The Insolvency and Bankruptcy Code - A dawn of new era of Debt Reforms

  M/s.  S Dhanapal & Associates, Practising Company Secretaries, Chennai                                                                                              S D hanapal  Sr. Partner  S Dhanapal & Associates Practising Company Secretaries Chennai   M/s.  S Dhanapal & Associates, Practising Company Secretaries, Chennai                                                         THE INSOLVENCY AND BANKRUPTCY CODE 2016 (An insight on notified provisions) POSITION ON INSOLVENCY BEFORE INTRODUCTION OF THIS CODE The Existing insolvency laws and laws relating to recovery of loans enacted for the purpose of companies and banks namely the Sick Industrial Companies Act, The Recovery of Debt Due to Banks & Financial Institutions Act, the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, Companies Act 2013/Companies Act 1956 etc are not providing speedy remedy to recover the loans and debts due from debtors and in a way it has failed to improve the recovery position and possibility from debtor by the creditor. The position remain the same in case of Individuals, sole proprietorships and partnership firms where the laws governing the insolvency namely The Presidency Towns Insolvency Act, 1909 and The Provincial Insolvency act, 1920 were not providing proper solution to recover the loans and debts due from individual and partnership debtors. Therefore, it is felt by the Government that there is a need to have a consolidated law or code to govern and regulate the matters of recovery of money from debtors who have borrowed and failed to repay debts even after it becomes due more particularly when those debts are not secured. If we look at the provisions in the Constitution of India, the item “Bankruptcy & Insolvency” is stated as Entry 9 in List III - Concurrent List, (Article 246–Seventh Schedule to the Constitution) that is to say both Central and State Governments can make laws relating to this subject. It appears as follows: LEGISLATIVE AUTHORITY UNDER CONSTITUTION OF INDIA RELATING TO REGULATION, WINDING UP OF CORPORATIONS ANDINSOLVENCY & BANKRUPTCY Entry 43 List I Regulation and winding up of trading corporations, including banking, insurance and financial corporations, but not including co-operative societies Entry 44 List I Incorporation, regulation and winding up of corporations, whether trading or not, with objects not confined to one State, but not including universities. Entry 32 List II Incorporation, regulation and winding up of corporations, other than those specified in List I Entry 9 List III Bankruptcy & Insolvency A CODE THAT PROMISES VIVID FUTURE TO DEBT RECOVERY   M/s.  S Dhanapal & Associates, Practising Company Secretaries, Chennai                                                         From the above it can be seen that, laws relating to Insolvency and Bankruptcy can be legislated by both Central & State Governments. Whereas, since laws relating to regulation and winding up of companies / corporations / Banking are coming in List I, it appears laws can be legislated only by Central Government leaving laws relating to regulation and winding up of corporations, other than those specified in List I to State Governments’ Legislative Power. THE INSOLVENCY AND BANKRUPTCY CODE, 2015 – LEGISLATIVE HISTORY The Insolvency and Bankruptcy Code, 2015 was introduced in Lok Sabha on 21 December, 2015 and the same was referred to Joint Committee on The Insolvency and Bankruptcy Code, 2015 for examination. The report of the Joint committee was presented in Lok Sabha and was laid down in Rajya Sabha on April 28, 2016. The code has been passed by Lok Sabha on May 05, 2016 and by Rajya Sabha on May 11, 2016. POSITION ON INSOLVENCY AFTER INTRODUCTION OF THIS CODE It is stated in the preamble of the Code that the law is enacted to consolidate and amend the laws relating to reorganisation and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximisation of value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interests of all the stakeholders including alteration in the order of priority of payment of Government dues and to establish an Insolvency and Bankruptcy Fund, and for matters connected therewith or incidental thereto. Therefore upon the code becoming into force, various remedies as stated under the following laws will be coming under one roof: a) SICA, 1985 b) Recovery of Debts Due to Banks and Financial Institutions Act, 1993 c) SARFAESI Act, 2002; and d) Companies Act, 2013 The Code seeks to amend the following 11 enactments while repealing Presidency Towns Insolvency Act, 1909 and Provincial Insolvency Act, 1920;  The Indian Partnership Act 1932  The Central Excise Act 1944  The Income Tax Act 1961  The Customs Act. 1962  Recovery of Debts Due to Banks and Financial Institutions Act, 1993  The Finance Act 1994  The Securitisation & Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002  Sick Industrial Companies (Special Provisions) Repeal Act, 2003  The payment and Settlement Systems Act 2007  The Limited Liability Partnership Act 2008  Companies Act, 2013 / 1956 It is stated in the Press information released by Ministry of Finance dated 11th May 2016 that the objective of this new law is to promote entrepreneurship, availability of credit, and balance the interests of all stakeholders by consolidating   M/s.  S Dhanapal & Associates, Practising Company Secretaries, Chennai                                                         and amending the laws relating to reorganization and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner and for maximization of value of assets of such persons and matters connected therewith or incidental thereto and the salient features of the law are as follows: i- Clear, coherent and speedy process for early identification of financial distress and resolution of companies and limited liability entities if the underlying business is found to be viable. ii‐ Two distinct processes for resolution of individuals, namely- “Fresh Start” and “Insolvency Resolution”.  iii‐ Debt Recovery Tribunal and National Company Law Tribunal to act as Adjudicating Authority and deal with the cases related to insolvency, liquidation and bankruptcy process in respect of individuals and unlimited partnership firms and in respect of companies and limited liabilities entities respectively.   iv- Establishment of an Insolvency and Bankruptcy Board of India to exercise regulatory oversight over insolvency professionals, insolvency professional agencies and information utilities. v‐ Insolvency professionals would handle the commercial aspects of insolvency resolution process. Insolvency professional agencies will develop professional standards, code of ethics and be first level regulator for insolvency professionals members leading to development of a competitive industry for such professionals.   vi‐ Information utilities would collect, collate, authenticate and disseminate financial information to be used in insolvency, liquidation and bankruptcy proceedings.  vii- Enabling provisions to deal with cross border insolvency. The Insolvency and Bankruptcy Code, 2016, is divided into 5 parts. It consists of 238 clauses and 1 schedule. Part I – Preliminary Part II – Insolvency Resolution and Liquidation for Corporate Persons Part III – Insolvency Resolution and Bankruptcy for Individuals and Partnership Firms Part IV – Regulation of Insolvency Professionals, Agencies and Information Utilities Part V – Miscellaneous Code and this code extends to the whole of India, but Part III i.e. insolvency Resolution and Bankruptcy for individuals and Partnership Firms will not extend to Jammu & Kashmir. CODE IS APPLICABLE TO Companies incorporated under Companies Act Any other company governed by special Act Limited Liability Partnership / Partnership Firm Body Corporate, incorporated by any Act Individuals     M/s.  S Dhanapal & Associates, Practising Company Secretaries, Chennai                                                         FEW IMPORTANT DEFINITIONS UNDER THE CODE FOR CORPORATE INSOLVENCY   M/s.  S Dhanapal & Associates, Practising Company Secretaries, Chennai                                                         Particulars Timelines(days) Filing of Insolvency application – Details of what needs to be mentioned in the application has been specified X Adjudicating Authority- admission or rejection of application - Before rejecting an application, the Adjudicating Authority shall give a notice to the applicant to rectify the defect in the application within 7 days. If admitted, Adjudicating Authority to declare moratorium upon admission. X+14 Insolvency Resolution Professional appointment (X+14) + 14 Constitution of Committee of Creditors Appointment of final resolution professional (X+14) + 14 + 10 Submission of Resolution plan If approved- Moratorium ceases to have effect If rejected- Initiation of Liquidation Insolvency Resolution Process Completion (X+14) + 180 Insolvency Resolution Process Extension (X+14) + 180 +90   M/s.  S Dhanapal & Associates, Practising Company Secretaries, Chennai                                                         NOTIFICATION OF FEW PROVISIONS OF THE CODE RECENTLY BY MINISTRY OF CORPORATE AFFAIRS; Ministry of Corporate Affairs has recently notified on 5th of August, 2016 the provisions of sections 188 to 194 (both inclusive). Sections 188 to 194 (both inclusive) of the Insolvency and Bankruptcy Code, 2016 and these sections fall under Chapter I of Part IV (Regulation of Insolvency Professionals, Agencies and Information Utilities) of the Code and relate to the establishment, incorporation and constitution of The Insolvency and Bankruptcy Board of India (“Board”), and include provisions relating to powers of the chairman of the Board and meetings of the Board and also on 19th August 2016 following sections of the said Code shall come into force:— SECTIONS NOTIFIED on 19 th August 2016 Section 3 - (i) clause (1); (ii) clause (5); (iii) clause (22); (iv) clause (26); (v) clause (28); (vi) clause (37); section 221; section 222; section 225; section 226; section 230; section 232; section 233;. sub-section (1) and clause (zd) of sub-section(2) of sec 239; sub-section (1) and clause (zt) of sub-section (2) of section 240; section 241; and section 242 SECTIO N NO. HEADING PROVISIONS OF SECTION EFFECTIVE DATE 3(1) DEFINITIONS "Board" means the Insolvency and Bankruptcy Board of India established under sub-section (1) of section 188    19th August 2016 3(5) DEFINITIONS "Chairperson" means the Chairperson of the Board   19th August 2016 3(22) DEFINITIONS "notification" means a notification published in the Official Gazette, and the terms "notified" and "notify" shall be construed accordingly    19th August 2016 3(26) DEFINITIONS "prescribed" means prescribed by rules made by the Central Government    19th August 2016 3(28) DEFINITIONS "regulations" means the regulations made by the Board under this Code    19th August 2016 3(37) DEFINITIONS words and expressions used but not defined in this Code but defined in the Indian Contract Act, 1872, the Indian Partnership Act, 1932, the Securities Contact (Regulation) Act, 1956, the Securities Exchange Board of India Act, 1992, the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, the Limited Liability Partnership Act, 2008 and the Companies Act, 2013, shall have the meanings respectively assigned to them in those Acts.    19th August 2016 188 ESTABLISHMENT AND INCORPORATION OF BOARD 188. (1) With effect from such date as the Central Government may, by notification, appoint, there shall be established, for the purposes of this Code, a Board by the name of the Insolvency and Bankruptcy Board of India. (2) The Board shall be a body corporate by the name aforesaid, having perpetual succession and a common seal, with power, subject to the provisions of this Code, to acquire, hold and dispose of property, both movable and immovable, and to contract, and shall, by the said name, sue or be sued. (3) The head office of the Board shall be at such place in the National Capital Region, as the Central Government may, by notification, specify. 5th August 2016   M/s.  S Dhanapal & Associates, Practising Company Secretaries, Chennai                                                         Explanation.—For the purposes of this section, the expression "National Capital Region" shall have the same meaning as assigned to it in clause (f) of section 2 of the National Capital Region Planning Board Act, 1985. (4) The Board may establish offices at other places in India. 189 CONSTITUTION OF BOARD. 189. (1) The Board shall consist of the following members who shall be appointed by the Central Government, namely:— (a) a Chairperson; (b) three members from amongst the officers of the Central Government not below the rank of Joint Secretary or equivalent, one each to represent the Ministry of Finance, the Ministry of Corporate Affairs and Ministry of Law, ex officio; (c) one member to be nominated by the Reserve Bank of India, ex officio; (d) five other members to be nominated by the Central Government, of whom at least three shall be the whole-time members. *(Recently the Ministry of Corporate Affairs issued advertisement inviting application for the post of Chairperson and three whole time Members) (2) The Chairperson and the other members shall be persons of ability, integrity and standing, who have shown capacity in dealing with problems relating to insolvency or bankruptcy and have special knowledge and experience in the field of law, finance, economics, accountancy or administration. (3) The appointment of the Chairperson and the members of the Board other than the appointment of an ex officio member under this section shall be made after obtaining the recommendation of a selection committee consisting of— (a) Cabinet Secretary—Chairperson; (b) Secretary to the Government of India to be nominated by the Central Government—Member; (c) Chairperson of the Insolvency and Bankruptcy Board of India (in case of selection of members of the Board)—Member; (d) three experts of repute from the field of finance, law, management, insolvency and related subjects, to be nominated by the Central Government—Members (4) The term of office of the Chairperson and members (other than ex officio members)shall be five years or till they attain the age of sixty-five years, whichever is earlier, and they shall be eligible for reappointment. (5) The salaries and allowances payable to, and other terms and conditions of service of, the Chairperson and members (other than the ex officio members) shall be such as may be prescribed. *(The Ministry of Corporate Affairs has recently released the Insolvency and Bankruptcy Board of India (Salary, Allowances and other Terms and Conditions of Service of Chairperson and Members) Rules, 2016. 5th August 2016 190 REMOVAL OF MEMBER FROM OFFICE. 190.The Central Government may remove a member from office if he— (a) is an undischarged bankrupt as defined under Part III; (b) has become physically or mentally incapable of acting as a member; (c) has been convicted of an offence, which in the opinion of the Central Government involves moral turpitude; (d) has, so abused his position as to render his continuation in office detrimental to the public interest: Provided that no member shall be removed under clause (d) unless he has been given a reasonable opportunity of being heard in the matter. 5th August 2016   M/s.  S Dhanapal & Associates, Practising Company Secretaries, Chennai                                                         191 POWERS OF CHAIRPERSON 191. Save as otherwise determined by regulations, the Chairperson shall have powers of general superintendence and direction of the affairs of the Board and may also exercise such other powers as may be delegated to him by the Board. . 5th August 2016 192 MEETINGS OF BOARD. (1) The Board shall meet at such times and places, and observe such rules of procedure in regard to the transaction of business at its meetings (including quorum at such meetings) as may be determined by regulations. (2) The Chairperson, or if, for any reason, the Chairperson is unable to attend any meeting of the Board, any other member chosen by the members present at the meeting shall preside at the meeting. (3) All questions which come up before any meeting of the Board shall be decided by a majority votes of the members present and voting, and, in the event of an equality of votes, the Chairperson, or in his absence, the person presiding, shall have a second or casting vote. 5th August 2016 193 MEMBER NOT TO PARTICIPATE IN MEETINGS IN CERTAIN CASES 193. Any member, who is a director of a company and who as such director has any direct or indirect pecuniary interest in any matter coming up for consideration at a meeting of the Board, shall, as soon as possible after relevant circumstances have come to his knowledge, disclose the nature of his interest at such meeting and such disclosure shall be recorded in the proceedings of the Board, and the member shall not take any part in any deliberation or decision of the Board with respect to that matter. 5th August 2016 194 VACANCIES, ETC., NOT TO INVALIDATE PROCEEDINGS OF BOARD, OFFICERS AND EMPLOYEES OF BOARD. 194. (1) No act or proceeding of the Board shall be invalid merely by reason of— (a) any vacancy in, or any defect in the constitution of, the Board; or (b) any defect in the appointment of a person acting as a member of the Board; or (c) any irregularity in the procedure of the Board not affecting the merits of the case. (2) The Board may appoint such other officers and employees as it considers necessary for the efficient discharge of its functions in such manner as may be specified. (3) The salaries and allowances payable to, and other terms and conditions of service of, officers and employees of the Board appointed under sub-section (2) shall be such as may be specified by regulations. 5th August 2016 221  GRANTS BY CENTRAL GOVERNMENT The Central Government may, after due appropriation made by Parliament by law in this behalf, make to the Board grants of such sums of money as that Government may think fit for being utilised for the purposes of this Code.   19th August 2016 222  BOARD’S FUND (1) There shall be constituted a Fund to be called the Fund of the Insolvency and Bankruptcy Board and there shall be credited thereto—  (a) all grants, fees and charges received by the Board under this Code;  (b) all sums received by the Board from such other sources as may be decided upon by the Central Government;  (c) such other funds as may be specified by the Board or prescribed by the Central Government.  (2) The Fund shall be applied for meeting—  (a) the salaries, allowances and other remuneration of the members, officers and other employees of the Board;  (b) the expenses of the Board in the discharge of its functions under section 196;  19th August 2016   M/s.  S Dhanapal & Associates, Practising Company Secretaries, Chennai                                                         (c) the expenses on objects and for purposes authorised by this Code;  (d) such other purposes as may be prescribed.   225  POWER OF CENTRAL GOVERNMENT TO ISSUE DIRECTIONS. (1) Without prejudice to the foregoing provisions of this Code, the Board shall, in exercise of its powers or the performance of its functions under this Code, be bound by such directions on questions of policy as the Central Government may give in writing to it from time to time:  Provided that the Board shall, as far as practicable, be given an opportunity to express its views before any direction is given under this sub-section.  (2) The decision of the Central Government as to whether a question is one of policy or not shall be final.   19th August 2016 226  POWER OF CENTRAL GOVERNMENT TO SUPERSEDE BOARD. (1) If at any time the Central Government is of opinion— (a) that on account of grave emergency, the Board is unable to discharge the functions and duties imposed on it by or under the provisions of this Code; or  (b) that the Board has persistently not complied with any direction issued by the Central Government under this Code or in the discharge of the functions and duties imposed on it by or under the provisions of this Code and as a result of such noncompliance the financial position of the Board or the administration of the Board has deteriorated; or  (c) that circumstances exist which render it necessary in the public interest so to do, the Central Government may, by notification, supersede the Board for such period, not exceeding six months, as may be specified in the notification.    (2) Upon the publication of a notification under sub-section (1) superseding the Board, — (a) all the members shall, as from the date of supersession, vacate their offices as such;  (b) all the powers, functions and duties which may, by or under the provisions of this Code, be exercised or discharged by or on behalf of the Board, shall until the Board is reconstituted under sub-section (3), be exercised and discharged by such person or persons as the Central Government may direct; and (c) all property owned or controlled by the Board shall, until the Board is reconstituted under sub-section (3), vest in the Central Government.  (3) On the expiration of the period of supersession specified in the notification issued under sub-section (1), the Central Government may reconstitute the Board by a fresh appointment and in such case any person or persons who vacated their offices under clause (a) of sub-section (2), shall not be deemed disqualified for appointment: Provided that the Central Government may, at any time, before the expiration of the period of supersession, take action under this sub-section.    (4) The Central Government shall cause a notification issued under sub- section (1) and a full report of any action taken under this section and the circumstances leading to such action to be laid before each House of Parliament at the earliest.    19th August 2016   M/s.  S Dhanapal & Associates, Practising Company Secretaries, Chennai                                                         230 DELEGATION The Board may, by general or special order in writing delegate to any member or officer of the Board subject to such conditions, if any, as may be specified in the order, such of its powers and functions under this Code (except the powers under section 240 as it may deem necessary.    19th August 2016 232 MEMBERS, OFFICERS AND EMPLOYEES OF BOARD TO THE PUBLIC SERVANTS. The Chairperson, Members, officers and other employees of the Board shall be deemed, when acting or purporting to act in pursuance of any of the provisions of this Code, to be public servants within the meaning of section 21 of the Indian Penal Code.    19th August 2016 233 PROTECTION OF ACTION TAKEN IN GOOD FAITH No suit, prosecution or other legal proceeding shall lie against the Government or any officer of the Government, or the Chairperson, Member, officer or other employee of the Board or an insolvency professional or liquidator for anything which is in done or intended to be done in good faith under this Code or the rules or regulations made thereunder.   19th August 2016 239(1)  POWER TO MAKE RULES (1) The Central Government may, by notification, make rules for carrying out the provisions of this Code.   19th August 2016 239(2)(z d)  (zd) the salaries and allowances payable to, and other terms and conditions of service of, the Chairperson and members of the Board under sub-section (5) of section 189;   19th August 2016 240(1)  POWER TO MAKE REGULATIONS. (1) The Board may, by notification, make regulations consistent with this Code and the rules made thereunder, to carry out the provisions of this Code.   19th August 2016 240(2)(zt )  (zt) the appointment of other officers and employees under sub-section (2), and the salaries and allowances payable to, and other terms and conditions of service of, such officers and employees of the Board under sub-section (3), of section 194;   19th August 2016 241  RULES AND REGULATIONS TO BE LAID BEFORE PARLIAMENT. Every rule and every regulation made under this Code shall be laid, as soon as may be after it is made, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or regulation or both Houses agree that the rule or regulation should not be made, the rule or regulation shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule or regulation.   19th August 2016 242  POWER TO REMOVE DIFFICULTIES. (1) If any difficulty arises in giving effect to the provisions of this Code, the Central Government may, by order, published in the Official Gazette, make such provisions not inconsistent with the provisions of this Code as may appear to be necessary for removing the difficulty:  Provided that no order shall be made under this section after the expiry of five years from the commencement of this Code.  (2) Every order made under this section shall be laid, as soon as may be after it is made, before each House of Parliament.   19th August 2016     M/s.  S Dhanapal & Associates, Practising Company Secretaries, Chennai                                                         CHART CONSISTING OF EXISTING PROVISIONS OF COMPANIES ACT 2013 TO BE AMENDED /  REPLACED WITH THE PROVISIONS OF INSOLVENCY AND BANKRUPTCY CODE (IBC) 2016 ON  NOTIFICATION AS FOLLOWS;  Sl  Inserted  /Amended  Sections of  Companie s Act,2013 Impact in the provisions of the Companies Act 2013  which stands modified as per Provisions of  E leventh Schedule of Insolvency and Bankruptcy  Code 2016  Existing provisions of  Companies Act, 2013 Provisions of E leventh Schedule  of Insolvency Code  amend Companies Act 2013 as  under.   1 2(23) Definition of Company Liquidator – Clause 23 is  getting substituted Liquidator can be appointed  by the Tribunal in case of  winding up by tribunal or the  Company / creditors in case  of voluntary winding up Liquidator can be appointed  only by the Tribunal in  accordance with Section 275  2 2(94A)   New clause 94A inserte d  in the Companies Act 2013  as per the Eleventh Schedule of The Insolvency and  Bankruptcy Code 2016 to bring liquidation under IBC,  2016 also within the meaning of Winding up under  Companies Act 2013. Originally winding up only  was covered under  Companies Act, 2013   Winding up also includes   liquidation  under IBC, 2016 as  per new clause 2(94A) which  stand inserted in CA 2013.  3 8(9) Transfer of excess assets of Section 8 Company, in  case of winding up / dissolution.  For the words “the Rehabilitation & Insolvency Fund  formed u/s 269”, the words “Insolvency &  Bankruptcy Fund formed u/s 224 of the IBC, 2016” is  Substituted  “the Rehabilitation &  Insolvency Fund formed u/s  269”,  the words “Insolvency &  Bankruptcy Fund formed u/s  224 of IBC, 2016” stand  inserted  in Section 8(9) of  Companies Act 2013.   4 66(8) Reduction of Share Capital:   For the words “is unable, within the meaning of  section 271(2), to pay the amount of his debt or  claim” the words “Commits default, within the  meaning of section 6 of the IBC, 2016, in respect of  the amount of his debt or claims” is substituted Section 66(8) triggers only  when  commission  of default  in payment of debt / claim of  a creditor occurs. the words “Commits default,  within the meaning of section  6 of the IBC, 2016, in respect  of the amount of his debt or  claims” stand inserted in  Section 66(8) of CA 2013.  5 77(3) Duty to Register Charges etc   After the words “the liquidator” the words  “appointed under this Act or the IBC, 2016” is  inserted Unregistered charges shall  not be considered by the  liquidator appointed under  Companies Act, 2013 Unregistered charges shall not  be considered by the liquidator  appointed under CA, 2013 as  well as the liquidator  appointed  under the IBC, 2016  6 117 (3)(f) Resolutions & agreements to be filed:For the words “section 304” the words “section 59  of the IBC, 2016” is substituted as Chapter XX, Part II  containing section 304 to 323 dealing with voluntary section 304 provided for  circumstances where a  company can wound up  voluntarily   The words “section 59 of the  IBC, 2016” stand inserted in  Sec 117 (3)(f) of CA 2013 in  place of words “section 304” as    M/s.  S Dhanapal & Associates, Practising Company Secretaries, Chennai                                                         winding up is fully omitted.    Section 59 of IBC, 2016  provides for Voluntary  liquidation of companies.  7 224(2) Winding up in pursuance to the Inspectors Report:   After the words “wound up under this Act” the  words “or under the IBC, 2016” is substituted Section 224(2) providesfor  Winding up in pursuance to  the Inspectors Report under  this Act The words “or under the IBC,  2016” stand inserted in Section  224(2) of CA 2013 in place of  “wound up under this Act”  8 230(1)&(6 ) Power to compromise or make arrangements with  creditors and members  Everywhere after the word “Liquidator” the words  “appointed under this Act or under the IBC, 2016” is  inserted.     Section 230(1)&(6) provides  for Power to compromise or  make arrangements with  creditors and members.   The words “appointed under  this Act or under the IBC,  2016” stand inserted in Section  230 (1) & (6) of CA 2013.  9 249 (1)(e) Restriction on making application u/s 248 in certain  situations, for removal of name of the Company    For the word “is being wound up under Chapter XX,  whether voluntarily or by the Tribunal” the words  “is being wound up under Chapter XX of this Act or  under the IBC, 2016” is substituted Section249(1)(e)envisages  Restriction on making  application u/s 248 in certain  situations, for removal of  name of the Company is  being wound up under  Chapter XX, whether  voluntarily or by the Tribunal   the words “is being wound up  under Chapter XX of this Act or  under the IBC, 2016” stand  inserted in Section 249 (1)(e)  of CA 2013 to replace the  words “is being wound up   under Chapter XX, whether  voluntarily or by the Tribunal”  10 253‐269 Chapter XIX – fully omitted CHAPTER XIX comprising  Section 253 – 269 deals with  Revival & rehabilitation of  Sick Companies. Chapter XIXof CA 2013stands fully omitted as equivalent  provisions were got  incorporated in the Code.   11 270 Modes of winding up    Fully substituted as follows;  "270. The provisions of Part I shall apply to the winding up of a company by the Tribunal under this Act."  Provisions of the Section 270  envisage as under;  Winding up:  1. By Tribunal   2. Voluntary  The new provisions of Section  270 enable  winding up of a  company only by the Tribunal  by bringing out the scope of  Voluntary Winding up outside  the purview of Companies Act  2013.   12 271    PART I.—Winding up by the Tribunal  Circumstances in which company may be wound up  by Tribunal –   (a) if the company is unable to pay its debts;  (b) the company by special resolution  (c) if the company has acted against the interests of Circumstances specified  under Clause (b) (c) (e) (f)   and  Clause (g)  in which  company may be wound  up  by Tribunal under Section 271  of CA 2013 are retained. Circumstances  specified   under Clause (a) and Clause (d)  in which company may be  wound  up by Tribunal Under  Section 271 of CA 2013 was  removed by virtue of    M/s.  S Dhanapal & Associates, Practising Company Secretaries, Chennai                                                         the sovereignty and integrity of Indiaetc…. (d) winding up of the company under Chapter XIX;  (e) application by the Registrar or the Tribunal   (f) default in filing its financial statements or annual  returns for preceding five years; or  (g) just and equitable that the company   amendments brought out by  IBC  2016    13  272 Section 272 ‐ Petition for winding up by – (a) the company;  (b) any creditor or creditors,   (c) any contributory or contributories;   (d) all or any of the above together;  (e) the Registrar;  (f) any person authorised by the Central Government  (g) in a case falling under clause (c) of sub‐section (1)  of section 271, by the Central or  State.   Persons  specified  under  Clause (a) (c) (e) (f)  and   Clause (g)  of Section 272 of  CA 2013 who were earlier  entitled to present petition  for the company to be wound  up by Tribunal under Section  271 of CA 2013 are permitted  to enjoy the same privilege.    Persons   specified   under  Clause b of Section 272 of CA  2013 who was earlier entitled  to present petition for the  company to be wound up by  Tribunal under Section 271 of  CA 2013 is now permitted to  enjoy the such privilege ONLY  under IBC 2016.     14 275(2) Appointment of Liquidator Section   275(2)  Sub section (2) is substituted which enable  appointment of Liquidator by the Tribunal only from  amongst the Insolvency Professional Agency under  the IBC, 2016. Section 275(2)envisages  Appointments of Liquidator  and permit such appointment  only  frompanel maintained  by the Central Government  consisting of the names of  chartered accountants,  advocates, company  secretaries, cost accountants.   Section 275(2) is substituted  enabling appointment of  Liquidator by the Tribunal only  from amongst the Insolvency  Professional Agency to be  constituted under the IBC,  2016.  15 275(4) Removal of liquidator by Central government ‐  Section  275(4)   Removal of name of any person by Central  Government from the panel of liquidators on the  grounds of misconduct, fraud, misfeasance, breach of  duties or professional incompetence. Lifted the right of removal of  liquidator by Central  government who earlier has  authority to remove the  name of any person from the  panel of liquidators on  grounds of misconduct etc  The Code contemplates  Establishment of an Insolvency  and Bankruptcy Board of India  to exercise regulatory  oversight over insolvency  professionals, insolvency  professional agencies who in  turn will develop professional  standards, code of ethics for  insolvency professionals,    16 280 Jurisdiction of Tribunal (Section 280)  (a) any suit or proceeding by or against the Section 280 originally  envisaged Tribunal also to IBC 2016 has introduced  changes such a way any    M/s.  S Dhanapal & Associates, Practising Company Secretaries, Chennai                                                         company;  (b) any claim made by or against the company,   (c) any application made under section 233;  (d) any scheme submitted under section 262;  (e) any question of priorities or any other question     (Fully substituted with same provisions and removed   clause (d) alone in Sec 280) have Jurisdiction onthe  matters  relating to scheme to  be submitted u/s 262 (now  removed clause (d) outside  purview of Tribunal under CA  2013 scheme submitted under  section 262 falls outside  purview of Tribunal under CA  2013 u/s 262– as the entire  chapter XIX relating to revival  & rehabilitation of sick  companies is omitted.  17 289 Power of tribunal on application for stay of winding  up  (Section 289) Fully Omitted  It was contemplated that the Tribunal can entertain  in case any application is filed by promoter or  shareholder for rehabilitation of company after  winding order is passed.  Power of  Tribunal on application  for stay of winding up is now  removed as provisions of  Section 289 of the  CA  2013 is  fully omitted. IBC 2016 has introduced  changes such a way Power of  Tribunal on application  for stay of winding up falls  outside purview of Tribunal  under CA 2013 as matter  relating to rehabilitation is  covered under IBC 2016.  18 304‐323 Chapter XX, Part II containing section 304 to 323  dealing with voluntary winding up is fully omitted.   It was contemplated that the Tribunal can entertain  in case any matters of voluntary winding up  as per  provisions of Section 304‐323 of the  CA 2013.But  after advent of Insolvency code 2016, the matters  pertaining voluntary winding up appears to be dealt  with under the provisions of IBC 2016 and there  hence omitted under CA 2013.. Power of Tribunal to  entertain matters of  voluntary winding up  as per  provisions of Section 304‐323  of the  CA 2013 is now  removed as  fully omitted.  IBC 2016 has introduced  changes to ensure voluntary winding up falls outside  purview of Tribunal under CA  2013 as matter relating to  liquidation is covered under IBC  2016.  19 325 Section 325 ‐ Application of Insolvency Rules in  winding up of insolvent companies (fully omitted)  It was contemplated to follow Application of  Insolvency Rules in winding up of insolvent  companies as per provisions of Section 325 of the CA  2013. But after advent of Insolvency code 2016, the  matters pertaining voluntary winding up appears to  be dealt with under the provisions of IBC 2016 and  there hence omitted under CA 2013. Application of Insolvency  Rules in winding up of  insolvent companies as per  provisions of Section 325 of  the CA 2013 is now removed  as fully omitted. IBC 2016 has introduced  changes to ensure Application  of Insolvency Rules in winding  up of insolvent companies as  per provisions of Section 325  of the CA 2013 to fall outside  purview as matter relating to  liquidation is covered under IBC  2016.  20 326 Section 326 ‐ Overriding preferential payments    ( fully substituted)  A new set of Provisions for Section 326  of the CA  2013 stands substituted with those provisions  restricting applicability of section 326 only to the  winding up of the Company within the purview of the  Companies Act 2013 as after advent of Insolvency Provisions of Section 326   before amendment:   Notwithstanding anything  contained in this Act or any  other law for the time being  in force, in the winding up of  a company,—  (a) workmen’s dues; and  (b) debts due to secured  creditors to the extent such Provisions of Section 326  after amendment:   "326. (1) In the winding up of a  company under this Act, the  following debts shall be paid in  priority to all other debts:  (a) workmen's dues; and;  (b) where a secured creditor  has realised a secured asset, so  much of the debts due to such    M/s.  S Dhanapal & Associates, Practising Company Secretaries, Chennai                                                         code 2016, the matters pertaining voluntary winding  up appears to be dealt with under the provisions of  IBC 2016 and there hence omitted under CA 2013.   debts rank under clause (iii)  of the proviso to sub‐section  (1) of section 325 pari passu  with such dues, shall be paid  in priority to all other debts secured creditor as could not  be realised by him or the  amount of the workmen's  portion in his security,  whichever is  less, pari passu  with the workmen's dues:  21 327 Preferential Payments   New clause 7 inserted   New Sub section 7 is introduced in Section 327  of  the CA 2013 which mandating the applicability of  section 326 which deals with overriding preferential  payments and sec 327 which deals with Preferential  Payments only to the winding up of the Company  within the meaning and purview of the Companies  Act 2013 as after introduction of Insolvency Code  2016, the  matters pertaining to those preferential  payments appears not to be applicable in the event  of liquidation under the IBC, 2016   Under the Companies Act  2013      In section 327,    (a) after sub‐section (6) , the  following sub‐section shall be  inserted, namely ;    " (7) Sections 326 and 327  shall not be applicable in the  event of  liquidation under the  Insolvency and Bankruptcy  Code, 2016.";   New clause inserting provisions  that section 326 & 327 shall  not be applicable in the event  of liquidation under the IBC,  2016 as sub section 7 in  Section 327 of the CA 2013 to  exclude the applicability of  provisions of section 326 and  sec 327 of CA 2013 in the case  of Liquidation under and  within the ambit of IBC 2016.  22 327 Preferential Payments   Explanation for “relevant date” is substituted to  provide for voluntary winding up under IBC, 2016  (b) in the Explanation, for clause (c) , the following  clause shall be substituted, namely :‐    " (c) the expression "relevant date" means in the case  of a company being wound up by the Tribunal, the  date of appointment or first appointment of a  provisional liquidator, or if no such  appointment was  made, the date of the winding up order, unless, in  either case, the company had commenced to be  wound up voluntarily before that date under the  Insolvency and Bankruptcy Code,2016;".   Section 327 of the Companies  Act 2013 has amended by  inserting a new provisions in  replacement to the  existing  explanation after sub section   7 as clause c to the  explanation and therefore the  explanation of relevant date  stands modified with the new  provisions     Meaning of relevant date has  got changes to bring reference  of voluntary winding up under  IBC 2016 to replace the  reference of voluntary winding  up  under Companies Act 2013.  Accordingly the clause c to the  explanation after sub section 7  of section 327 of the  companies act stands altered.  23 329 Transfers not in good faith to be void New section 329 is substituted to replace the  present provisions of Section 329 as follows;    (Fully substituted)   329. Any transfer of property, movable or  immovable, or any delivery of goods, made by a  company, not being a transfer or delivery made in  the ordinary course of its business or in favour of a  purchaser or encumbrancer in good faith  and for  valuable consideration, if made within a period of  one year before the presentation of a petition for  winding up by the Tribunal under this Act shall be  void against the Company Liquidator." Entire provisions of section  329 is substituted to replace  the existing provisions of  Section 329 to  exclude  voluntary winding up  within  the purview of and for the  purpose of section 329 of the  Companies Act 2013; To replace the reference of  voluntary winding up under  section 329 under Companies  Act 2013. Accordingly the  clause c to the explanation  after sub section 7 of section  327 of the  companies act  stands altered.    M/s.  S Dhanapal & Associates, Practising Company Secretaries, Chennai                                                           24 334 Transfers etc., after commencement of winding up  to be void  Fully substituted to remove reference to voluntary  winding up under CA, 2013.  Following provisions stands substituted by virtue of  the new amendments;    "334. In the case of a winding up by the Tribunal, any  disposition of the property including actionable  claims, of the company and any transfer of shares in  the company or alteration in the status of its  members, made after the commencement of the  winding up shall, unless the Tribunal otherwise  orders, be void.". Following provisions stands  removed by virtue of the new  amendments;  334. (1) In the case of a  voluntary winding up, any  transfer of shares in  the  company, not being a transfer  made to or with the sanction  of the Company Liquidator,  and any alteration in the  status of the members of the  company, made after the  commencement of the  winding up, shall be void IBC 2016 has introduced  changes to ensure voluntary  winding up falls outside  purview of section 334 under  CA 2013 as matter relating to  voluntary winding up  is  covered under IBC 2016.  Accordingly provisions of  section 334 substituted to  ensure only the case relating to  a winding up by the Tribunal is  covered within the provisions  of the section 334 of CA 2013.  25 336(1) Section 336 ‐ Offences by officers of companies in  liquidation  Sub section 1 of Section 336 stands altered, to enable  and ensure current provisions of Sub section 1 of  Section 336 are not overlapped with the provisions of  the IBC 2016,  in the following manner;   Clause (1) is substituted to remove reference to  voluntary winding up under CA, 2013 The provisions of section 336  substituted /altered to ensure  only the cases relating to a  winding up by the Tribunal  are covered within the  provisions of the section 336  of CA 2013. IBC 2016 has introduced  changes to ensure voluntary  winding up falls outside  purview of section 336 under  CA 2013 as matter relating to  voluntary winding up  is  covered under IBC 2016.   26 337 Section 337 ‐ Penalty for frauds by officers   Section 337 stands altered, to enable and ensure  current provisions of Section 337 are not overlapped  with the provisions of the IBC 2016,  in the following  manner;   substituted to remove reference to voluntary  winding up under CA, 2013 The provisions of section 337  substituted /altered to ensure  only the cases  relating to a  winding up by the Tribunal  are covered within the  provisions of the section 337  of CA 2013. IBC 2016 has introduced  changes to ensure voluntary winding up falls outside  purview of section 337 under  CA 2013 as matter relating to  voluntary winding up   /liquidation is  covered under  IBC 2016.   27 342(2),  (3), (4) Section 342 ‐ Prosecution of delinquent officers and  members of company;‐    Section 342 stands altered, to enable and ensure  current provisions of Section 342 are not overlapped  with the provisions of the IBC 2016,  in the following  manner;     Sub section (2), (3) & (4) is fully omitted to remove  reference to voluntary winding up under CA, 2013 The provisions of section 342  substituted /altered to ensure  only the cases relating to a  winding up by the Tribunal  are covered within the  provisions of the section 342  of CA 2013. IBC 2016 has introduced  changes to ensure voluntary  winding up falls outside  purview of section 342 under  CA 2013 as matter relating to  voluntary winding up  is  covered under IBC 2016.     M/s.  S Dhanapal & Associates, Practising Company Secretaries, Chennai                                                         28 343(1) Section 343(1) ‐ Company Liquidator to exercise  certain powers subject to sanction;  Section 343(1) stands altered, to enable and ensure  current provisions of Section 343(1) are not  overlapped with the provisions of the IBC 2016,  in  the following manner;   fully substituted to remove reference to voluntary  winding up under CA, 2013 The provisions of section  343(1)  substituted /altered to  ensure only the cases relating  to a winding up by the  Tribunal are covered within  the provisions of the section  343(1)  of CA 2013. IBC 2016 has introduced  changes to ensure voluntary  winding up falls outside  purview of section 343(1)    under CA 2013 as matter  relating to voluntary winding  up is covered under IBC 2016.   29 347(1) Section  347(1)‐ Disposal of books and papers of  company  Section 347(1) stands altered, to enable and ensure  current provisions of Section 343(1) are not  overlapped with the provisions of the IBC 2016,  in  the following manner;   Sub section (1) is substituted to remove reference to  voluntary winding up under CA, 2013. The provisions of section  347(1) substituted /altered to  ensure only the cases relating  to a winding up by the  Tribunal are covered within  the provisions of the section  347(1)  of CA 2013. IBC 2016 has introduced  changes to ensure voluntary winding up falls outside  purview of section 347(1)  under CA 2013 as matter  relating to voluntary winding  up is covered under IBC 2016.  30 348(1) Section  348(1) ‐ Information as to pending litigation Section 348(1) stands altered, to enable and ensure  current provisions of Section 348(1) are not  overlapped with the provisions of the IBC 2016,  in  the following manner;  Sub section (1) is substituted  to remove reference to voluntary winding up under  CA, 2013 The provisions of section  348(1) substituted /altered to  ensure only the cases relating  to a winding up by the  Tribunal are covered within  the provisions of the section  348(1) of CA 2013. IBC 2016 has introduced   changes to ensure voluntary  winding up falls outside  purview of section 348(1)  under CA 2013 as matter  relating to voluntary winding  up is covered under IBC 2016.   31 357  Section 357 ‐ Commencement of Winding up of  Tribunal  Fully substituted with the following provisions:  "357. The winding up of a company by the Tribunal  under this Act shall be deemed to commence at the  time of the presentation of the petition for the  winding up.".  With the above change reference to voluntary  winding up got removed and date  of commencement  provided as the date of submission of petition in  casae of winding up by Tribunal. The provisions of section 357  substituted /altered to ensure  only the cases relating to a  winding up by the Tribunal  are covered within the  provisions of the section 357  of CA 2013. IBC 2016 has introduced  changes to ensure voluntary  winding up falls outside  purview of section 357  under  CA 2013 as matter relating to  voluntary winding up  is  covered under IBC 2016.   32 370 Section 370 ‐ Continuation of pending legal  proceedings ‐ Amended to give reference to the IBC,  2016 as follows:  In section 370, in the proviso, after the words  "obtained for the winding up the company", the  words "in accordance with the provisions of this Act  or of the Insolvency and Bankruptcy Code, 2016" shall  be inserted.   Few provisions in section 370  stand  inserted /altered to  ensure the cases relating to a  winding up covered within  the provisions of the section  370  of CA 2013 and also of  the Insolvency and  Bankruptcy Code, 2016  covered. IBC 2016 has introduced  changes to ensure winding up   within purview of section 370  under CA 2013 and as well as  winding up  in accordance with  the provisions of IBC 2016 is  also covered under section 370     M/s.  S Dhanapal & Associates, Practising Company Secretaries, Chennai                                                         33 372 Section 372 ‐ Power of court to stay or restrain  proceedings‐ Amended to give reference to the IBC,  2016;  In section 372, after the words "The provisions of this  Act", the words "or of the Insolvency and Bankruptcy  Code,2016, as the case may be," shall be inserted.   Few provisions in section 372 stand inserted /altered to  ensure the cases relating to a  winding up covered within  the provisions of the section  372  of CA 2013 and also  Insolvency and Bankruptcy  Code, 2016 covered. IBC 2016 has introduced  changes to ensure winding up   within purview of CA 2013 and  as well as winding up  in  accordance with the  provisions of IBC 2016 is also  covered under section 372   34 419 Section 419‐ Benches of Tribunal   Fully substituted with the following provisions:   In section 419, for sub‐section (4), the following sub‐ section shall be substituted, namely:—  "(4) The Central Government shall, by notification,  establish such number of benches of the Tribunal, as  it may consider necessary, to exercise the  jurisdiction, powers and authority of the Adjudicating  Authority conferred on such Tribunal  by or under  Part II of the Insolvency and Bankruptcy Code, 2016. Provisions in sub‐section (4),  of section 419 stand  inserted  / altered to ensure  establishment such number  of benches of the Tribunal to  exercise the jurisdiction,  under IBC Code, 2016  covered. Amended to remove reference  to rehabilitation of companies  and provide for establishment  of benches of Tribunal TO  exercise the jurisdiction, under  IBC Code, 2016    35 424(1)  Section 424 ‐ Procedure before Tribunal &  Appellate Tribunal ‐ Amended to give reference to  the IBC, 2016 as follows:  In section 424,—  (i) in sub‐section (1), after the words, "other  provisions of this Act", the words “or of the  Insolvency and Bankruptcy Code, 2016" shall be  inserted;  (ii) in sub‐section (2), after the words, "under this  Act", the  words "or under the Insolvency and  Bankruptcy Code, 2016" shall be inserted.   Provisions in sub‐section (1)  and sub‐section (2), of section  424 stand  inserted / altered  to ensure Tribunal is  empowered also to regulate  their procedure to exercise  the jurisdiction, of and  under  IBC Code, 2016. Amendment Provisions of the  IBC 2016 attempt to introduce  changes to ensure Tribunal is  empowered to regulate their  own procedure to exercise the  jurisdiction, of and  under IBC   Code, 2016 in relation to  matters filed before it.  36 429(1)  Section 429(1) ‐ Power to seek assistance of chief  metropolitan  magistrate etc. –     Amended to remove reference to sick companies and  provide reference to the IBC, 2016 " as follows In section 429, for sub‐section (1), the following sub‐ section shall be substituted, namely:—    (1) The Tribunal may, in any proceedings for winding  up of a company under this Act or in any proceedings  under the Insolvency and Bankruptcy Code, 2016, in  order to take into custody or under  its control all  property, books of account or other documents,  request, in writing, the Chief Metropolitan  Magistrate, Chief Judicial Magistrate or the District  Collector……   Power to seek assistance     of chief Metropolitan   Magistrate etc under section  429(1). Amended to remove  reference to sick companies  and provide reference to the  IBC, 2016   Amended to remove reference  to sick companies and provide  reference to the provisions of   IBC, 2016 in connection with  seeking assistance of Chief  Metropolitan Magistrate and  more particularly amended to  give reference to the IBC, 2016;         M/s.  S Dhanapal & Associates, Practising Company Secretaries, Chennai                                                         37 434 Section 434 ‐ Transfer of certain pending  proceedings Amended to give reference to the  provisions relating to and matters to be dealt with  under IBC, 2016 as follows;  Fully substituted  A newly inserted proviso to Sub section 1 of Section  434 is as under:  “Provided that only such proceedings relating to the  winding up of companies shall be transferred  to the  Tribunal that are at a stage as may be prescribed by  the Central Government.” Provisos to clause d of sub  section 1 of Section 434  have  been removed and  a proviso  to Clause c of Sub section 1 of  Section 434 has been inserted  and to give effect  this change,  IBC 2016 attempts to  substitute the entire  provisions of section 434 of  the Companies Act 2013 . The reference made relating to  BIFR and corresponding  provisions removed; new  proviso inserted which  provides that only such  proceedings relating to the  winding up of companies shall  be transferred to the  tribunal  that are at a stage as may be  prescribed by the  Central  Government.     38 468(2) Section 486 (2) Powers of Central Government to  make rules relating to winding up  Amended to remove reference to voluntary winding  up and provide reference to IBC, 2016  Removed provisions stated in clause ii of Sub Section  2 of Section 468 of the Companies Act 2013 is as  under:  (ii) for the voluntary winding up of companies,  whether by members or by creditors;    Provisos  to clause d of sub  section 1 of Section 434 have  been removed and a proviso  to Clause c of Sub section 1 of  Section 434 has been inserted  and to give effect this change,  IBC 2016 attempts to  substitute the entire  provisions of section 434 of  the Companies Act  2013.   The reference made relating to     (ii) for the voluntary winding  up of companies, whether by  members or by creditors;      has been removed in sub  section 2 of Section 468 of the   Companies act 2013.      39         Schedule  V, in Part  II, in  section III In Schedule V, in Part II, in section III, for clause (b),   the following clause shall be substituted namely:    "(b) where the company‐  (i) is a newly incorporated company, for a period of  seven years from the date of its incorporation, or  (ii) is a sick company, for whom a scheme of revival  or rehabilitation has been ordered by the Board for  Industrial & Financial Reconstruction for a period of  five years from the date of sanction of scheme of  revival, or  (iii) is a company in which a resolution  plan has been  approved by the National Company Law Tribunal  under the Insolvency and Bankruptcy Code, 2016 for  a period of five years from the date of such approval,  it may pay remuneration up to two times the amount  permissible under section II."   The following provisions  introduced vide amendment  through  IBC 2016 which  enables to pay remuneration  up to two times the amount  permissible under section II in  Part II Schedule V ".    iii) is a company in which a  resolution plan has been  approved by the National  Company Law Tribunal under  the Insolvency and  Bankruptcy Code, 2016 for a   period of five years from the  date of such approval,   Special privilege is  to pay  remuneration up to two times  the amount permissible under  section II in Part II Schedule V   is given in case of resolution  plan has been approved by the  National Company Law  Tribunal under the Insolvency   and Bankruptcy Code, 2016      M/s.  S Dhanapal & Associates, Practising Company Secretaries, Chennai                                                         ROLE OF NCLT AND PROCESS OF INSOLVENCY RESOLUTION UNDER INSOLVENCY AND BANKRUPTCY CODE THE SIMPLIFIED OUTLINE OF THE CORPORATE INSOLVENCY RESOLUTION PROCESS UNDER THE INSOLVENCY AND BANKRUPTCY CODE, 2016 IS AS BELOW: 1. When Loan Default occurs: Either the borrower / the lender approach the adjudicating authority which is the NATIONAL COMPANY LAW TRIBUNAL (NCLT - in case of Company’s & LLP’s) or the Debt Recovery Tribunal (DRT – in case of individuals or partnership firms) for initiating the resolution process. 2. Appointment of Interim Insolvency Professional (IP) An Interim Insolvency Professional will be appointed by the Creditors to take control of the debtor’s assets and company’s operations, collect financial information of the debtor from the information utilities, ascertain the claim and to constitute a creditor’s committee. 3. Decision of the Creditor’s Committee Every item that requires the approval of the creditors in their committee meeting needs to be passed with a voting share percentage of 75%. 4. Restructuring Process: Upon passing of the resolution by the creditors committee, the committee shall decide on the restructuring process that could either be a revised repayment plan for the company or liquidation of the assets of the company. If no such decision is taken by the creditors in their meeting then, the debtor’s assets will be liquidated to repay the debt. 5. Approval of the Tribunal / Liquidation The resolution plan shall be sent to the NCLT for its approval and implementation thereafter. If the NCLT does not approve the resolution plan, then the liquidation process shall begin.   M/s.  S Dhanapal & Associates, Practising Company Secretaries, Chennai                                                         NATIONAL COMPANY LAW TRIBUNAL VERSUS COMPANY LAW BOARD Sl. No. Particulars CLB NCLT 1. Benches 5 Benches sit across length and breadth of our country 11 Benches sit across length and breadth of our country as of now and few more Benches are expected in near future 2. Jurisdiction Limited powers Matters pertaining to the CLB, BIFR, AAIFR and also matters relating to winding up, mergers, restructuring & other such provisions which is originally being vested with High Courts. 3. Contempt power No such powers Vested with Contempt power 4. Representation by Professionals Advocate, CS, CA, CWA will have representation rights Advocate, CS, CA, CWA and Other professionals also may be allowed to represent their clients in matters pertaining to mergers / winding ups etc 5. Class Action Suits Only members with requisite nos are allowed to file Oppression & mismanagement suits Members & deposit holders permitted u/s 245 against company, statutory appointees, audit firms and other independent consultants 6. Online portal Limited usage Dedicated Online Portal through which all parties, Central or State Government agencies and local government bodies may electronically send & receive documents to or from NCLT & make required payments (www.nclt.gov.in) 7. Electronic Filing No such rules Electronic filing & serving of tribunals documents shall be mandatory 8. Members of Technical Committee & Selection Committee Did not have a selection committee Officers holding ranks of Secretaries or additional secretaries can be considered for appointment as technical members. Selection committee includes Chief Justice of India, who will have a casting vote. 9. Appeals CLB then High Court then Supreme Court NCLT then NCLAT then Supreme Court 10. Ousting of Civil Court Jurisdiction No such provision Section 430 ousts the jurisdiction of civil courts.       M/s.  S Dhanapal & Associates, Practising Company Secretaries, Chennai                                                         Wrap up The current legal framework governing the winding-up of companies is contained in the Companies Act, 1956. The provisions contained in Chapter XX of the Companies Act, 2013 relating to winding up of companies have not been notified yet. The winding up proceedings under the 1956 Act are carried out voluntarily (members‘voluntary liquidation, which is a liquidation procedure for solvent companies, and creditors‘voluntary liquidation), or compulsorily by the High Court. It may be noted that insolvency of a company is only one of the grounds for compulsory winding up a company. The important objective of The Insolvency and Bankruptcy Code 2016 is to provide a specialised and quick resolution mechanism for debt recovery. The Code attempts to provide one stop solution by amending various laws relating to insolvency and reorganisation of corporate persons, partnership firms and individuals in a time bound manner and for providing rehabilitation opportunity to persons who are unable to repay their debts and for maximization of value of the assets of such persons and matters connected therewith or incidental thereto. Further the primary objective of the National Company Law Tribunal is to provide a specialised and quick dispute resolution mechanism for Indian Companies. Also all the pending suits before the Company Law Board, BIFR etc is expected to be resolved by the NCLT. The constitution and functioning of NCLT is also providing a wider scope for professionals in their practice areas including appearance before the Tribunal. Therefore, it is high time to all professionals to equip themselves and become conversant and be acquainted in this new area to appear before NCLT for orders.   Post your reflections to S. DHANAPAL FCS, B.Com, B.A.B.L. Senior Partner, S Dhanapal & Associates (A firm of Practising Company Secretaries) Suite No.103, First Floor, Kaveri Complex, 96/104, Nungambakkam High Road, (Next to NABARD & ICICI Bank), Nungambakkam, Chennai - 600 034. Land-line 044 - 4553 0256 / 0257 Dir- 42652127 Cell-9677022712 Email Id. csdhanapal@gmail.com Website:www.csdhanapal.com PROFESSIONAL LIFE – ENDLESS POSSIBILITIES WITH BORDERLESS SUCCESSES Copyright 2016 © With Author  All rights are reserved. No part of this  article may be reproduced, stored in a  retrieval system or transmitted, in any  form or by any means, mechanical,  photocopying, recording or otherwise,  without prior written permission of the  author. These contents will form part of  a book  being authored by the Author.  Any breach of these rights or conditions  will entitle civil and criminal action  without further notice.