IBC, 2016:

Revolutionising

CA profession

11-Sep-171

Nipun SinghviHead- Corporate Law Practices

B.Com.(Hons.), BCCD, LLB, LLM(Corporate Laws),LCS, FCA, Certified

IFRS, Certified Forensic Accountant, Certified Con. Bank Audit

Ahmedabad | Mumbai |Delhi |Jodhpur

Disclaimer

11-Sep-172

All the views presented here are my personal and doesn’t in

any way are the views of organisations owned or controlled

by me. Their similarity in any way doesn’t purport to the

views of Institutions and any action taken based on these

views should be your personal domain with professional

advice. No legal action can be taken for the loss incurred on

action taken relying on the opinion ,advice or comments

made during the presentation.

11-Sep-173

Code or Act?

Civil Procedure Code, 1908 Companies Act,2013

Code of Criminal Procedure ,

1973

Income tax Act, 1961

Indian Penal Code,1860 Finance Act,1994

11-Sep-174

Bankruptcy No. 1:

The Trump Taj Mahal, 1991

Bankruptcy No. 2:

Trump Castle, 1992

Bankruptcy No. 3:

Trump Plaza and Casino, 1992

Bankruptcy No. 4:

Plaza Hotel, 1992

Bankruptcy No. 5:

Trump Hotels and Casinos Resorts, 2004

Bankruptcy No. 6:

Trump Entertainment Resorts, 2009

11-Sep-175

Structure

Part I

Preliminary

Section 1 to 3

Part II

Corporate Insolvency

Resolution Process

7 Chapters

Section 4 -77

Part III

Insolvency Resolution

and Bankruptcy of

Individuals and

Partnership firms

Part V

Miscellaneous

Section 224-255

SCHEDULES

First to Eleventh

Schedule

Part IV

Regulation of Insolvency

Professionals, Agencies

and Information Utilities

7 Chapters

Section 188-233

Code has 255 Sections divided

into 5 parts

11-Sep-176

The Sick Industrial Companies (Special Provisions)

Act, 1985;

The Presidency Towns Insolvency Act, 1909 and the

Provincial Insolvency Act, 1920;

Amended 10 Central Acts

The Indian Partnership Act, 1932

The Central Excise Act, 1944

The Income- tax Act, 1961

The Customs Act, 1962

The Recovery of Debts due to Banks and Financial Institutions Act, 1993

The Finance Act, 1994

The Securitisation and Reconstruction of Financial Assets and

Enforcement of Security Interest Act, 2002

The Sick Industrial Companies (Special Provisions) Repeal Act, 2003

The Payment and Settlement Systems Act, 2007

The Limited Liability Partnership Act, 2008

The Companies Act, 2013

11-Sep-177

Amitabh Bachchan Corporation

Limited went Bankrupt

SICA allowed only industries

specified under IDRA Schedule

It bought factory to become SICK

company.

Now no need to be Industry under IDRA – Schedule I

Any company whether engaged in Manufacturing or Service both can

apply.

Registration shall give immunity under all pending suits/ proceedings.

IBBI

Advisory Committee

Service Providers

Corporate Insolvency & Liquidation

Professional Resolution Agency

Resolution Professionals

11-Sep-179

Insolvency Professionals

Insolvency Professionals

Insolvency Professionals

Entity

Passed National Insolvency

Exam

Passed Limited Insolvency

Exam + 15 Years of experience

in after graduation in

Management.

Passed Limited Insolvency

Exam + 10 Years of practice as

CA, CS, CWA, ADV

15 Years of practice as CA,

CS, CWA, ADV for Limited

Period of 6 Month

LLP or Registered Partnership

Firm having majority of

Partners registered as

Insolvency Professional

A Company having majority

of Whole Time Directors

registered as Insolvency

Professional

11-Sep-1710

How to Apply for Insolvency Professional

1. Apply for Limited Insolvency Examination/ National Insolvency

Exam

2. After Clearing Exam Apply to become Member with any IPA u/s

206 by Filing Prescribed forms of IPA and Fee of Rs. 10,000/-

3. After becoming Member of IPA apply to IBBI u/s 207 read with

regulation 6 of IB(IP) Regulation, 2016 in FORM A along with

Fee of Rs. 10,000/-

11-Sep-1711

“Insolvency”

“Winding Up”

“Liquidation”

“Bankruptcy”

11-Sep-1712

Who can initiate CIRP?

Corporate

Debtor Creditors

Operational

Creditors

Financial

Creditors

11-Sep-1713

Operational Financial

Employees Banks

Trade Creditors Financial

Institutions

Labourers NBFC

Rent expenses Lender

Utility bills

11-Sep-1714

Employees on paper for 3

years and couldn’t get dues

Service Tax Dept to auction Vijay

Mallya’s Kingfisher Airlines

in November 2016

11-Sep-1715

(7) "financial creditor" means any person to whom a financial debt is owed and includes a

person to whom such debt has been legally assigned or transferred to;

(8) "financial debt" means a debt alongwith interest, if any, which is disbursed against the consideration

for the time value of money and includes—

(a) money borrowed against the payment of interest;

(b) any amount raised by acceptance under any acceptance credit facility or its de-materialised equivalent;

(c) any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan

stock or any similar instrument;

(d) the amount of any liability in respect of any lease or hire purchase contract which is deemed as a

finance or capital lease under the Indian Accounting Standards or such other accounting standards as

may be prescribed;

(e) receivables sold or discounted other than any receivables sold on nonrecourse basis;

(f) any amount raised under any other transaction, including any forward sale or purchase agreement,

having the commercial effect of a borrowing;

(g) any derivative transaction entered into in connection with protection against or benefit from

fluctuation in any rate or price and for calculating the value of any derivative transaction, only the

market value of such transaction shall be taken into account;

(h) any counter-indemnity obligation in respect of a guarantee, indemnity, bond, documentary letter of

credit or any other instrument issued by a bank or financial institution;

(i) the amount of any liability in respect of any of the guarantee or indemnity for any of the items referred

to in sub-clauses (a) to (h) of this clause;

11-Sep-1716

(20) "operational creditor" means a person to

whom an operational debt is owed and includes

any person to whom such debt has been legally

assigned or transferred;

(21) "operational debt" means a claim in

respect of the provision of goods or services

including employment or a debt in respect of the

repayment of dues arising under any law for the

time being in force and payable to the Central

Government, any State Government or any local

authority;

Managing NPA17

Corporate Firm/Proprietor

SARFAESI

RDDB

Arbitration

Indian Penal Code,1860 and CrPC

Fraud U/S 447 of CA Act, 2013

NCLT under IBC

138 of NI Act, 1881

Wilful Defaulter

SARFAESI

RDDB

Arbitration

IPC/CRPC

Provincial Insolvency Act, 1920/The

Presidency-Towns Insolvency Act, 1909

Wilful Defaulter

DRT under IBC yet to be notified

138 of NI Act, 1881

Managing NPA18

Civil Proceeding Criminal Proceeding

Summary suits under CPC, 1908

Ordinary suits for recovery

Arbitration proceedings under

Arbitration & Conciliation Act,

1996

Under IPC/CRPC

Wilful Defaulter – RBI Circular

Under Sec. 138 of NI Act

Managing NPA19

SA under Sec. 17

13(4) Possession Notice

Symbolic Physical

Rejoinder from Bank

Reply to Rejoinder Bank may reply

SARFAESI

13(2) Notice Reply within 60 Days

11-Sep-1720

Corporate Jurisdiction under

Companies Act,2013

NCLT

NCLAT

Special Courts

Supreme Court

High Courts

11-Sep-1722

Work of IRP after Appointment in tenure of 30 Days

IP will make Public Announcement of his Appointment as IRP within 3 Days

of Appointment on Form A

Management of Affairs of Corporate Debtor transferred to IRP

Appointment of 2 Registered Valuers by IRP within 7 Days of Appointment

Proof of Claims to be submitted within 14 days from Appointment of IRP

(Subject to regulation 12(2) which allowed creditor to submit their proof

before approval of Resolution Plan by COC

Prepare and Supply at least part of Information Memorandum to COC and

Applicant within 30 days before first meeting of COC as per regulation

36(1)(a) and rest part within 14 days of First Meeting of COC as per

regulation 36(1)(b)

Formation of COC and filing report certifying constitution of COC with

NCLT within 30 days from Appointment.

First meeting of COC within 7 days of filing report with NCLT

First meeting of COC decides the FATE of IRP, whether he’ll go out or become

RP for the rest Insolvency Process

11-Sep-1723

Key Points for IRP

•Default more than Rs.1 lakh

• Shift from Net-worth based to Default based law

• “Debtors in possession” to “Creditors in Possession”

11-Sep-1724

11-Sep-1727

Liquidation Costs

Government dues of 12 months

Workmen dues and Secured Creditors Debt

Workmen dues

Employees’ dues

Unsecured Creditors

Preference Shareholders

Equity Shareholders

Insolvency Process Costs

Liquidation Costs

Workmen dues of 24 months and Secured Creditors Debt

Employee dues of 12 months

Unsecured financial creditors

Crown debts & unpaid dues of secured creditors

Other debt (include Trade Creditors)

Preference Shareholders

Equity Shareholders

Companies Act,1956IBC,2016

Rules & Regulations under the Code

• 30 Nov 2016 (Application To Adjudicating Authority) Rules, 2016

• 31st Jan 17 Insolvency and Bankruptcy Board of India( Procedure For Governing Boards Meetings)

Regulations, 2017.

• 31st Jan 17 Insolvency and Bankruptcy Board of India( Advisory Committee) Regulations, 2017.

• 31st Jan 17 Insolvency and Bankruptcy Board of India(Engagement Of Research Associates And

Consultants) Regulations, 2017.

• 15 Dec 16 Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016.

• 30 Nov 16 Insolvency and Bankruptcy Board of India (Insolvency Resolution Process For

Corporate Persons) Regulations, 2016.

• 23 Nov 16 Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations,

2016.

• 21 Nov 16 Insolvency and Bankruptcy Board of India (Model Bye-Laws and Governing Board of

Insolvency Professional Agencies) Regulations, 2016.

• 21 Nov 16 Insolvency and Bankruptcy Board of India (Insolvency Professional Agencies)

Regulations, 2016.

Nipun Singhvi B.Com.(Hons.), BCCD, LLB, LLM (Corporate), LCS, FCA, IFRS

Certified, Forensic Certified, Con. Bank Audit Certified

11-Sep-1729

111-112, University Plaza,Nr Vijay Cross Roads,NavrangpuraAhmedabad 380 009

+91 79 30615933

+91 93275 55933

+91 98290 31411

nipunsinghvi@yahoo.comnipun@cogitolegal.com

Ahmedabad | Mumbai |Delhi |Jodhpur