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

The IBC provides a legal framework for resolving insolvency and bankruptcy issues, facilitating a timely resolution of financial distress for companies. Below are the key steps and requirements to file for insolvency:

• Eligibility Criteria:
  • Your company must be registered under the Companies Act, 2013 or any previous company law.
  • It must be unable to pay its debts, meaning it has defaulted on payments exceeding ₹1 lakh (as per Section 4 of the IBC).
• Filing an Application:
  • The application for insolvency can be filed with the National Company Law Tribunal (NCLT) having jurisdiction over Patna.
  • Form 1 must be filled out, providing details about the company, its debts, and reasons for insolvency.
  • Documents required include financial statements, a list of creditors, and details of the default.
• Submission of Fees:
  • Pay the requisite fees as prescribed under the IBC and the NCLT rules.
• Admission of Application:
  • The NCLT will review the application and associated documents.
  • If the application is admitted, a moratorium will be declared, preventing creditors from taking legal action against the company for a period of 180 days (extendable as per Section 12 of the IBC).
• Appointment of Resolution Professional:
  • The NCLT will appoint an Insolvency Resolution Professional (IRP) to manage the company and facilitate the resolution process.
  • The IRP will call a meeting of creditors to discuss the resolution plan.
• Resolution Plan:
  • Creditors will vote on the resolution plan proposed.
  • A plan must be approved by a minimum of 66% of the voting share of the creditors.

If a viable resolution plan is not approved, the company may go into liquidation as per Section 33 of the IBC. It is advisable to consult with a legal expert specializing in insolvency for a comprehensive understanding of the process and implications.