My company in Thane 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 Thane cannot pay its debts.

The IBC provides a structured framework for resolving insolvency and bankruptcy issues for companies and individuals. For companies that are unable to pay their debts, the following steps and requirements are applicable:

• Eligibility Criteria:
  • The company must be registered under the Companies Act, 2013 or any other relevant law.
  • The company must be unable to pay its debts, which is defined as having debts amounting to over Rs. 1 lakh and being unable to repay them within the stipulated time.
• Filing the Application:
  • An application for insolvency can be filed with the National Company Law Tribunal (NCLT) under Section 7 of the IBC.
  • The application must include details such as the company’s financial position, the amount of debt, and details of creditors.
• Documentation Required:
  • Incorporation certificate of the company.
  • Financial statements for the past three years.
  • List of creditors and the amount owed to each.
  • Proof of default in payment.
• Process After Filing:
  • Upon receiving the application, NCLT will assess it and may admit it if satisfied with the evidence presented.
  • If admitted, a moratorium period will be declared during which all recovery actions against the company are halted.
  • An Interim Resolution Professional (IRP) will be appointed to manage the company’s affairs during the insolvency process.
• Resolution Plan:
  • The IRP will call for a meeting of the creditors to present a resolution plan for repayment.
  • A resolution plan must be approved by at least 66% of the creditors.
• Conclusion:
  • If a resolution plan is approved, the company will continue operating; otherwise, it may be liquidated.

In summary, if your company in Thane is unable to meet its financial obligations, initiating insolvency proceedings under the IBC is a viable option, provided all procedural requirements are met and the application is properly filed with NCLT.