COMPANY SECRETARY IN PRACTICE INSOLVENCY AND BANKRUPTCY CODE 2016 OPPORTUNTY TO COMPANY SECRETARIES BY OMKAR V DEOSTHALE COMPANY SECRETARY IN PRACTICE csomkardeosthale@gmail.com

NEED FOR ONE LAW No single umbrella legislation for Insolvency In India Instead slew of legislations like: Companies Act SICA RDDBFIA SARFAESI Presidency Town Insolvency Act, 1909 Provincial Insolvency Act ,1920 Various forums like DRT, High Court, BIFR, Civil Courts, etc. Official Liquidator system is failure DRT does not bring early results Vicious Circle: Increase in troubled corporates – ripple effect of less recovery – results in delayed recovery – results in loss of money and its value and thereby result in availability of less credit – results in slow recovery

Preamble of Code AN ACT TO CONSOLIDATE AND AMEND THE LAWS RELATING TO REORGANISATION AND INSOLVENCY RESOLUTION OF CORPORATE PERSONS, PARTNERSHIP FIRMS AND INDIVIDUALS IN A TIME BOUND MANNER FOR MAXIMISATION OF VALUE OF ASSETS OF SUCH PERSONS, TO PROMOTE ENTREPRENEURSHIP, AVAILABILITY OF CREDIT AND BALANCE THE INTERESTS OF ALL THE STAKEHOLDERS, INCLUDING ALTERATION IN THE ORDER OF PRIORITY OF PAYMENT OF GOVERNMENT DUES AND TO ESTABLISH TO AN INSOLVENCY AND BANKRUPTCY BOARD OF INDIA, AND FOR METTERS CONNECTED THEREWITH OR INCIDENTAL THERETO.

SCHEME OF THE ACT DEVIDED INTO 5 PARTS Part I – Preliminary Part II – Insolvency Resolution and Liquidation of Corporate Persons Part III - Insolvency Resolution and Liquidation of Partnerships and Individuals Part IV – Insolvency Professionals, Agencies and Information Utilities Part V - Miscellaneous

REGULATIONS The Insolvency and Bankruptcy Board of India (Insolvency Professional Agencies) Regulations 2016 Insolvency and Bankruptcy Board of India (Model Bye Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016 The Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016 The Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 The Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 The Insolvency and Bankruptcy Board of India (Liquidation process) Regulations, 2016

INSOLVENCY RESOLUTION PROCESS Sections 6 to 32 of Code. IP Process - Cr and Dr.xls Resolution professional and Creditors Committee Driven process 75% of Financial Creditors are KINGS

Liquidation Section 33 of the Code Section 44 – Beware of Preferential Transactions Section 45 Undervalued Transaction Section 50 Extortionate Arrangement Distribution – Section 52 (Secured Creditors) Section 53 general

OTHER PROCESSES Fast Track Insolvency Process – 55 to 58 Voluntary Liquidation – Sections 59 Only if default has not occcured

Important Terms Financial Creditor Operational Creditor Default Applicant Adjudicating Authority – NCLT (for Corporates and LLPs) Resolution Professional and Liquidator

OPPORTUNITY FOR CS – DISCUSSION FORUM Resolution Professional Consultant NCLT Appearance Restructuring Strategist (either for Creditor or Debtor) Filling to Information Utility Transactions to be entered into needs to be checked to avoid being banned transactions in Insolvency process

SPECIAL SKILLS TO BE ACQUIRED Knowledge of functioning of Bank is must Working Knowledge of Accounts and Finance RP – Knowledge of management is must Do a Due Diligence before getting into RP of any Company. Company Secretary posses the required skills, Courage to enter in this area is must.

THANK YOU. CSOMKARDEOSTHALE@GMAIL.COM