My company in Ghaziabad 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 Ghaziabad cannot pay its debts.

The IBC provides a framework for the resolution of insolvency and bankruptcy for individuals and companies in India. As a corporate debtor, your company can initiate the insolvency process if it meets certain criteria. Below are the key points and steps involved in filing for insolvency under the IBC:

• Eligibility Criteria:
  • Your company must be classified as a 'corporate debtor' under Section 3(8) of the IBC.
  • It must be unable to pay its debts as defined under Section 4 of the IBC, which states that a company is deemed to be unable to pay its debts if it has defaulted on payment of a minimum of INR 1,00,000.
• Filing Application:
  • File an application with the National Company Law Tribunal (NCLT) under Section 7 of the IBC.
  • The application must include details such as the default, the amount due, and evidence of non-payment.
  • All necessary documents, like the company's financial statements, board resolution, and details of creditors, must be attached.
• Adjudication Process:
  • The NCLT will review the application and decide within 14 days of filing whether to admit or reject it.
  • If admitted, the NCLT will appoint an Interim Resolution Professional (IRP) to manage the company’s affairs during the insolvency process.
• Resolution Process:
  • The IRP will call a meeting of the creditors to form a Committee of Creditors (CoC) to evaluate resolution plans.
  • Resolution plans must be submitted within 180 days, which can be extended by another 90 days if required.
• Outcome:
  • If a resolution plan is approved by the CoC, it will be submitted to the NCLT for approval.
  • If no resolution is possible, the company may proceed to liquidation as per the provisions of Section 33 of the IBC.

Filing for insolvency can be complex and involves various legal processes. It is advisable to consult with a legal expert specializing in insolvency to navigate the process effectively.