Are you disturbed and perturbed by your bad debt? Your debtor is avoiding you? Don’t know what to do?
Well, it is a well-known fact that bad debt is an adverse factor and if not recovered, it becomes detrimental to the financial health of the Creditor, be it an individual or a corporate. If your efforts have not brought any positive results and all your pleas have fallen on deaf ears, it is advisable to approach a law firm.
MUDS consultancy firm is one of the most established insolvency law firms in Delhi, with an impeccable reputation. We constantly aspire to understand the clients’ circumstances and requirement and dispense reliable, honest and thoroughgoing legal advice accordingly. Sincerely catering to our clients with professional supremacy, we have been successful in creating a niche for ourselves.
If you are pitched against a corporate debtor who owes you Rs one lakh or more, then an insolvency law firm in Delhi like ours, can be your best bet. We have a highly experienced team of professionals who have assisted individuals, companies and businesses in recovering their debts.
As a creditor you should be aware of your rights as our research has proven that the biggest hurdle in recovery of bad debt is ‘ignorance’, as the aggrieved creditor is either uninformed or misled!
A bad debt, imperative of whether it’s a financial debt or an operational debt, can be recovered through Insolvency and Bankruptcy Code, 2016, (IBC) the most effective tool. The Code is an amalgam of different earlier codes and provides single window clearance system.
We at MUDS can successfully decode the Code for you as we are an experienced insolvency law firm in Delhi which has brought relief to 165+ clients in similar cases.
The legal steps from the initiation of the insolvency process till its satisfactory resolution, there is a great deal of legal work to be done. Only an insolvency law firm in Delhi like ours, which has professionals, with extensive experience in the matter, can bring out the best result. We will not only guide but also expedite the entire process, follow it continuously and keep you updated throughout.
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:
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,
II) Reject the Application and communicate such decision to the operational creditor and the corporate debtor if,
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:
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.
Demand Notice (form 3 and form 4 – IBBI Rules)
|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.|
Banks, Financial Institutions, Homebuyers, Enterprise, Corporate Entity or Company, etc. fall in the category of Financial Creditors and can approach under Section 7 of the Insolvency and Bankruptcy Code, 2016 for recovery of overdue debt. Whereas, Manufacturers, Traders, Employees etc. are called Operational Creditors and they can approach under Section 9 of the Insolvency and Bankruptcy Code, 2016 for recovery of debt.
The Adjudicating Authority, that is, NCLT, can reject the application under these circumstances if:
A Creditor can himself or jointly with other creditors, file in NCLT against the corporate debtor and initiate insolvency. While filing the application, the proof of default should be attached and the suggested name of the insolvency professional should also be submitted.
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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