The IBC (Insolvency and Bankruptcy Code, 2016), also known popularly as the Code, is a set of rules laid in India to handle debts. The Code helps creditors get their money back when people or companies can’t pay. The Code makes sure they try to fix it quickly, within 180 days, extendable to 270 days. There’s also a new method, called the Fast-Track Corporate Insolvency Resolution Process. The fast-track process is usually applicable for simpler cases. The fast process takes considerably less time than the regular process.
Fast-Track Corporate Insolvency Resolution Process Explained
Here’s a list of steps involved in the Fast-Track Corporate Insolvency Resolution Process:
Appointment of Interim Resolution Professional:
- When a party files an application to initiate a Corporate Insolvency Resolution Process, the National Company Law Tribunal (NCLT) appoints an Interim Resolution Professional (IRP). The NCLT acts as the Adjudicating Authority.
- The appointed IRP is responsible for overseeing the initial stages of the fast-track CIRP.
- Within three days of their appointment, the IRP is required to make a public announcement.
- The announcement serves as a notice to the public and creditors involved in the case.
- The announcement includes essential details, such as the last date for creditors to submit their claims.
- The deadline for claims submission should not exceed ten days from the IRP’s appointment.
- The announcement must be made in English and one regional language to ensure accessibility.
Submission of Claims:
- Creditors, which can include operational creditors, financial creditors, employees, etc., have a ten-day window to submit their claims to the IRP.
- Along with the claims, creditors are expected to provide supporting documentation, such as records available with the information utility and other relevant documents.
- The supporting documents could include contracts for the supply of goods or employment agreements.
- The IRP reviews all claims submitted and verifies their accuracy within seven days of receiving the last claim.
Formation of Committee of Creditors (CoC) & its Meetings:
- The IRP assembles a Committee of Creditors (CoC), consisting of financial and operational creditors of the corporate debtor.
- The first meeting of the CoC is convened within seven days of the submission of the report, confirming the formation of the committee.
Time Period for Completion of the Process:
- Fast-track Corporate Insolvency Resolution Process is governed by Chapter II (Part II) of the Insolvency and Bankruptcy Code, 2016.
- According to the Code, the fast-track insolvency process must be completed within 90 days from the initiation date.
- However, the standard period can be extended by an additional 45 days if necessary, making the maximum duration 135 days.
- Section 35-A of the Code outlines the procedure for inviting resolution plans.
- The resolution professional overseeing the fast-track CIRP invites resolution plans from all eligible resolution applicants.
- The invitation is sent at least 15 days before submitting it to the Adjudicating Authority (NCLT). The time frame allows for careful consideration of resolution proposals.
In essence, the Fast-track Corporate Insolvency Resolution Process is designed to expedite the resolution of financial distress for corporate debtors. It primarily focuses on cases where lenders or the corporate borrower itself initiate insolvency proceedings. The Code sets strict time limits to ensure the swift handling of cases, allowing the Adjudicating Authority to concentrate its efforts on more intricate matters that demand extensive time, resources, and attention. This streamlined process aims to provide a fair and efficient mechanism for resolving corporate insolvency while safeguarding the interests of all parties involved, including creditors, employees, and the distressed company itself. Every step of the resolution process requires high legal knowledge and relevant expertise to ensure that all processes are moving smoothly without hassles. Therefore, relying on seasoned professional resources such as Ancoraa Resolution is always a great advantage.