Personal Insolvency Process

INSOLVENCY is the state of financial distress where a person or entity is unable to pay off their debts or other obligations. Resolution of Corporate and Non-Corporate Insolvency has been standardized by the Insolvency and Bankruptcy Code, 2016.

Part III of IBC, 2016 is dedicated to individual and partnership firms undergoing INSOLVENCY. The key to the resolution of non-corporate insolvency is the “Repayment Plan’, according to which the debtor will pay their debts to creditors, and also provides for the manner in which the affairs of the debtors will be carried on.

Routes For Individual Insolvency Law:

Bankruptcy Route: Under this route, an application seeking repayment can be filed by a debtor or the creditors at the Debt Recovery Tribunal (DRT). A Resolution Professional (RP) then examines the application and makes a recommendation of acceptance or rejection to the DRT.

Fresh Start Process: This route is established for resolution in case of insolvency of low-income, low-asset debtors. The Fresh Start Process ensures a lower cost of transaction in the Insolvency Resolution Process as compared with the Bankruptcy Route.

Upon admission of the application, a moratorium of six months with specific guidelines for both debtors and creditors commences, allowing for some breathing space for all parties involved.

Who Can Invoke Personal Insolvency
Personal Insolvency proceedings can be initiated by either the debtor or the creditor (which includes financial, operational, secured, and unsecured creditors and decree-holders).

If the debtor fails to pay within fourteen days of service of demand notice, Personal Insolvency can be invoked by the creditors by filing an application under IBC, 2016 Part III, either by themselves or in coordination with other creditors. The application can be submitted either directly or through a Resolution Professional to the Adjudicating Authority (AA).

Advantages for the Lenders

Resolution Professional under Individual Insolvency has the right to supervise the implementation of the Repayment Plan within Individual Insolvency proceedings. This assures the creditors of greater control and transparency in the process.

“My Rupee Mantra” experts provide the consultancy to all the stake holders in initiation of Individual Insolvency Process which include:

• Drafting and issue of Notices
• Drafting of application to be filed before Adjudicating Authority.
• Follow up and pleading of application filed with NCLT on behalf of the concerned applicant.
• Drafting of application for appeal to be filed before the Hon’ble National Company Law Appellate Tribunal.
• Follow up at various levels.