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

The IBC provides a framework for the resolution of insolvency and bankruptcy for individuals and companies. Here are the steps and requirements for filing for insolvency:

• Eligibility: Ensure your company meets the eligibility criteria under Section 7 of the IBC, which states that a financial creditor can initiate the Corporate Insolvency Resolution Process (CIRP) if the company defaults on a debt payment.
• Default Amount: The minimum default amount to trigger the insolvency process is ₹1 lakh for companies, as per the threshold set in the IBC.
• Filing Application: The application for initiating the CIRP must be filed with the National Company Law Tribunal (NCLT). You will need to provide details including:
  • Proof of default
  • Details of the financial creditors
  • Company’s registration details
• Documents Required: Prepare and submit the following documents:
  • Incorporation documents of the company
  • Financial statements for the last two years
  • List of creditors and their claims
  • Board resolution authorizing the filing
• CIRP Process: Once the application is accepted, the NCLT will appoint an Interim Resolution Professional (IRP) who will take over the management of the company and conduct the resolution process.
• Resolution Plan: The IRP will invite resolution plans from potential investors or resolution applicants. A plan must be approved by a majority of the creditors.
• Completion Timeframe: The entire insolvency process should be completed within 180 days, extendable by another 90 days under Section 12 of the IBC.

It's important to consult with a legal professional who specializes in insolvency law to guide you through the process and ensure compliance with all relevant legal requirements.