 1 representative elected by all employees


Committee with only creditors in class



When it is formed

 - Corporate Debtor has only creditors in class

 - No other financial creditors eligible to join the committee



Consist of only authorised representative


Who shall appoint registered valuer

Resolution Professional


When shall registered valuer be appointed

Within 7 days from appointment of Resolution Professional but not later than 40th day from insolvency commencement date


How many registered valuer shall be appointed



Various time lines under the Act



Commencement of CIRP

Date of admission of application of CIRP


Appointment of IRP

By Adjudicating Authority within 14 days of Commencement of CIRP


Public Announcement of inviting claim

within 3 days from the date of his appointment as interim resolution professional


Submission of Claim

within 14 days from the date of his appointment as interim resolution professional


Verification of Claim

Within 7 days from receipt of claim


Appointment of Authorised Representative

Within 2 days from verification of claim


Report certifying constitution of COC

Within 2 days from verification of claim


1st Meeting of COC

Within 7 days from Constitution of COC


Resolution to appoint Resolution Professional by COC

In first meeting of COC


Submission of IM to COC

Within 2 weeks from appointment of RP but not later than 54th day of Commencement


Reporting by Liquidator to AA



Preliminary Report

Within 75 days from liquidation commecement date


First Progress Report

Within 15 days after the end of the quarter in which he is appointed


Subsequent Progress Report

Within 15 days after the end of every quarter


Application for Early Dissolution

Anytime after preparation of preliminary report, if it appears to liquidator that



 - the realizable properties of the corporate debtor are insufficient to cover the cost of the liquidation process;


 - the affairs of the corporate debtor do not require any further investigation; he may apply to the Adjudicating Authority for early dissolution of the corporate debtor and for necessary directions in respect of such dissolution


Permissible mode of Sale in case of Liquidation

 - Standalone Basis

 - Slump Sale

 - Set of assets collectively

 - Assets in parcels

 - The Corporate Debtor as going

 - The Business of corporate debtor as going concern


Ordinary mode of sale of assets:

The liquidator shall ordinarily sell the assets of the corporate debtor through an auction in the manner specified in Schedule I.


Circumstances in which an asset of Corporate Debtor may be sold by means of private salein the manner specified in Schedule I

 - the asset is perishable;

 - the asset is likely to deteriorate in value significantly if not sold immediately;

 - the asset is sold at a price higher than the reserve price of a failed auction; or

 - the prior permission of the Adjudicating Authority has been obtained for such sale


Compulsory Prior Permission of Adjudicating Authority before sale of an asset when sale to

 - Related Party of Corporate Debtor

 - His Related Party

 - Any Professional Appointed by him


Two estimates of realizable value of the assets or businesses to be submitted by Registered Valuer independently to the Liquidator

 - Estimates from physical verification of the assets of the corporate debtor

 - Estimates computed in accordance with the Companies (Registered Valuers and Valuation) Rules, 2017

Average of the above two estimates shall be taken as the value of the assets or businesses.


Distribution of Liquidation Proceeds in case of Voluntary Liquidation

 - The liquidator shall distribute the proceeds from realization within six months from the receipt of the amount to the stakeholders.

 - The liquidation costs shall be deducted before such distribution is made.

 - The liquidator may, with the approval of the corporate person, distribute amongst the stakeholders, an asset that cannot be readily or advantageously sold due to its peculiar nature or other special circumstances.


Financial Product means

 - Securities

 - Contracts of insurance, deposits

 - Credit arrangement including loans and advances by banks and financial institutions

 - Retirement benefit plans

 - Small saving instrument

 - Foreign currency contracts other than contracts to exchange one currency (whether Indian or not) for another which are to be settled immediately, or any other instrument as may be prescribed


Where the interim resolution professional is not appointed in the order admitting application under section 7, 9 or 10, the insolvency commencement date shall be:

Date of appointment of Interim Resolution professional by the adjudicating Authority


In consortium funding COC include

Each of the member of consortium funding


Quorum of COC

Members of the Committee representing at least 33% of the voting rights present either in person or video conference or other audio-visual means


When shall the resolution professional circulate the minutes of the meeting to all participants

within 48 hours of said meeting by elctronics means


Upon appointment of liquidator in a company, whose power shall be vested in the hands of the liquidator:

Power of Board of directors and Key Managerial Personnel of the corporate debtor


What portion of the fee, the liquidator entitled to receive after the distribution of realised amount from the liquidation estate

50% of the fee payable on realization


What is the prescribed time period after which the unclaimed amount under the Companies Liquidation Account will be transferred to the general revenue account of Central government

15 Years


Which of the following report shall be prepared by the liquidator pursuant to the sale of assets of corporate debtor?

Asset Sale Report


Can IBBI recommend the replacement of a liquidator in a liquidation process of corporate debtor:

Only in those cases which are transferred from BIFR


Who shall bear the cost of proving the claims under the liquidation process?



The liquidator has to make an application to the Adjudicating Authority with respect to onerous property of corporate debtor within……………months from liquidation commencement date:

6 months


The liquidator has to communicate his intention within ……of receipt of inquiry to a person who inquired in writing about the filing of application in respect of onerous property:

1 month


A person shall be considered independent of the corporate debtors if he is not an employee or proprietor or a partner of a legal or a consulting firm, that has or had any transaction with the corporate debtor amounting to ……… of the gross turnover of such firm, in the last three financial years.

5% or more


In case liquidator a person shall not be considered independent of the corporate debtor, if a legal or a consulting firm, that has or had any transaction with the corporate debtor contributing .......... or more of the gross turnover of such firm, in the last three financial years.

10% or more


Relevant Forms



Maintain consultation with stakeholder

Form A of Schedule II


Public Announcement 

Form B of Schedule II within 5 days of appointment


Submission of claim by Operational Creditor

Form C of Schedule II


Submission of claim by Financial Creditor

Form D of Schedule II


Submission of claim by Workmen or Employee

Form E of Schedule II


Submission of claim by Authorised Representative of Workmen or Employee

Form F of Schedule II


Submission of claim by person other than Operational Creditor, Financial Creditor and Workmen or Employee

Form G of Schedule II


Bye laws means the bye laws made by the ……………under section 205 of the IBC, 2016

Insolvency Professional Agency


The insolvency and Bankruptcy code, Act 2016 Repealed ……… Acts and Amended ……. Acts.

 - 2 and 11


The Insolvency and Bankruptcy Code, 2016 consists of ……..section and …….Schedules

 - 255 Sections and XII Schedules


…………..includes a agreement or arrangement in writing for the transfer of assets, or funds, goods or services, from or to the corporate debtor



…………..includes sale, purchase, exchange, mortgage, pledge, gift, loan or any other form of transfer of right, title, possession or lien:



The independence stage in the Insolvency and Bankruptcy Code, 2016 for Corporate Insolvency are:

Resolution process and liquidation


Financial Debt

 - Money borrowed against payment of interest

 - any amount raised by acceptance under any acceptance credit facility or its de-materialised equivalent

 - any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument

 - the amount of any liability in respect of any lease or hire purchase contract which is deemed as a finance or capital lease under the Indian Accounting Standards

 - receivables sold or discounted other than any receivables sold on nonrecourse basis;

 -  any amount raised under any other transaction, including any forward sale or purchase agreement, having the commercial effect of a borrowing


Insolvency Resolution Process Cost

 -  the amount of any interim finance and thecosts incurred in raising such finance;

 - the fees payable to any person acting as a resolution professional;

 - any costs incurred by the resolution professional in running the business of the corporate debtor as a going concern;

 - any costs incurred at the expense of the Government to facilitate the insolvency resolution process;


Altman z score –question on range 

 - < 1.8 going for bankruptcy


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