IBC FOR CREDITORS

Insolvency and Bankruptcy Code, 2016 (“IBC”) is the law enacted with the objective to give a revival opportunity to the debtor and provide relief to all creditors including other stakeholders. Under IBC there are 2 types of creditors i.e. Financial Creditors and Operational Creditors. Let’s explain them

‘Financial Creditor’ means any person to whom any financial debt is owned. Financial debt as defined u/s 5(8) of IBC means any debt which is disbursed against the consideration for the time value of money i.e. interest and includes other as described in above section.  Illustration: – If any person or any corporate person provides financial assistance to the corporate debtor against the interest, it shall be a financial debt. It includes the homebuyers who make an advance payment to real estate developers for the booking of any flat/unit/property.

‘Operational Creditor’ means a person to whom an operational debt is owed and includes any person to who such debt has been legally assigned or transferred to. Operational debt as defined u/s 5(21) of IBC means any claim relating to the provision of goods/service/employment or payable to Government.  Illustration: – If any person has any outstanding or given any advance related to purchase or sales of goods/services to any debtor. It would be operational debtor.

Sec 7 - Application
Sec 8 - Application
Sec 10 - Application

Benefits to Creditors under IBC

In a recent interview dated 01/10/2018, Mr. M S Sahoo, Chairman, Insolvency and Bankruptcy Board of India (IBBI), has said that due to IBC, Rs. 1,00,000 Crs has been recovered within 2 years of its IBC operations, through the IBC procedures.

Benefits can clear and can be summarized as under:

# Easy and time-bound process for filing the petition
# Complete transparency through information utility
# Time-bound process to get the recovery and related process
# Good synchronization between NCLT and IBBI
# Timely recovery of money with interest
# Timely identification of distress assets

How to start the IBC process

The process under IBC can be started by filing the petition before jurisdictional NCLT u/s 7 or 8 or 10 of IBC, to initiate Corporate Insolvency Resolution Process (“CIRP”), of such Corporate Debtor

How to start the IBC process

The process under IBC can be started by filing the petition before jurisdictional NCLT u/s 7 or 8 or 10 of IBC, to initiate Corporate Insolvency Resolution Process (“CIRP”), of such Corporate Debtor

How to start the IBC process

The process under IBC can be started by filing the petition before jurisdictional NCLT u/s 7 or 8 or 10 of IBC, to initiate Corporate Insolvency Resolution Process (“CIRP”), of such Corporate Debtor

The partners of AAAIP are being appointed as liquidator during Liquidation Process and Voluntary Liquidation Process and would also be appointed as Bankruptcy Trustee after the provisions of Individual bankruptcy are notified. AAAIP has separated the function of Liquidation Process and have trained a separate batch of human resources for the handling of Liquidation Process. Following are the key responsibilities of the Liquidation Process team: –

# To communicate with all stakeholders such as Stakeholders Consultative Committee, other claimants, promoters and directors, Key Managerial Personnel, statutory authorities, auditors, employees of Corporate Debtor, etc for the purpose of seeking information, informing them about the commencement of Liquidation Process.
# To appoint professionals such as Registered Valuers for valuation of the assets of the Corporate Debtor; auditors for receipt and payment account, brokers for the sale of assets and even for selling the Corporate Debtor as going concern
# To maintain a penal of professionals after verification of key documents, antecedents and performance history for the purpose of their appointment for Corporate Debtors. AAAIP maintain a penal of advocates, auditors, registered valuers, media agencies, security service providers, etc. to be used for Liquidation Process.
# To interact and coordinate with different professionals appointed for the process and to provide the requisite information for completion of the job and to obtain their report.
# To convene Stakeholders Consultation Meetings and to prepare all notices, agenda, minutes, etc and to act as a bridge between stakeholders and the Insolvency Professional.
# To prepare and compile Asset Memorandum, Preliminary Reports, Progress Reports and co-ordinate for all the information required.
# To conduct the entire process e-auction process for sale of assets, preparation of e-auction document, keep the virtual data room, verify eligibility of bidder under section 29A and other documents for receipt and examination of bids. To issue a letter of intent and sale certificate and distribute the funds to stakeholders.

Liquidation Process is all about selling the assets of the Corporate Debtor and distributing the sale proceeds to stakeholders. The liquidator, in the normal course, gets better remuneration if the assets are sold in the first six months and his remuneration diminishes on every sale after the first six months. Therefore, AAAIP has made special arrangements for efficient and faster sale of assets of Corporate Debtor during the Liquidation Process. Following are the key deliverables of the Asset Sale team to partners of AAAIP: –
# Asset Sale Team prepare brief details of each asset and collect all the title documents and other details for proper due diligence of prospective buyers.
# The assets sale is advertised on various online portals for sale of assets such as property portals, vehicle sale portals, scrap sale portals, etc. and common digital mobile number is used for all the portals. The same common mobile number is used for various other publicity efforts for sale of assets such as banners, new paper inserts, new paper advertisements, bulk emails, bulk sms, etc.
# The leads generated out of all efforts are captured in software and all the leads are attended regularly to develop them as a bidder. Human resources posted are various cities co-ordinate for inspection of the asset by the prospective bidders.
# The team also create a Virtual Data Room (VDR) for uploading all the relevant documents, title papers, list of assets, etc for faster transfer of information to prospective bidders.

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There are situations during the CIRP and Liquidation Process that Insolvency Professionals would urgently require human resources to be posted at Corporate Debtor’s business. AAAIP has developed full-fledged department for recruitment and appraisal of human resources with a large database of industry experts and retired bankers who can be posted to monitor cash flow at Corporate Debtor

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AAAIP has an in-house IT department responsible for hardware and software maintenance. The team is also responsible for uploading various documents on the IBBI website and on the website of Corporate Debtor.

AAAIP has made in-house arrangements for state-of-the-art video conferencing capable of having a video conference call with more than 10 participants and also share files on the screen simultaneously. It has also made in-house arrangements for video recording of proceedings of any meeting of Committee of Creditors or Stakeholders. All these support services are available for partners of Insolvency Professional Entity. 

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