TIMELINES IN INSOLVENCY RESOLUTION PROCESS UNDER Section 94 & 95 OF THE CODE

Chapter III of Part III of the Insolvency and Bankruptcy Code, 2016 (‘Code’ for short) deals with the insolvency resolution process against the personal guarantors to the Corporate Debtor in Section 94 to Section 120.  The Board also made a regulation for this purpose, called, ‘Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Personal Guarantors to Corporate Debtor) Regulations, 2019 (‘Regulation’ for short)

In this article the timelines to be adopted in the insolvency resolution process for personal guarantors to corporate debtor is to be discussed.

1. Admission of application by the Adjudicating Authority.

Section 94 of the Code provides for filing application initiation of Insolvency resolution process by the personal guarantor himself.  Section 95 of the Code provides for filing application for initiation to insolvency resolution process by the financial creditor.  The application is to be filed within the limitation period and also for the debts more than Rs.1 crore.

2. Interim Moratorium will come into effect on the application for Insolvency resolution process.

Section 96(1) of the Code provides that an interim-moratorium shall commence on the date of the application in relation to all the debts and shall cease to have effect on the date of admission of such application.

3. The IRP/RP shall file a report to the Adjudicating Authority within 10 days from the date of receipt of the order from the Adjudicating Authority.

Section 99(1) of the Code provides that the resolution professional shall examine the application referred to in Section 94 or Section 95, as the case may be, within ten days of his appointment, and submit a report to the Adjudicating Authority recommending for approval or rejection of the application.

4. Within 14 days from the date of the report from the IRP/RP the Adjudicating Authority shall decide the application either admitting or rejecting the application.

Section 100(1) of the Code provides that the Adjudicating Authority shall, within fourteen days from the date of submission of the report under section 99 pass an order either admitting or rejecting the application referred to in Section 94 or 95, as the case may be.

5. The Adjudicating Authority shall provide a copy of the order along with the IRP/RP report within 7 days from the date of passing the order.

Section 100 (3) of the Code provides that the Adjudicating Authority shall provide a copy of the order passed under sub-section (1) along with the report of the resolution professional and the application referred to in Section 94 or 95, as the case may be, to the creditors within seven days from the date of the said order.

6. The interim moratorium will cease when the Adjudicating Authority passes order either admitting the application/rejection of the application.

7. In case the application is admitted the moratorium will start and continues up to 180 days from the date of passing the order.

Section 101 (1) of the Code provides that when the application is admitted under section 100, a moratorium shall commence in relation to all the debts and shall cease to have effect at the end of the period of one hundred and eighty days beginning with the date of admission of the application or on the date the Adjudicating Authority passes an order on the repayment plan under section 114, whichever is earlier.

8. Public announcement shall be made inviting claims from the creditors within 7 days from the date of order.

9. Receipt for claims from the creditors – within 21 days from the date of public announcement.

Section 102(1) of the Code provides that the Adjudicating Authority shall issue a public notice within seven days of passing the order under section 100 inviting claims from all creditors within twenty-one days of such issue.

10. List of creditors shall be prepared within 30 days from the date of public announcement.

Section 104 of the Code provides that the resolution professional shall prepare a list of creditors on the basis of-

• the information disclosed in the application filed by the debtor under Section 94 or 95, as the case may be;
• claims received by the resolution professional under section 102.

The resolution professional shall prepare the list mentioned within thirty days from the date of the notice.

11. Repayment plan has to be submitted before the Adjudicating Authority within 21 days from the last date of submission of the claims.

Section 106(1) of the Code provides that the resolution professional shall submit the repayment plan under section 105 along with his report on such plan to the Adjudicating Authority within a period of twenty-one days from the last date of submission of claims under section 102.

12. The Repayment plan has to be filed before the Adjudicating Authority on or before completion of 120 days from the resolution process commencement date.

Regulation 19 provides that the resolution professional shall file the repayment plan, as approved by the creditors, along with the report mentioned in sections 106 or 112, as the case may be, with the Adjudicating Authority on or before completion of one hundred and twenty days from the resolution process commencement date.

13. On completion of repayment plan the Resolution professional is to send notice to all concerned within 14 days of the completion.

Section 117(1) of the Code provides that the resolution professional shall within 14 days of the completion of the repayment plan, forward to the persons who are bound by the repayment plan,  a notice that the repayment plan has been fully implemented; and a copy of a report by the resolution professional summarising all receipts and payments made in pursuance of the repayment plan and extent of the implementation of such plan as compared with the repayment plan approved by the meeting of the creditors.

14.  The resolution professional may apply to the Adjudicating Authority to extend the time mentioned in sub-section (1) for such further period not exceeding 7 days.

15.  Issue of notice by Resolution Professinal for failure to implement repayment plan.

Regulation 20 provides If the personal guarantor failed in implementing the repayment plan, the resolution professional shall, within 3 days of knowledge of such failure, issue a notice to the guarantor identifying the failure and requiring him.

Meeting of creditors

1. Notice shall be issued to the creditors before 14 days of such meeting.

Section 107(1) of the Code provides that the resolution professional shall issue a notice calling the meeting of the creditors at least fourteen days before the date fixed for such meeting.

2. The Resolution Professional shall not adjourn the meeting for a period not more then 7 days at a time.

Section 108(4) of the Code provides that the resolution professional may for a sufficient cause adjourn the meeting of the creditors for a period of not more than seven days at a time.

3. Section 117(1) of the Code provides that on completion of the repayment plan the Resolution Professional shall send a notice to all concerned within 14 days and also to file a petition before the Adjudicating Authority about the same.

4. Section 117(2) of the Code provides that the Resolution Professional shall file an application before the Adjudicating Authority for the extension of 7 days to file a petition before the Adjudicating Authority.