My company in Panaji 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 Panaji is unable to pay its debts.

The IBC provides a comprehensive framework for insolvency resolution for companies in India. The process can be initiated by either the creditors or the company itself. Here are the key points and steps involved in filing for insolvency:

• Eligibility Criteria:
  • Your company must be incorporated under the Companies Act, 2013 or any previous company law.
  • The company should be unable to pay its debts, which is defined under Section 4 of the IBC as defaulting on payments exceeding ₹1 lakh.
• Initiation of Proceedings:
  • You can file an application for Corporate Insolvency Resolution Process (CIRP) under Section 7 of the IBC if you are a financial creditor, or under Section 9 if you are an operational creditor.
  • For voluntary insolvency, the company’s board of directors must pass a resolution to initiate the process.
• Application Filing:
  • The application must be submitted to the National Company Law Tribunal (NCLT) along with the required documentation, including a list of creditors and proof of default.
  • Ensure that the application is in compliance with the prescribed format as per the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016.
• Adjudication by NCLT:
  • The NCLT will examine the application and may admit it if satisfied with the grounds of default and eligibility.
  • If admitted, the tribunal will appoint an Interim Resolution Professional (IRP) to manage the affairs of the company.
• Resolution Process:
  • The IRP will call for claims from all creditors and initiate the resolution process, which must be completed within 180 days, extendable by a further 90 days.
  • Creditors will vote on the resolution plan, which requires a minimum of 66% approval.
• Liquidation:
  • If a resolution plan is not approved, the company will enter liquidation as per the provisions of Section 33 of the IBC.

It is advisable to consult with a legal professional or an insolvency practitioner to guide you through the complexities of the IBC and ensure compliance with all procedural requirements.