My company in Karnal 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 Karnal cannot pay its debts.

The IBC provides a framework for the resolution of insolvency and bankruptcy for individuals and companies in India. Here are the steps and requirements to file for insolvency under the IBC:

• Eligibility: Ensure that your company meets the eligibility criteria under Section 7 of the IBC, which allows a financial creditor to initiate the Corporate Insolvency Resolution Process (CIRP) against a corporate debtor.
• Debt Criteria: The company must owe a minimum default amount of INR 1 lakh to initiate insolvency proceedings.
• Filing an Application: The application needs to be filed with the National Company Law Tribunal (NCLT) having jurisdiction over the company’s registered office. This is governed under Section 7 of the IBC for financial creditors, Section 8 for operational creditors, and Section 10 for corporate debtors themselves.
• Documentation: Prepare and submit necessary documents such as:
  • Insolvency application in Form 1.
  • Proof of default (financial statements, bank statements, etc.).
  • Details of the company’s directors and authorized signatories.
  • Any other documents required by the NCLT.
• Admission Process: NCLT will review the application and if satisfied, will admit the application and declare a moratorium on the company’s assets under Section 14 of the IBC.
• Appointment of Interim Resolution Professional (IRP): Upon admission, the NCLT will appoint an IRP to manage the affairs of the company during the resolution process.
• Committee of Creditors (CoC): A CoC will be formed, consisting of all financial creditors who will make decisions regarding the resolution plan.
• Resolution Plan: The CoC will evaluate and approve a resolution plan to revive the company or liquidate its assets under Section 30 of the IBC if no viable plan is available.

It is advisable to consult with a legal professional who specializes in insolvency law to guide you through the process and ensure compliance with all requirements under the IBC.