In 2016, the Insolvency and Bankruptcy Code was enforced to resolve claims against insolvent companies in an expedited manner. The process of Corporate insolvency resolution (CIRP) is concerned with the main three parties affected by the regular functions of the company, the corporate debtor, the financial creditor, and the operational creditor. This code gives the rights to the creditors to secure the repayment of the credit provided to the corporate debtor. The process though simplified, remains tedious for all the parties involved.
KSK Team of insolvency lawyers sweeps right into action on behalf of the parties in situations requiring:
In an effort to enforce the recovery mechanism, the process of CIRP has been laid down under the Act, this process holds utmost importance in the insolvency regime to hold the corporate debtor responsible. The KSK team is well-versed with the requirements of the IBC regime and holds immense experience with its application.
As per section 7 of Insolvency and Bankruptcy code 2016, a financial creditor is a person to whom the financial debt is owed by the business.
Operational creditors are those who provide transactional services or supplies pertinent to business operations on credit, whereas financial creditors provide loans and securities. Financial creditors get a preference in the Committee of creditors over operational creditors due to the nature of their transactions.
Under section 14, the moratorium period begins from the date insolvency begins and lasts until the resolution plan is approved or liquidation proceedings initiate. This prohibits legal proceedings against the corporate debtor until the completion of such period.
When through CIRP corporate insolvency can be achieved within 90 days, it’s known as Fast-track CIRP, it applies to small companies, start-ups, and unlisted companies with total assets of ₹1 Cr in the preceding fiscal year.
