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of <h1>Understanding Section 253: how companies were declared sick and protected while restructuring debt and restricting asset transfers</h1> Section 253 of the Companies Act, 2013 (now omitted) earlier provided a mechanism for determination of a 'sick company.' On default of debt repayment to secured creditors representing at least 50% of outstanding debt, any secured creditor or the company itself could apply to the Tribunal to declare the company sick and seek stay of winding-up, execution, or recovery proceedings. Certain government and financial institutions could also refer a company to the Tribunal on sufficient belief of sickness. Pending such application, the company's asset dispositions and board actions were restricted. The Tribunal had fixed timelines to determine sickness and, if satisfied, could grant time and impose conditions for repayment of debts.
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