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

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

• Eligibility Criteria: Ensure your company meets the eligibility criteria for initiating insolvency proceedings. Under Section 4 of the IBC, a company can file for insolvency if it owes a minimum of ₹1 lakh to its creditors.
• Default in Payment: You must confirm that the company has defaulted in making payments to its creditors. This is defined under Section 3(12) of the IBC, where a default occurs when a debtor fails to repay a debt when it becomes due.
• Filing an Application: The application for insolvency can be filed with the National Company Law Tribunal (NCLT). The appropriate bench for Ranchi is the NCLT Bench at Ranchi. The application must be filed in Form 1 as prescribed under the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016.
• Documentation: Prepare and submit necessary documents, including:
• Insolvency application form
• List of creditors
• Financial statements of the company
• Proof of default
• Any other supporting documents
• Payment of Fees: Pay the requisite fees as stipulated by the NCLT for the application.
• Admission of Application: Upon submission, the NCLT will examine the application. If admitted, the NCLT will appoint an Interim Resolution Professional (IRP) to manage the company’s affairs during the insolvency process as per Section 16 of the IBC.
• Resolution Process: The IRP will conduct a resolution process to negotiate with creditors to arrive at a resolution plan. This process must be completed within 180 days, extendable by a further 90 days.
• Conclusion: If a resolution plan is not approved, the company may be ordered to be liquidated under the provisions of the IBC.

Filing for insolvency can be complex, and it is advisable to consult with a legal professional experienced in insolvency law to assist you throughout the process.