My company in Jalandhar 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 (IBC), 2016, if your company in Jalandhar is unable to pay its debts.

The IBC provides a structured process for insolvency resolution, applicable to companies and individuals alike, aiming to promote entrepreneurship and balance the interests of all stakeholders. Below are the key steps, requirements, and provisions relevant to the insolvency filing process for your company:

• Eligibility to File: Under Section 7 of the IBC, a financial creditor, operational creditor, or the corporate debtor itself can initiate the insolvency process. As a company, you can file under the provisions set forth for corporate debtors.
• Default Threshold: The default must be at least Rs. 1 lakh, as per Section 4 of the IBC. You must determine if your company's debts exceed this threshold.
• Filing Application: To initiate the process, you need to file an application with the National Company Law Tribunal (NCLT) under Section 7 of the IBC. The application should include:
• The name of the corporate debtor.
• Details of the default and the amount owed.
• Evidence of the default (financial statements, loan agreements, etc.).
• Details of the proposed resolution professional.
• Admittance to Proceedings: Upon receiving the application, the NCLT will assess the evidence. If the application is admitted, a moratorium on debt recovery is imposed as per Section 14, preventing creditors from initiating or continuing any legal actions against the company.
• Appointment of Resolution Professional: Once the application is admitted, a resolution professional will be appointed to manage the affairs of the company and facilitate the resolution process.
• Resolution Plan: The resolution professional will invite potential resolution applicants to submit a resolution plan. The plan must be approved by a majority of the committee of creditors, as outlined in Section 30.
• Completion of Process: The entire process must be completed within 180 days, extendable by another 90 days if required, as per Section 12 of the IBC.

It is advisable to consult a legal expert or insolvency professional to navigate the complexities of the process and ensure compliance with all legal requirements.