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Insolvency Law Firms 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 has always held a prime place in world polity but in the last few years, it has also been getting recognition as an economic power. Economic growth has been positive and this has led to a spurt of growth in all sectors. Number of companies, firms, businesses have gone up tremendously, but as a side effect, lots of legal and compliance issues have arisen. As matters related to judiciary and law are incomprehensible to common people, they are bound to take aid of legal firms and professionals in such matters.

    Nothing can be more agonizing than having to deal with bad debt, especially if a substantial amount is involved. Chasing debtors, trying for means and ways to get back your due, is no easy task; it hampers your economic, physical as well as mental health. If your rational and logical persuasions have fallen on deaf ears, it is advisable to contact a professional agency or firm to assist you. If you are looking to recover your bad debt from a corporate then it is advisable for you to contact one of the many insolvency law firms in India. Insolvency and Bankruptcy(I&B) Code, 2016, is outstanding legislation of a blend of various earlier codes and provides a single-window clearance system. It is a creditor centric legislation which provides time-bound relief.

    MUDS consultancy has established itself as one of the topmost insolvency law firms in India. We are greatly advantaged to have a gamut of professionals’ adept in IBC, 2016 and it is their steadfast commitment and professional fairness that has led to our huge success. Today we have to our credit 90+ successful cases of liquidation pan India and additionally, 50 more in the pipeline.

    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)

    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.

    By going through the above points, it must be clear that this is the best option to recover your bad debt within a short time, but to be successful in your endeavor, you need to contact one of the well- established insolvency law firms in India.

    Looking at the steps from the initiation of the process till the satisfactory solution, there is a great deal of legal work to be done. A legal firm, which has professionals with extensive experience in the matter, can be the best bet. They will expedite the entire process, follow it continuously and keep you updated. Take an informed decision and overcome your hurdles!

    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 Insolvency Law Firms in India

      In case of initiation of the insolvency process, there are certain eligibility criteria laid down by the Insolvency and Bankruptcy Code, 2016.

      • If a default has occurred.
      • The Creditor should owe the debt.
      • The debt should be legally assigned to the debtor and transferred.

      Once the insolvency resolution application is admitted, thereafter it shall be accepted within 14 days, and the corporate insolvency process shall begin from that date.

      The Adjudicating Authority, that is, 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.

      A corporate debtor may face liquidity if:

      • Any time during the insolvency resolution process, 75% of the creditors committee resolve to liquidate it.
      • If the creditors committee fails to finalize a resolution within the stipulated 180 days.
      • The resolution plan submitted by the committee is rejected by the NCLT.

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