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Bankruptcy Professionals In India

Recovery Of Financial And Operational Debt In India Through Insolvency

Drafting of Insolvency Petition
Filing of your matter with NCLT
Appearances by the Advocates and pleadings for the same
Final Order from NCLT
Recovery of Financial and Operational debt from the Debtors

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    India’s recent economic growth has taken the world by surprise and so because it has become the sixth largest economy, going by the GDP. It has been applauded to be the fastest expanding economy among the growing economies and has witnessed marvelous growth in all sectors. Lot of credit for this goes to the government which has sincerely taken up liberalization of the regulatory framework. This ease of regulations motivated many entities, big and small, to venture into the Indian market and make the most of it.

    But managing and running a business is not a child’s play, it needs multiple factors to be taken into consideration. Any error in planning or strategies, or any miscalculation of expenses or inadequate liquidity or even external factors like slump in the market, etc. can create disastrous impact. So many a times, it happens that companies and firms face a situation where they reach a point of no return and need to wind up.

    If your company has become insolvent, that is, unable to meet financial obligations, then you as a creditor can initiate liquidation under the Insolvency and Bankruptcy Code, 2016 (IBC). On the other hand, if your company is solvent, then as a member you can go for voluntary winding up.

    Under any circumstance you will need legal assistance to execute the entire process successfully and get the desired result. Comprehending the legal language and regulations is an arduous task which is beyond the capabilities of the common man.

    MUDS is a consulting firm par excellence and we have the best team of bankruptcy professionals in India. We extend unwavering support to companies, businesses and individuals that want assistance in insolvency, bankruptcy or liquidation.

    Our team of highly accomplished bankruptcy professionals in India are adept in Insolvency and Bankruptcy Code, 2016, and this is the main reason for us being one of the most sought-after consulting firms in India.

    Recovery Of Debt Services That We Offer In India:

    Initiation of Corporate Insolvency Resolution Process by Financial Creditor: Section 7 of IBC
    Application for initiation of corporate insolvency resolution process by Operational Creditor: Section 9 of IBC.
    Summary Suit (Order 37 of the Code of Civil Procedure Code, 1908)
    Section 138 of the Negotiable Instruments Act, 1881 (Cheque Bounce cases)

    Our team of bankruptcy professionals in India is unmatched and it has an impeccable track record with 160+ successfully completed cases and another 50 in the pipeline. We lay great emphasis on professional and ethical accountability of each one of our employees, and along with it earnest devotion, honest dedication and ardent professionalism.

    Eligibility Criteria To File Recovery Of Debt Cases:

    1. In case of initiation of Corporate Insolvency Resolution Process by Financial Creditor, it should owe the financial debt and the debt should be legally assigned to him and transferred. The Term “Financial Creditor” includes Banks, Financial Institutions, Homebuyers, Enterprise, Corporate Entity or Company (Section 7 of the IBC).

    According to Sub-section (1) of the Act, the Financial Creditor either by itself or jointly with other financial creditors may file an application for initiating the Corporate Insolvency Resolution Process against a corporate debtor when a default has occurred.

    The Adjudicating Authority shall within 14 days of the receipt of the application under sub-section (2), ascertain the existence of the default from the records of the information utility or on the basis of the evidence furnished by the financial creditor under sub-section (3).

    Also, where the Adjudicating authority is satisfied that:

    A default has occurred and the application under sub-section (2) is complete, and there are no disciplinary proceedings pending against the proposed resolution professional, it may, by order, admit such application; or
    Default has not occurred or the application under sub-section (2) is incomplete or any disciplinary proceeding is pending against the proposed resolution professional, it may by order, reject such application.

    2.  In case of initiation of Corporate Insolvency Resolution Process by the Operational Creditor, the Operational Creditor should owe the financial debt and the debt should be legally assigned to him and transferred. The term “Operational Creditor” includes Manufacturers, Traders, Employees (Section 9 of the IBC).

    After the expiry of the period of 10 days from the date of delivery of the notice or the invoice demanding payment under (1) of section 8, if the operational creditor does not receive payment from the corporate debtor or the dispute under sub-section (2) of section 8, the operational creditor may file an application before the adjudicating authority for initiating the CIRP process.

    The Adjudicating authority shall within 14 days of the receipt of the application under sub-section (2), by an order:

    I) Admit the application and communicate such decision to the operational creditor and corporate debtor if,

    The application made under sub-section (2) is complete.
    There is no repayment of the unpaid operational debt.
    The invoice or notice for payment to the corporate debtor has been delivered by the operational creditor.
    No notice of dispute has been received by the operational creditor or there is no record of dispute in the information utility; and
    There are no disciplinary proceedings pending against any resolution professional proposed under sub-section (4).

    II) Reject the Application and communicate such decision to the operational creditor and the corporate debtor if,

    The application made under sub-section (2) is incomplete.
    There has been repayment of the unpaid operational debt.
    The Creditor has not delivered the invoice or notice for payment to the corporate debtor.
    Notice of dispute has been received by the operational creditor or there is a record in the information utility.
    Any disciplinary proceeding is pending against any proposed resolution professional.

    3.   In case of the Summary Suit under Order 37 of the Code of Civil Procedure, 1908, the Creditor shall file the Summary Suit in the respective courts having jurisdiction if there is a suit upon Bills of Exchange, Hundis and Promissory Notes.

    Suits in which the plaintiff seeks only to recover a debt or liquidated demand in money payable by the defendant, with or without interest, arising:

    On a Written Contract,
    On an Enactment, where the sum sought to be recovered is a fixed sum of money or in the nature of the debt other than a penalty; or
    On a guarantee, where the claim against the principal is in respect of a debt or liquidated demand only.

    4.  Section 138 of the Negotiable Instruments Act, 1881 (Cheque Bounce Recovery Case): If the customer delays the payment through cheque then the seller can file a suit against the customer under Section 138 of the Negotiable Instruments Act, 1881.

    Under Section 138, a legal notice is sent to the customer regarding the bouncing of the cheque and if he does not pay within 30 days, then the seller can file a suit against the customer under Section 138 of the NI Act regarding non-payment of the payment.

    The brief description of the procedure of insolvency is enough to give you an insight into the legal entanglements that it carries. It is essential for you to make a wise choice as you should be aware that not all firms are competent in it. Any amateur firm that has a team of inexperienced bankruptcy professionals in India, may lead you to another hurdle or crisis, instead of bringing relief.

    We are a legal firm, which has professionals with extensive experience in the matter, and therefore, are the best bet. We shall expedite the entire process, follow it continuously and keep you updated. Take an informed decision and overcome your hurdles by contacting us!

    Document Required
    Documents Required For Recovery Of Financial And Operational Debt Through Insolvency
    Demand Notice (form 3 and form 4 – IBBI Rules)
    Company’s Ledger Account
    Copy of the Invoices showing proof of transactions between the two parties
    Bank Statements of the Operational/ Financial Creditor
    Affidavit by the Operational creditor Section 9 (3) (b) –IBBI Rules
    Acknowledgement of Transaction between 2 parties
    Copy of the Emails exchanged between 2 parties
    Copy of the Legal Notice served by the Operational/ Financial Creditor
    Affidavit – Bank Certificate – (Section 9 of IBBI Rules) (not mandatory)

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      A Comparative Chart Of All Options

      Comparison Basis Section 7 of IBC Section 9 of IBC Summary Suit (Order 37 of Cpc, 1908) Section 138 of NI Act, 1881
      Claim Amount Minimum Amount is Rs. 1 lac Minimum Amount is Rs. 1 lac It is prescribed as per the Code of Civil Procedure, 1908. It is prescribed as per the NI Act, 1881.
      Limitation Period It is 3 years from the date when the debt has become due. It is 3 years from the date when the debt has become due. The limitation is prescribed as per the 45 days is the time period for filing the case in the Concerned Court when the cheque has been bounced.
      Total time-frame 6 months (Approx.) 6 months (Approx.) 3-4 months (Approx.) 6 months- 1 year (It can vary)
      Type of Persons availing the Services Homebuyers, Financial Institutions, Banks etc. (They all are termed as Financial Creditors) Employees, Traders, Manfacturers (They all are termed as Financial Creditors) Manfacturers, Traders, Buisnessmen and any other person dealing in goods and services. Any person whose cheque has been bounced by the Bank due to insufficient funds on payment by the debtor.
      Court Fees to be Paid Rs. 25,000 Rs. 2,000 It is prescribed as per the Amount of claim. It is prescribed as per the Amount of claim.

       

      Alternately Call our Legal Expert Now For Free Consultation at 09599653306

      Frequently Asked Questions on Bankruptcy Professionals in India

      • All Operational and Financial Creditors, secured and unsecured, can initiate Insolvency under IBC, 2016, if the minimum default amount is one lakh and above. Banks, Financial Institutions, Homebuyers, Enterprise, Corporate Entity or Company can approach under Section 7 of the Insolvency and Bankruptcy Code, 2016 for recovery of Money. And Manufacturers, Traders, Employees etc. can approach under Section 9 of the Insolvency and Bankruptcy Code, 2016 for recovery of Money.

      According to Section 3 (11) of IBC, ‘debt’ refers to any amount or obligation which is due from anyone; it includes financial as well as operational debt.

      NCLT, can reject the application under these circumstances, if:

      • The application made under sub-section (2) is incomplete.
      • There has been repayment of the unpaid operational debt.
      • The Creditor has not delivered the invoice or notice for payment to the corporate debtor.
      • Any disciplinary proceeding is pending against the proposed resolution professional.

      The Financial Creditor or the Operational Creditor, initiating action under Section 7 and Section 9 of the Insolvency and Bankruptcy Code, 2016, need to act within three years from when the debt had become due or payable.

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