Application to Adjudicating Authority Rules for Insolvency Resolution of Corporate Persons, 2016
Enabling the initiation of the insolvency resolution process under the Insolvency and Bankruptcy Code
The Insolvency and Bankruptcy Code, 2016 (Code) provides a consolidated legal framework for resolving insolvency of corporate debtors. A corporate insolvency resolution process (CIRP) can be initiated under the Code against a corporate debtor at any time if it defaults in repaying its debt obligations. The Code permits a financial creditor or an operational creditor to file an application to initiate CIRP against a corporate debtor which has defaulted on its debts. As the Code recognises the National Company Law Tribunal (NCLT) as the Adjudicating Authority having exclusive jurisdiction over matters related to insolvency resolution and liquidation of corporate debtors, such application needs to be filed before the NCLT. However, where an operational creditor wishes to initiate CIRP, she is required to file a demand notice with the corporate debtor in respect of the default before filing an application with the NCLT. Additionally, a corporate debtor is also permitted to initiate a CIRP on its own .
The Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, were drafted to lay down the detailed procedure of filing an application for initiating the CIRP against a corporate debtor. These Rules also specify the requisite forms for filing such an application and the manner of filing a demand notice with the corporate debtor.