Corporate liquidation process

Once it is confirmed that the corporate debtor has defaulted then the adjudication process of insolvency starts and the national company law tribunal heads the process it is on the part of the NCLT either to pass the process or reject the same. There are several steps involved in the process as follows :

Applying in front of the National company law tribunal for the adjudication:

1st step: According to the section 9 of the code the insolvency process shall start from the date of admission of the application of default .once it is found that the corporate debtor is no more likely to pay the debt the insolvency process can be started by the creditor. The condition precedent is that the. Amount of default shall be 1 lakh or more to claim the default.

Admission or rejection of the application:

2nd step: the adjudication board that is the NCLT they have the jurisdiction to either accept the application or reject the same within the timeframe of 14 days . if there is rejection the applicant has all right to get back with the defect in the judgement and administer once again within 7 days .if the application is admitted then process shall take a timeframe of 180 days and can be extended till 90 days more.

Declaration of a moratorium and public announcement :

3rd step: After the application is admitted the public announcement is declared under sec 15 of this code, wherein the shareholders and all the parties of interest are informed which shall be made after the appointment of the interim resolution professional.

Before the public announcement is made the corporate debtor is given a chance to resume its status .moratorium is a period of delay where the law is suspended for some time.

Appointment of interim resolution professional

4th step: the adjudicating authority has the power to appoint an interim resolution professional within 14days from the start date and the interim professional shall be duty-bound till the resolution professional is appointed and shall look towards the affairs of the corporate debtor .the procedure of appointment of resolution professional is laid down under section 22.

Appointment of resolution professional

5th step: The authority to appoint the resolution professional is vested with the committee of creditors in the first meeting of the committee of creditors which shall be held within seven days after the committee of creditors are framed. The committee by the majority of 66 % shall either appoint another resolution professional or appoint the interim professional as the resolution professional. To replace the interim resolution professional there shall be an application made before the adjudicating authority.

 Formation of a committee of creditors

6th step: it is the duty of the interim resolution professional to analyse all the debts of the corporate debtor and frame the committee of creditors as laid down by the code of IBC under section 21

Meeting of committee of creditors

7th step: there shall be a meeting held wherein all the creditors of the debtors shall be present. And all the participants of the committee shall be given a notice of not less than 5 days regarding the meeting . meeting shall be conducted to frame a resolution plan.

Formation of Resolution plan

8th step: the resolution plan shall be framed by following the section 30 of this code .an resolution plan shall provide for the measures as a necessary insolvency resolution of the corporate debtor for the maximization of the value of the assets .transfer the assets of the debtor among the creditors. there shall be a fair evaluation of the debtors' assets. the resolution plan is subject to rejection as well and all the committee of the creditor as well as the debtor shall agree to the plan.

 Liquidation process

9th step: when the corporate debtor fails to repay the debts of creditors and defaults to pay first the corporate debtor is followed by the corporate insolvency process if even in that process the corporate debtor fails then the corporate debtor is followed by the liquidation process, whereinto talk in a general sense one liquidator is appointed who takes the place of the corporate debtor.