1. Insolvency and Bankruptcy: Resolution Code
Organized by EIRC of ICAI
CA Subodh Kumar Agrawal
Agrawal Subodh & Co.
Kolkata, Delhi

2. Structuring of the Code
PART -I
Preliminary (Sec 1-3)
Short title, extent, commencement ; application; and Definitions
PART-II
Insolvency Resolution and Liquidation for Corporates (Sec 4-77)
Divided into 7 Chapters
• Covers Corporate Insolvency Resolution (CIR) Process; Liquidation Process ; Fast Track CIR; Voluntary Liquidation; AA; and Offences and Penalties
PART -III
Insolvency Resolution and Liquidation for Individuals and Partnership Firms (Sec )
• Covers Fresh Start Process; Insolvency Resolution; Bankruptcy Order; Administration and distribution of the bankruptcy estate; AA; and Offences and Penalties
• Does not extend to the State of Jammu & Kashmir
Part-I
Agrawal Subodh & Co

3. Structuring of the Code Contd…..
Part- IV
Regulation of Insolvency Professionals, Agencies and Information Utilities (Sec )
7 Chapters ; Deals with the institutional framework under the Code –establishment of the Board, powers and functions of Board; covers IPs, IP Agencies, and Information Utilities;
Inspection and Investigation of IP Agency
Part-V
Miscellaneous (Sec )
Calls for repeal of certain enactments and savings;
Requires amendments in certain enactments;
Contains transitional provisions
Empowers the Central Governments to make Rules, and empowers the Board to make Regulations.
Agrawal Subodh & Co

4. Corporate Insolvency Resolution Process
Default
COC
Resolution Process
Failure to Pay whole or any Part or Installment of the Amount of Debt or Interest due(Minimum INR 1 Lakh)
Consists of Financial Creditors only,Excluding Related Parties
Will Confirm or Replace IRP as RP
To Approve Several Actions of RP
CoC Can Replace IP during CIRP by 75% Approval
Default
Who can File the Application?
Appointment of a Resolution Professional
Financial Creditors
Operational Creditors (including Government and Employees/Workmen)
Corporate Debtor
Moratorium Period
(180/270 Days)
Resolution Plan
Interim Resolution Professional/Resolution Professional(IRP/RP)
The Resolution Plan Must Provide For:
Payment of Insolvency Resolution Process Costs
Pay Liquidation Value to operational Creditor Before other Financial Creditors
Liquidation value to dissenting FC
Management of the affairs of the Borrower after the Plan is Approved
Implementation and Supervision of the Approved Plan
Formation of Committee of Creditor
Financial Creditor and/or Corporate Applicant shall Propose the Name of an IRP in the Application No
66% of the Creditors by value to Approve Resolution Plan
All Powers of the Board and Management Shall Vest with the IRP/RP. RP is Responsible to Run the Company as a Going Concern during CIRP.
YES
Implement the Resolution Plan
Goes into Liquidation 4
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5. Corporate Insolvency Resolution Process Contd…
Moratorium
Voting Power
NCLT to Declare Moratorium from the Insolvency Commencement until the Completion of Insolvency
Only Financial Creditors have Voting Power in the Committee in the ratio of Debt owed
All decision of the Committee shall be Approved by 66% of Financial Creditor
If all Members are not Present at a Meeting, a Vote Shall not be taken at, and the RP can Seek Vote by an Electronic Vote System
Directors and Others eligible can Attend the Meeting but Would not have any Voting rights.
Moratorium Shall Prohibit:
Institution of Suits
Transfer of Assets
Foreclosure, Recovery or Enforcement under SARFAESI
Recovery of Assets
Fast track Insolvency
For Debtors With:
Assets and Income Below a Level
Such Class of Creditors
Other Categories
As may be Notified by the Central Government (Completed in 90 Days)
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6. CIRP TIMELINE Section / Regulation Description of Activity Norm
Latest Timeline
Section 16(1)
Commencement of CIRP and appointment of IRP …. T
Regulation 6(1)
Public announcement inviting claims
Within 3 Days of Appointment of IRP
T+3
Section 15(1)(c) / Regulations 6(2)(c) and 12 (1)
Submission of claims
For 14 Days from Appointment of IRP
T+14
Regulation 12(2)
Up to 90th day of commencement
T+90
Regulation 13(1)
Verification of claims received under regulation 12(1)
Within 7 days from the receipt of the claim
T+21
Regulation 13(2) Verification of claim
received under 12(2)
T+97
Section 21(6A) (b) / Regulation 16A
 Application for appointment of AR
Within 2 days from verification of claims received under regulation 12(1)
T+23 6
Agrawal Subodh & Co

7. CIRP TIMELINE Section / Regulation Description of Activity Norm
Latest Timeline
Regulation 17(1) Report certifying constitution
of CoC
T+23
Section 22(1) / Regulation 19(1)
1st meeting of the CoC
Within 7 days of the constitution of the CoC, but with seven days’ notice
T+30
Section 22(2)
Resolution to appoint RP by the CoC
In the first meeting of the CoC
Section 16(5)
Appointment of RP
On approval by the AA ……
Regulation 17(3)
IRP performs the functions of RP till the RP is appointed.
If RP is not appointed by 40th day of commencement
T+40
Regulation 27
Appointment of valuer
Within 7 days of appointment of RP, but not later than 40th day of commencement
T+47
Section 12(A) / Regulation 30A
Submission of application for withdrawal of application admitted
Before issue of EoI W
CoC to dispose of the application
Within 7 days of its receipt or 7 days of constitution of CoC, whichever is later.
W+7 7
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8. CIRP TIMELINE Section / Regulation Description of Activity Norm
Latest Timeline
Filing application of withdrawal, if approved by CoC with 90% majority voting, by RP to AA
Within 3 days of approval by CoC
W+10
Regulation 35A
RP to form an opinion on preferential and other transactions
Within 75 days of the commencement
T+75
RP to make a determination on preferential and other transactions
Within 115 days of commencement
T+115
RP to file applications to AA for appropriate relief
Within 135 days of commencement
T+135
Regulation 36 (1)
Submission of IM to CoC
Within 2 weeks of appointment of RP, but not later than 54th day of commencement
T+54
Regulation 36A
Publish Form G
Within 75 days of commencement
Invitation of EoI
Submission of EoI
At least 15 days from issue of EoI (Assume 15 days)
T+90 8
Agrawal Subodh & Co

9. CIRP TIMELINE Provisional List of RAs by RP
Section / Regulation
Description of Activity
Norm
Latest Timeline
Provisional List of RAs by RP
Within 10 days from the last day of receipt of EoI
T+100
Submission of objections to provisional list
For 5 days from the date of provisional list
T+105
Final List of RAs by RP
Within 10 days of the receipt of objections
T+115
Regulation 36B
Issue of RFRP, including Evaluation Matrix and IM
Within 5 days of the issue of the provisional list
Receipt of Resolution Plans
At least 30 days from issue of RFRP (Assume 30 days)
T+135 9
Agrawal Subodh & Co

10. Corporate Resolution Process : Timeline
Filing of Application To NCLT
Declare Moratorium
Admission Of Application
No. Of Days
NCLT To Appoint Interim Resolution Professional
Public Announcement
Appoint 2 Registered Valuer To calculate Liquidation Value
Verification Of Claims By IRP
Submission Of Proof Of Claim
IRP To Constitute CoC And File a Report
Convene And Hold 1st COC Meeting
Appointment of Resolution Professional
Preparation of Complete IM
Form an opinion on Transaction Audit; Publish EOI
Prov list within 10 days i.e. 100 days
30 days
23 days
3 days
Day –ve 14
0 days
Max 14 days
37 days
14 days
21 days
44 days
75 days
Appl 21(6A)(b) to AA for AR
Say EOI to close
Objection to Prov List 105 days and isue of RFRP
Verification of Claims (finally)
90 days
90 days
Final list of RA and also determination of Preferential Transaction 115 days
EOI to be kept open for at least 15 days
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11. Corporate Resolution Process: Timeline
Filing of petition to AA for forensic
Extention and completion
To submit the apprroved resolution plan to AA
135 days
165 days
270 days
180 days
Approval Of Resolution Plan By NCLT
Receipt of Resolution Plan
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12. CIRP Regulations contd....
CHAPTER I
CHAPTER II
PRELIMINARY
GENERAL 1
Short title and commencement 3
Eligibility for resolution professional 2
Definiions 4
Access to books 4A
Choice of authorised representation 5
Extortionate credit transaction
CHAPTER III
CHAPTER IV
PUBLIC ANNOUNEMENT
COMMITTEE OF CREDITORS 6
Public announcement 16
Committee with only operational creditors 7
Claims by operational creditor
16A
Authorised Representation 8
Claims by financial creditors
16B
Committee with only creditor in class 8A
Claims by creditors in a class 17
Constitution of committee 9
Claims by workmen and employees 9A
Claims by other creditors 10
Substantiation of claims 11
Cost of proof 12
Submission of proof of claims 13
Verification of Claims 14
Determination of amount of claims 15
Debt in foreign currency
CHAPTER V
CHAPTER VI
MEETING OF THE OMMITTEE
VOTING BY THE OMMITTEE 18
Meetings of the committee 25
Voting by the committee 20
Service of notice by electronic means 26
Voting through electronic means 21
Contents of the notice for meeting 22
Quorum at the meeting 23
Participation through video conferencing 24
Conduct of meeting
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13. CONDUCT OF CORPORATE INSOLVENCY RESOLUTION PROCESS
CIRP Regulations
CHAPTER VII
CHAPTER VIII
CONDUCT OF CORPORATE INSOLVENCY RESOLUTION PROCESS
INSOLVENCY RESOLUTION PROCESS COSTS 27
Appointment of registered valuers 31
Insolvency resolution process costs 28
Transfer of debt due to creditors 32
Essential supplies 29
Sale of assets outside the ordinary course of business 33
Costs of the interim resolution professionals 30
Assistance of local district administration 34
Resolution professional costs
30A
Withdrawal of application
34A
Disclosure of costs
CHAPTER IX
RESOLUTION PLAN 35
Fair value and Liquidation Value
35A
Preferential and other transaction 36
Information Memorandum
36A
Invitation for expression of interest
36B
Request for resolution plans 37
Resolution plan 38
Mandatory content of the resolution plan 39
Approval of resolution plan 40
Extension of the corporate insolvency resolution process period
40A
Model timeline for corporate insolvency resolution process
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14. Avoidance of historical transaction, which can be set aside by NCLT
Borrowers are personally liable to contribute where they have carried out any of the following transactions:
Sec
Details
Time limit
consequences
43-44
Preferential transaction :
given a preference, with the effect of putting that person in a beneficial position
“related party – in the last two years
Unrelated party – in the last one year
If regd with I/U within 30 days – Exempt
Good faith Apply
NCLT can pass an order to make the borrower of the person given preference to restore, repay or account for any profit from such a transaction.
Can reach out to second and third layer
45-48
Undervalue transaction:
And did not take place in the ordinary course of business. And what is not an arms length transaction
Related party – in the last two years
NCLT can pass an order to make the borrower or the person benefited from such a transaction to restore, repay or account for any profit from such transaction
Can reach out only to immediate party
Application by Creditor also. 49
Transaction defrauding creditors:
If any transaction is deliberately entered by the borrower to defraud a creditor
No time limit
Good faith apply
NCLT can pass an order to make the borrower or the person benefitted from such a transaction to restore, repay or account for any profit from such transaction
50-51
Extortionate credit transaction:
party to an extortionate credit transaction
In the last two years
NCLT can pass an order to restore the position, set aside the whole transaction, modify the term etc.
Application Only by liquidator or RP
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15. Offences and Penalties Contd….
Sec 65
Fraudulent initiation of proceedings
1 Lacs-1 crores
Sec 66-67
Fraudulent Trading
Appl by RP to AA
Against Directors & partners
To make contribution to assets as it may deem fit
Sec 68
Concealment of property
For 10,000 or more
Officer
1 lac – 1 crore
3 yr to 5 yr
Sec 69
Defrauding creditors
From Within 2 months before unsatisfied judgement. Upto 5 years
Officer/ debtor
1 lacs- 1 crore
1 yr – 5 yr
Sec 70
Misconduct in CIRP
Prev 12 month Do
1 lac – 1 Cr
3 yr- 5 yr
IP max upto 6 months and
1 lac – 5 lac
Sec 71
Falsification of book of debtor
1 lac- 1 cr
3 yr-5 yr
Sec 72
Wilful and material omissions
Sec 73
False Representation to creditors
Sec 74
Contravention of Moratorium and Resolution plan
Officer/debtor
Creditor
All
Moratorium: 3 yr to 5 yr and 1 lac to 3 lac
1 lac – 1 crore and 1 yr to 5 yr
Resolution Plan
1 yr to 5 yr and 1 lac to 1 cr
Sec 75
False information furnished by Fin Creditor
creditor
1 lac to 1 crore
Sec 76
Non disclosure of dispute or repayment by Op Creditor
1 lac to 1 crore and 1 yr to 5 yr
Sec 77
False information in app by Corp debtor
debtor
3 yr to 5 yr and 1 lac to 1 crore
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