My company in Asansol cannot pay its debts; can I file for insolvency under IBC?

Detailed Legal Analysis

Yes, you can file for insolvency under the Insolvency and Bankruptcy Code, 2016 (IBC) if your company in Asansol cannot pay its debts.

The IBC provides a legal framework for the resolution of insolvency and bankruptcy for individuals, companies, and partnerships in India. Here are the key steps and requirements for filing for insolvency:

• Eligibility: Ensure that your company meets the criteria for insolvency under Section 4 of the IBC, which states that a company is considered to be in default if it fails to pay its debts that are due.
• Default Threshold: The amount of default must be at least ₹1,00,000 for operational creditors and ₹1,00,000 for financial creditors as per Section 4 of the IBC.
• Resolution Professional: You will need to appoint a Resolution Professional (RP) who will manage the insolvency process. The RP must be registered with the Insolvency and Bankruptcy Board of India (IBBI).
• Filing Application: File an application for corporate insolvency resolution process (CIRP) with the National Company Law Tribunal (NCLT) under Section 7 (for financial creditors) or Section 9 (for operational creditors) of the IBC.
• Application Contents: The application must include the following:
  • Details of the company, including its registered office address.
  • Evidence of default (financial statements, loan agreements, etc.).
  • Name and address of the proposed RP.
• Admissibility: The NCLT will review the application to ensure it meets the necessary requirements and is admissible under the IBC.
• Moratorium Period: Once the application is admitted, a moratorium will be imposed under Section 14 of the IBC, which halts all legal proceedings against the company.
• Resolution Process: The RP will conduct the resolution process, inviting claims from creditors and formulating a resolution plan.

Insolvency proceedings can significantly affect your company’s operations and stakeholder relationships, so it is advisable to seek legal counsel to navigate the complexities of the IBC effectively.