Our country has been suffering from the lowest recovery rate in the world at about 20% of debt resulting in huge accumulation of NPAs caused due to various reasons attributed to debtors or creditors. It could be due to genuine business failure or the willful default by the borrowers or sudden downturn in industry or economy. On 28th May 2016, the Insolvency and Bankruptcy Code (IBC 2016) was enacted to provide the legal and legislative framework to support lenders effectively to recover or restructure defaulted debts in time. The Code became operational in December 2016.
The code replaces various previous multiple legislations and provides the appropriate platform for Insolvency Resolution within maximum 270 days from the date of admission failing which the liquidation of Debtors’ Assets will be initiated. It envisages an ecosystem comprising of National Company Law Appellate Tribunal (NCLAT), National Company Law Tribunal (NCLT), Debt Recovery Appellate Tribunal (DRAT), Debt Recovery Tribunal (DRT), Insolvency and Bankruptcy Board of India (Board), Information Utilities (IUs), Insolvency Professionals Agencies (IPAs), Insolvency Professionals (IPs) and Insolvency Professional Entities (IPEs) for implementation of the code. The code is now fully operational and a number of long pending litigations relating to corporate insolvency resolution and liquidation are getting settled fast. LSI aims to be a vibrant player in the new emerging Insolvency Resolution regime as an Insolvency Professionals Entity (IPE) by making available the services of Insolvency Resolution Professionals and other professionals like Chartered Accountants, Cost Accountants, Advocates, Valuers, Engineers, Project consultants, Security personnel under one roof.
Support to Resolution Professionals
We also provide secretarial assistance with the secretarial work to the Resolution Professionals. These services include the following:
We provide legal assistance to our clients through empanelled advocates for initiating the Insolvency Resolution process. We have established associations with reputed Legal Firms to undertake cases with NCLT Benches. All the needs of the client with regard to making an application with NCLT / NCLAT are taken care of.
Forming a Resolution Plan
As per section 5(26) of the IBC, “Resolution Plan” means a plan proposed by any person for insolvency resolution of the Corporate Debtor as a going concern. A Resolution Plan is prepared on the basis of the information Memorandum given by the Resolution Professionals.
A Resolution Plan shall identify particular sources of funds that will be used to cover the following:
● The Insolvency Resolution Process costs.
● The Liquidation Value which is due to the Operational Creditors.
● The Liquidation Value outstanding to dissenting Financial Creditors.