Wednesday, December 6, 2017

IBC CODE LIQUIDATION PROCESS REGULATIONS 2016 BRIEF PART II

REGULATION 19   CLAIMS BY  WORKMEN AND EMPLOYEES 

1)  A  person  claiming  to be   a workman or an  employee  of the corporate debtor  shall submit proof of claim  to the liquidator  in person by post or by electronic means in Form E of Schedule II

2)  When  there  are dues to numerous  workmen  or employees  of the corporate debtor, an authorized  representative  may  submit  one proof of claim  for all such  dues on theri behalf  in Form F  of schedule II

3) Existence of  dues to workmen or employees may be proved  by them, individually or  collectively on the basis of

a)  records  available  in an information utility if any or

b)   other   relevant  documents  which adequately establish  the dues, including  any or all of the following

i)   a proof of employment  as contract of employment for the period  for which  such workmen  or employees  is claiming dues

ii)  evidence of  notice demanding   payment of unpaid  amount and any documentary or other proof  that payment  has not been made, and

iii)   an order  of a court  or tribunal that has adjudicated  upon the non payment of dues, if any

4   The liquidator  may admit   the claims   of a workmen or an employee  on the basis  of the books of account  of the corporate debtor if such  workmen or employee has not made a claim

Regulation No 20    Claims by other stakeholders 

1)  A person, claiming  to be  a stakeholder  other than those under Regulations  17 (1), 18 (1)  or 19 (1)   shall submit   proof of claims  to the  liquidator  in person, by post or by electronic means in Form G of Schdule  II

2)  Existence of  the claim of the stakeholders   on the basis of
 a)   the  records  available  in on information utility  if any or

b)   other relevant  documents  which adequately   establish  the claim,  including any or all of the following

i)  documentary evidence  of notice demanding  payment of unpaid  amount or bank statements of the claimant showing that the claim has not been paid and an affidavit  that the documentary evidence  and bank statements are true, valid and genuine

ii) documentary or electronic  evidence of the shareholding and

iii)   an order  of  a court,  tribunal or other authority    that has   adjudicated  upon the non payment  of a claim if any


Regulation No. 21   Proving  security interest

The existence of a security  interest may be proved  by a secured  creditor  on the basis of

a)   the records available  in an information utility, if any
b)  certificate of registration of charge issued  by the Registrar of Companies or
c)   proof of  registration of charge  with the Central  Registry  of Secularization Asset  Reconstruction  and Security interest of india

Regulation No. 22   Production of bills of exchange and promissory notes

Where a person   seeks to  prove a debt  in respect of bill of exchange, promissory notes or other negotiable instrument or security  of  a  like nature  for which the corporate debtor  is liable, such bill of exchange , note,  instrument or security  as the case may be  shall be produced  before the  liquidator   before the claim is admitted


Regulation No. 23   Substantiation of claims

 The liquidator call for such  other evidence  or clarification  as he deems fit   from a  claimant  for substantiating  the  whole or part of the claim

 Regulation No. 24    Cost of proof

 1)  A  claimant  shall bear  the cost  of proving its claim

2)   Costs incurred  by the liquidator  for verification and determination of a claim  shall form part of liquidation cost

Provided if a claim or part of the claim  is found to be  false,  the liquidator   shall   endeavor  to  recover  the costs incurred   for verification and determination of claim    from  such claimant   and  shall provide  details  of the claimant to the Board

Regulation No. 25  Determination of  claim 

 When the  amount claimed  by a claimant  is not precise due to any  contingency or any  other reason, the liquidator  shall make the best estimate of the amount of the claim  based on the information available with him

Regulation No. 26  Debt in foreign currency

  The  claims  denominated  in foreign currency shall be  valued  in Indian currency or   the official  exchange rate  as on the date of  the liquidation commencement date

The official exchange rate  is the reference   rate published by the  Reserve Bank of India  or  derived  such  reference notes

Regulation No. 27   Periodical payments 

  Rent  interest  and such other payments are periodical in nature
A person  may claim  only  for any amount due and unpaid  up to the liquidation commencement date

Regulation No. 28  Debt payable on future time 

1)   A person may prove  for a claim whose payment was not yet due  on the liquidation commencement date and is  entitled to distribution in the same manner  as any other  stakeholder

2)  Subject to any contract  to the contrary, where a stakeholder has proved that a claim under sub regulation (1)  and the debt  has not fallend due before distribution, he is entitled to distribution of the admitted  claim  reduced as follows.


 Regulation No. 29  Mutual credits and set off

  Where there are mutual dealings between the corporate debtor and another party, the sums  due from one party   shall be set off against  the same due from the other to arrive  at the net amount payable  to the corporate debtor or to the other party


Illustration  Rajesh owes   Rs.1000    to the corporate debtor.  The corporate debtor owes  Rs.700 to Rajesh.  After set off Rs.300  is payable by Rajesh   to the corporate debtor.

 Regulation No. 30  Verification of claims

 The liquidator  shall verify the claims  submitted  within 30 days  from the last date of receipt of claims  and amy either admit   or reject   the claim , in whole or in part as the case may be


Regulation No. 31  List of stakeholders

 1)  The  liquidator  shall prepare  a list of  stakeholders, category wise, on the basis  of  proofs of claims  submitted  and accepted  under these regulations with-

a)  the amounts of claim admitted if applicable

b)   the extent  to which   the debts  or dues  are secured or unsecured if applicable

c)  the details  of the stakeholders and

d)   the proofs admitted or rejected in part,   and the  proofs  wholly rejected


2)   The liquidator  shall file  the list of stakeholders  with the Adjudicating authority within forty five days  from the last date  of  receipt of claims,  and the filing  of the list  shall be announced  to the public  in the manner  specified  in Regulation   12 (3)

3)  The liquidator  may apply to the Adjudicating authority to modify  on entry  in the list of stakeholders  filed with  the Adjudicating authority, when  he comes  across   additional  information   warranting such modification and shall  modify the  entry in the manner  affected by the adjudicating authority

4) The  liquidator   shall modify  an entry in the list  of stakeholders filed with the Adjudicating authority in the manner  directed  by the Adjudicating  Authority   while disposing  of an appeal preferred under Section 42

5)  The list of stakeholders  as modified  from time to time shall be-

a)   available  for inspection  by the persons   who  submitted  proofs of claim

b)   deployed  on the website, ( if any of the corporate debtor)
















Tuesday, December 5, 2017

IBC code Liquidation process regulation 2016

There are  46  Regulations

Important definitions

Contributory  -   A  member of the company ,  a Partner of the limited liability  and
Any other  person liable  to contribute towards   the assets of the  corporate debtor in the event of liquidation

Identification number -    Limited Liability  Partnership identificatio number  or the Corporate identity  Number

Preliminary Report  -   the report  prepared  in accordance with regulation 13

Regulation 13  -   The liquidator   shall submit a  Preliminary report  to the Adjudicating Authority  within 75  days  from the  liquidation commencement  date
The preliminary report includes

a)  The  capital structure of the corporate debtor
b)  The estimates of its assets and liabilities  as on the liquidation   commencement date  based on the books of the corporate debtor

In case  of books   of the corporate debtor not reliable, liquidator shall also provide  such estimates  based on   reliable  recores and date otherwise  available to him
c)   Whether he intends to make any  further inquiry  into any matter relating to the promotion, formation or failure of the corporate debtor  of the conduct of the business   thereof and
d)  The proposed  plan of action  for carrying out liquidator  including the  timeline within  which he proposes   to carry out  and the estimated liquidation costs.

Progress Report     Quarterly report   prepared  in accordance with Regulation 15

The liquidator    shall submit  progress  reports to the Adjudicating authority   as under

a)  First  progress  report   within fifteen days after the end of the quarter in which he is appointed

b)  Subsequent  progress reports  within fifteen days  after the end of the every quarter  during which  he acts as  liquidator

Provided   that if an insolvency  professional  ceases  to act as   a liquidator during the liquidation process , he shall   file a progress report  for the quarter  upto the date  of his ceasing  to act, within 15 days  of such cessation

Progress report provide the following information

a)  Appointment, tenure of appointment  and cessation of appointment of professionals
b)  A  statement  indicating  progress in liquidation
i)  settlement  of list of stakeholders
ii)  details of any property  that remain to be sold  and realized
iii)  distribution made to the stakeholders  and
iv)  distribution of unsold property made to the stakeholders

c)  Details fee or remuneration

i)  Fee  due to and  received  by the liquidator  together with a  description  of the activities carried out by him
ii) The remuneration  or fee  paid to professionals  appointed by the liquidator  together with a   description  of activities carried out by them
iii)  other  expenses incurred by the liquidator  whether paid or not

d)  Development in any  material litigation, by or against  the corporate debtor
e) filing or  and  developments in application for avoidance  of transactions  in accordance with   chapter III  pf Part II  of the code
f) changes if any in estimated liquidation costs

3)  Progress Report  shall enclose   an account maintained  by the liquidator
a)  his receipts and payments  during the quarter and
b)  the cumulative  amount of his receipts and payments  since the  liquidation commencement date

4) The Progress Report  shall enclose a  statement indicating any material change  in the expected realization  of any property proposed to be sold  along with  the basis  for such change

Provided that the above statement  shall not be accessible to any person  during the course of liquidation , unless permitted by the  Adjudicating authority

5) Fourth  quarter progress report  shall enclose audited   accounts of the liquidator's receipts  and payments   for the financial year

In case  Insolvency professional  ceases to act as  liquidator , the audited accounts  which he  has acted as  liquidator, shall be  enclosed   with the progress report  to be filed  after cessation of his appointment

Appointment of liquidator  13th February 2017  and ceases  to act as liquidator  on 12th February 2019


Report No
Period covered  in the quarter
Last date of submission  of Report
1
13th Feb  to 31st March 2017
15th April 2017  ( Also submit audited accounts since it is fourth quarter )
2
April 2017  to  June 2017
15th July  2017
3
July  2017 to  September 2017
15th  October 2017
4
October 2017 to  December 2017
15th January  2017
5
January 2018  to  March 2018
15th April  2018  ( Also submit  audited accounts since it is  fourth quarter)
6
April 2018  to  June 2018
15th July  2018
7
July  2018 to  September 2018
15th  October 2018
8
October 2018 to  December 2018
15th January  2017
9
January 2019  to   12th February 2019
27th February 2019  ( Also  submit  audited accounts since he ceases to act as liquidator)




Registered Valuer    A  person  registered  in accordance  with the Companies Act, 2013

Stakeholder  means  the  stakeholders   entitled  to  distribution of proceeds under Section 53


Chapter  II
Regulation 3

Eligibility   for appointment as liquidator


 Liquidator and every partner or director  of the insolvency  professional entity  of which he is a  partner  or  director  is independent   of the corporate debtor

Who is Independent

a)  is eligible  to be appointed  as an independent  director on the board of the corporate debtor  under Section 149 of the Companies Act, 2013   where the corporate debtor is  a company

b)  is not  a related party  of the corporate debtor or
c)  has  not been an employee or proprietor or a partner

i)  of  a firm  of auditors  or company secretaries or cost auditors  of the corporate debtor or
ii)  of a legal or a consulting  firm,  that has or had any transaction  with the  corporate debtor  contributing    ten percent or more of the gross turnover  of such firm, in the last three financial years

2)  shall disclose  the  existence of any pecuniary  or personal relationship with the concerned  corporate debtor  or any or any of its  stakeholders  as soon  as he becomes aware of it,  to the Board  and the Adjudicating authority


3) An  insolvency  professional  shall not continue  as a liquidator  if the insolvency professional entity  of which he is a  director or partner or any other partner  or director  of such insolvency professional entity   represents  any other stakeholders  in the same liquidation process

Regulation No.4   Liquidator's fees 


Liquidator fee is  form part of liquidation costs


The  liquidator  shall  be entitled  to such fee  and in such manner  as has been  decided by  the committee of creditor   before  a liquidation  order is passed  under Sections  33 (1) (a) and 32 92)


Liquidator shall be entitled   to a fee as  a percentage  of the amount   realized   net of  other l;liquidation costs


Percentage of fee on the amount realized/ distributed
Amount of realization/ Distribution  ( In Rupees)
In the first six months
In the next six months
In the next one year
Thereafter
                       Amount of Realization  ( exclusive  of liquidation costs)
On the first one crore
5.00
3.75
2.55
1.88
On the next  9 crore
3.75
2.80
1.88
1.41
On the next 40 crore
2.50
1.88
1.25
0.94
On the next 50 crore
1.25
0.94
0.68
0.51
On further sum realized 
0.25
0.19
0.13
0.10


                       Amount  Distributed  to Stakeholders)
On the first one crore
2.50
1.88
1.25
0.94
On the next  9 crore
1.88
1.40
0.94
0.71
On the next 40 crore
1.25
0.94
0.63
0.47
On the next 50 crore
0.63
0.48
0.34
0.25
On further sum realized 
0.13
0.10
0.06
0.05


4)  The liquidator  shall be entitled  to receive half of the fee payable  on realization under sub regulation  (3) only after such  realized  amount is distributed


CHAPTER III

POWERS AND FUNCTIONS OF LIQUIDATOR

REGULATIONS  5   REPORTING

1) The liquidator  shall prepare   and submit  the following reports

a)  Preliminary Report
b) an asset memorandum
c)  Progress  report
d)  sale report (s)
e)  minutes of consultation  with stakeholders and
f)  the final report  prior to distribution

Whom report to be submitted  -    Adjudicating Authority  in the manner specified under these regulations

2)    The liquidator shall preserve  a physical  as well as   electronic copy  of the reports  and minutes   for eight years  after the dissolution of the corporate debtor   ( Minutes and reports mentioned in sub regulation  (1)  )


3)  Available to all  stakeholders  in either electronic or physical form , on receipt of

a)  an application in writing
b) cost of making  such reports and minutes  available to  it and 

c) an Undertaking   from the stakeholder   that it shall maintain confidentiality of such reports  and minutes  
shall not  use these  to cause an undue gain or undue loss  to itself  or any other person

Regulations  6   Registers and books of account

1)  Where  the books of accounts of the corporate debtor is incomplete  on the commencement date, the liquidator  shall have them completed  and brought up to date  with all  convenient  speed  as soon as the order for liquidation order is passed

2)  The liquidator shall maintain  the following  registers and books  as may be applicable, in relation to liquidation  of the corporate debtor and shall preserve  them for a period of eight years  after the dissolution  of the corporate debtor 

a)  Cash book
b) Ledger
c)   Bank Ledger
d)   Register of Fixed Assets  and inventories
e)  Securities and investment register
f)  Register of Book debts and  outstanding debts
g)  Tenants Ledger
h) Suits Register
i)  Decree Register
j)  Register of claims and Dividends
k)  Contribution Ledger
l)  Distribution Register
m )  Fee Register
n )  Suspense Register
o)  Documents Register
p)  Books Register
q)   Register of unclaimed  dividends  and undistributed  properties  deposited  in accordance with Regulation 45  and 
r)  Such other books or registers  as may be  necessary to account for  transactions  entered into by him  in relation  to the corporate debtor

3)  The registers  and books  under sub regualtion 2   may be maintained  in the  forms  indicated  in Schedule III  with such modifications  as the liquidator  may deem fit  in the facts  and circumstances  of the liquidation process

4)   The liquidator  shall keep  receipts for all payments  made or  expenses  incurred by him


Regulations 7  Appointment of Professionals

1)  A  liquidator   may appoint  professionals  to assist him  in the discharge  of the duties, obligations   and  functions  for  a  reasonable  remuneration.
The remuneration payable to such professionals   shall form part of the liquidation cost.

2)  The  following professionals are not eligible to be appointed by liquidator
     who is his relative , is  a related party of the corporate debtor or has served   as an auditor  to the  corporate debtor  in the five years preceding the liquidation   commencement date.

3)   Disclosure of  pecuniary or personal  relationship by Professional appointed or proposed to be appointed , with  any of the stakeholders  or the concerned  corporate debtor  as soon as  he becomes  aware of it to the liquidator 


 Regulation  8  Consultation with stakeholders

1)  The stakeholders  consulted  under Section  35 (2)  shall extend  all assistance  and cooperation  to the liquidator  to complete  the liquidation   of the corporate debtor

2)  The liquidator shall maintain  the particulars  of any consultation with the stakeholders  made  under this  Regulation, as specified  in Form A of  Schedule II


 Regulation No 9  Personnel  to extend  cooperation to liquidator

1)  The liquidator may make an application to the  Adjudicating Authority  for  a direction that   a  person who

a)  is or has been  an officer,  auditor, employee, promoter or partner of the  corporate debtor
b)   was the interim  resolution professional,  resolution professional,  or the previous  liquidator of the corporate debtor or
c)   has possession of any of the properties  of the corporate debtor

2)  An application  may be made  under this Regulation  only after  the liquidator  has made  reasonable  efforts to obtain  the information  from such persons  and failed to obtain it.

Regulation  No. 10  Disclaimer of onerous property

1)    Where any part of the property  of a corporate debtor  consists of

a)  land of any tenure , burdened with  onerous convenants
b)   shares or stocks in companies
c)  any other property  which is not saleable or is not  readily  saleable by reason of the possession  thereof being bound either  to the performance  of any onerous  act or to the payment of any sum money or
d)  unprofitable  contracts

the liquidator  may, notwithstanding that 
he has endeavored  to sell  or 
has taken  possession  of the property or
exercised  any act of ownership  in relation thereto  or 
done  anything  in pursuance of the contract  f,

make an application to  Adjudicating authority  within 6 months  from the liquidation commencement   date,  or such extended  period  as may be allowed by the Adjudicating authority to disclaim  the property or contract

2)   The liquidator shall not make an application under sub regulation  (1)
if  a person interested in the property  or contract inquired  in writing  whether he will  make an application  to have such property  disclaimed,  and he did not communicate  his intention   within one month   from receipt of such inquiry

3)  The liquidator  shall serve a notice  to persons  interested in the onerous property  or contract   at least seven days  before making  an application for disclaimer  to the Adjudicating authority

Who is interested  person 

a)   is  entitled    to the benefit   or subject   to the burden  of the contract or
b)  claims  an interest  in a disclaimed  property  or is under  a liability  not discharged  in respect of  a disclaimed property


4)  Subject to  the order of  the Adjudicating  Authority approving  such disclaimer, 

the disclaimer  shall operate  to determine,  from the date of disclaier, the  rights, interest and liabilities  of the corporate debtor in or in respect of the property  or  contract disclaimed , but shall not,  except   so far as  is necessary  for the purpose of releasing  the  corporate debtor   and the property  of the corporate   from liability, affect the rights, interest   or liabilities of any other person.

5)   A  person  affected by the disclaimer under this Regulation shall be deemed  to be a creditor  of the corporate debtor  for the amount of the compensation or damages  payable in respect  of such effect,  and may accordingly  be payable  as a debt  in liquidator  under section 53 (1) (f)


Regulations No 11  Extortionate credit transactions

A  transaction  shall  be  considered  an extortionate  credit  transaction under  section 50 (2)   where the terms

1)  require  the corporate debtor  to make exorbitant  payments  in respect of the credit provided or
2)   are unconscionable  under the principles of law relating to contracts


Chapter  IV

General

Regulation No 12  Public announcement by liquidator

1)    The liquidator  shall make an  public announcement  in Form B  of Schedule II  within  five days  from his appointment

2)  The public announcement shall

a)  call  upon stakeholders  to submit  their claims  as on the liquidation commencement date  and
b)  provide the last date for submission of claim,  which shall be  thrity days  from the  liquidation commencement date


3)  The announcement   shall be published
a)  in one English  and one Regional language  newspaper  with wide circulation  as the location of the registered office   and principal office, if any of the corporate debtor  and any other location  where in the opinion  of the liquidator, the corporate debtor  conducts material  business  operations.

b)  on the website if any of the corporate debtor  and 
c)  on the website, if any,  designated by the Board  for this purpose


Regulation 13  Preliminary report

 Regulation 13  -   The liquidator   shall submit a  Preliminary report  to the Adjudicating Authority  within 75  days  from the  liquidation commencement  date   
The preliminary report includes

a)  The  capital structure of the corporate debtor
b)  The estimates of its assets and liabilities  as on the liquidation   commencement date  based on the books of the corporate debtor

In case  of books   of the corporate debtor not reliable, liquidator shall also provide  such estimates  based on   reliable  recores and date otherwise  available to him
c)   Whether he intends to make any  further inquiry  into any matter relating to the promotion, formation or failure of the corporate debtor  of the conduct of the business   thereof and
d)  The proposed  plan of action  for carrying out liquidator  including the  timeline within  which he proposes   to carry out  and the estimated liquidation costs.


Regulation No 14  Early dissolution

Any  time after  the preparation of the preliminary report, if it appears  to the liquidator  that

a)  the realization  properties  of the corporate debtor  are insufficient   to  cover  the cost of the liquidation  process and
b)   the affairs  of the corporate debtor  do no require  any further investigation

The liquidator  may apply  to the Adjudicating  Authority  for early dissolution  of the corporate debtor  and for necessary   directions  in respect of  such dissolution

Regulations No. 15  Progress Report


Progress Report     Quarterly report   prepared  in accordance with Regulation 15

The liquidator    shall submit  progress  reports to the Adjudicating authority   as under

a)  First  progress  report   within fifteen days after the end of the quarter in which he is appointed

b)  Subsequent  progress reports  within fifteen days  after the end of the every quarter  during which  he acts as  liquidator

Provided   that if an insolvency  professional  ceases  to act as   a liquidator during the liquidation process , he shall   file a progress report  for the quarter  upto the date  of his ceasing  to act, within 15 days  of such cessation

Progress report provide the following information

a)  Appointment, tenure of appointment  and cessation of appointment of professionals
b)  A  statement  indicating  progress in liquidation
i)  settlement  of list of stakeholders
ii)  details of any property  that remain to be sold  and realized
iii)  distribution made to the stakeholders  and
iv)  distribution of unsold property made to the stakeholders

c)  Details fee or remuneration

i)  Fee  due to and  received  by the liquidator  together with a  description  of the activities carried out by him
ii) The remuneration  or fee  paid to professionals  appointed by the liquidator  together with a   description  of activities carried out by them
iii)  other  expenses incurred by the liquidator  whether paid or not

d)  Development in any  material litigation, by or against  the corporate debtor
e) filing or  and  developments in application for avoidance  of transactions  in accordance with   chapter III  pf Part II  of the code
f) changes if any in estimated liquidation costs

3)  Progress Report  shall enclose   an account maintained  by the liquidator
a)  his receipts and payments  during the quarter and
b)  the cumulative  amount of his receipts and payments  since the  liquidation commencement date

4) The Progress Report  shall enclose a  statement indicating any material change  in the expected realization  of any property proposed to be sold  along with  the basis  for such change

Provided that the above statement  shall not be accessible to any person  during the course of liquidation , unless permitted by the  Adjudicating authority

5) Fourth  quarter progress report  shall enclose audited   accounts of the liquidator's receipts  and payments   for the financial year

In case  Insolvency professional  ceases to act as  liquidator , the audited accounts  which he  has acted as  liquidator, shall be  enclosed   with the progress report  to be filed  after cessation of his appointment

Appointment of liquidator  13th February 2017  and ceases  to act as liquidator  on 12th February 2019


Report No
Period covered  in the quarter
Last date of submission  of Report
1
13th Feb  to 31st March 2017
15th April 2017  ( Also submit audited accounts since it is fourth quarter )
2
April 2017  to  June 2017
15th July  2017
3
July  2017 to  September 2017
15th  October 2017
4
October 2017 to  December 2017
15th January  2017
5
January 2018  to  March 2018
15th April  2018  ( Also submit  audited accounts since it is  fourth quarter)
6
April 2018  to  June 2018
15th July  2018
7
July  2018 to  September 2018
15th  October 2018
8
October 2018 to  December 2018
15th January  2017
9
January 2019  to   12th February 2019
27th February 2019  ( Also  submit  audited accounts since he ceases to act as liquidator)



 CHAPTER V 

CLAIMS

 Regulation No. 16   Proof of claim

Progress Report     Quarterly report   prepared  in accordance with Regulation 15

The liquidator    shall submit  progress  reports to the Adjudicating authority   as under

a)  First  progress  report   within fifteen days after the end of the quarter in which he is appointed

b)  Subsequent  progress reports  within fifteen days  after the end of the every quarter  during which  he acts as  liquidator

Provided   that if an insolvency  professional  ceases  to act as   a liquidator during the liquidation process , he shall   file a progress report  for the quarter  upto the date  of his ceasing  to act, within 15 days  of such cessation

Progress report provide the following information

a)  Appointment, tenure of appointment  and cessation of appointment of professionals
b)  A  statement  indicating  progress in liquidation
i)  settlement  of list of stakeholders
ii)  details of any property  that remain to be sold  and realized
iii)  distribution made to the stakeholders  and
iv)  distribution of unsold property made to the stakeholders

c)  Details fee or remuneration

i)  Fee  due to and  received  by the liquidator  together with a  description  of the activities carried out by him
ii) The remuneration  or fee  paid to professionals  appointed by the liquidator  together with a   description  of activities carried out by them
iii)  other  expenses incurred by the liquidator  whether paid or not

d)  Development in any  material litigation, by or against  the corporate debtor
e) filing or  and  developments in application for avoidance  of transactions  in accordance with   chapter III  pf Part II  of the code
f) changes if any in estimated liquidation costs

3)  Progress Report  shall enclose   an account maintained  by the liquidator
a)  his receipts and payments  during the quarter and
b)  the cumulative  amount of his receipts and payments  since the  liquidation commencement date

4) The Progress Report  shall enclose a  statement indicating any material change  in the expected realization  of any property proposed to be sold  along with  the basis  for such change

Provided that the above statement  shall not be accessible to any person  during the course of liquidation , unless permitted by the  Adjudicating authority

5) Fourth  quarter progress report  shall enclose audited   accounts of the liquidator's receipts  and payments   for the financial year

In case  Insolvency professional  ceases to act as  liquidator , the audited accounts  which he  has acted as  liquidator, shall be  enclosed   with the progress report  to be filed  after cessation of his appointment

Appointment of liquidator  13th February 2017  and ceases  to act as liquidator  on 12th February 2019


Report No
Period covered  in the quarter
Last date of submission  of Report
1
13th Feb  to 31st March 2017
15th April 2017  ( Also submit audited accounts since it is fourth quarter )
2
April 2017  to  June 2017
15th July  2017
3
July  2017 to  September 2017
15th  October 2017
4
October 2017 to  December 2017
15th January  2017
5
January 2018  to  March 2018
15th April  2018  ( Also submit  audited accounts since it is  fourth quarter)
6
April 2018  to  June 2018
15th July  2018
7
July  2018 to  September 2018
15th  October 2018
8
October 2018 to  December 2018
15th January  2017
9
January 2019  to   12th February 2019
27th February 2019  ( Also  submit  audited accounts since he ceases to act as liquidator)

  CHAPTER  V

CLAIMS

 Regulation No. 16   Proof of claim

 A person,  who claims  to be a stakeholder, shall  prove his claim for debt or dues  to his,  including  interest if any,  as on the liquidation  commencement date

 Regulation No. 17    Claims by  Operational creditor


1)   A  person  claiming  to be an operational creditor  of the corporate debtor, other than a  workman  or employee , shall submit  proof  of claim  to the liquidator in person, by post or by electronic  means in Form C of Schedule II

2)  The existence  of  debt  to an operational  creditor  under this  Regulation may be proved on the basis of

a)   the records  available  with an information utility if any or
b)   other relevant  documents  which adequately  establish  the debt,  including any or all of the following

i)   a contract  for the supply of goods  and services  with corporate debtor
ii)  an invoice  demanding  payment for the goods and services  supplied to the corporate debtor
iii)   an order of a court  or tribunal  that has  adjudicated  upon the non payment of  debt,  if any and
v)   Financial accounts

 Regulation no 18  Claims  by financial creditors

1)  A person  claiming  to be  a financial  creditor  of the corporate debtor  shall submit   proof of claim  to the liquidator   -  Electronic  means  in Form D of Schedule II

2)  The existence of debt due to  the financial creditor  may be proved  on the basis


a)   the records available   in an information utility if any or

b)    other relevant documents  which adequately  establish   the debt, including any or all of the following

i)  a  financial contract   supported by financial statements  as evidence of the debt

ii)    a  record   evidencing  that the amounts committed  by the financial  creditor  to the corporate debtor  under a facility has been drawn by the corporate debtor

iii)  financial statements  showing that  the debt  has not been repaid and
iv)  an order of a court  or tribuanl  that  has adjudicated   upon the non payment of a  debt  if any

  











Thursday, August 17, 2017

On Clarification regarding availability of Transitional Credit for GST

On Clarification regarding availability of Transitional Credit for GST 
As per the rules, the Goods and Services Tax (GST) for the month of July 2017 has to be paid by 20th August, 2017. Only after the payment of full GST, return in summary Form 3B can be filed. 

Concerns have been raised about the form for claiming transitional input tax credit not being available on the GSTN website. This form will be available on the GSTN website from 21st August, 2017. In view of this, a small window of opportunity is being given to all the taxpayers. For those taxpayers who do not want to claim any transitional input tax credit have to necessarily pay the tax and file return in Form 3Bbefore the due date of 20th August, 2017. The taxpayers who want to avail the transitional input tax credit should also calculate their tax liability after estimating the amount of transitional credit as per Form TRANS I. They have to make full settlement of the liability after adjusting the transitional input tax credit before 20th August, 2017. However, in such cases, they will get time upto 28th August, 2017 to submit Form TRANS I and Form 3B. In case of shortfall in the amount already paid vis-à-vis the amount payable on submission of Form 3B, the same will have to be paid with interest @ 18% for the period between 21stAugust,2017 till the payment of such differential amount. 

*****


DSM/SBS/AK
(Release ID :170061)

Saturday, August 5, 2017

IBC an ideal tool for solving bad loan issue SOURCE BUSINESS STANDARD

IBC an ideal tool for solving bad loan issue

SANJAY DOSHI
While the government has been pursuing measures to tackle rising levels of nonperforming debt in public sector banks,agrowing pile of bad debt had also beenaconcern for the lender community.
With its clear and precise outlook towards insolvency, the Insolvency and Bankruptcy Code (IBC) 2016 might not only serve as an ideal tool to solve the badloans issue, but is also expected to haveasignificant impact on the conduct of business in the country.
Under the Code, an insolvency proceeding can be commenced by any creditor (financial or operational) or the corporate debtor itself, by filing an application with the Adjudicating Authority (AA) at the National Company Law Tribunal (NCLT). Insolvency proceedings can be initiated on admission of the application by the NCLT, after which the lenders have to formacommittee of creditors (CoC) and appoint an insolvency professional (IP) to act asaresolution professional (RP) and run the borrower´s business in the interim period.
To arrive ataresolution, the Code prescribes preparation and submission ofa “resolution plan” withinarational timeline of 180/270 days from the commencement of insolvency proceedings.
Section 5(28) of the Code definesaresolution plan as “aplan proposed by any person for continuation of the corporate debtor asagoing concern in accordance with Part II”.
The objective ofaresolution plan is to maximise eventual returns to the creditors.
Aresolution plan must be prepared in accordance with Regulation 37 and 38 under the Code.
Regulation 38 stipulates mandatory contents ofaresolution plan, which should include specific sources of funds to pay insolvency resolution process costs, sources of funds to pay liquidation value (operational creditors and dissention financial creditors), the term of the plan, implementation schedule, the manner of management of the business and adequate means for supervision.
The Code stipulates that it will be the RP´s duty to invite prospective lenders, investors and any other persons to put forward the resolution plan.
The corporate debtor may also filearesolution plan for consideration.
According to Section 25(i) of the Code, it will be the RP´s duty to present all resolution plans received at the CoC´s meetings.
The responsibility of approvingaresolution plan rests with the CoC, which will approve it with not less than 75 per cent voting in favour of it. Whereaplan approved by the CoC is subsequently approved by the AA, the final plan will be binding on the corporate debtors, its employees, members, creditors, guarantors and other stakeholders involved in the resolution plan.
If the CoC fails to approve and submitaresolution plan within the prescribed time, the corporate debtor could look at liquidation as an option, which will result in auctioning of the company´s assets to recover dues.
The NCLT is not expected to rejectaplan on the ground that it is not feasible, or possible to implement the plan fromapractical or economic/commercial point of view.
The NCLT is not meant to delve into the technical and economical complexity of the plan on what is essentiallyacommercial decision of the creditor.
However, the resolution plan may be challenged at the NCLT on technical grounds such as irregularities in conduct of meetings or voting process, challenge in calculation and payment of liquidation value, whether the plan is unfair, unjust and prejudicial to the interest of petitioner, and whether approval was obtained by fraud or misrepresentation.
However, there are certain areas around the resolution plan which remain unaddressed by the Code.
There is lack of clarity on whether the CoC can approve more than one plan byamajority, and whether the AA can request modifications in plans approved by the CoC on technical grounds or mistakes apparent from records.
The Code is also silent on changes that may be required after approval ofafinal plan by the AA, due to circumstantial variations such as change in regulation, loss of key customer or cancellation of licence.
Clarity is also required on whether consent of shareholders is required on the approved plan for sale of assets, mergers and amalgamation, as per the provisions of the Companies Act, 2013.
In the past, the RBI has initiated various restructuring schemes —such as Corporate Debt Restructuring, Strategic Debt Restructuring, Joint Lenders Forum, Scheme for Sustainable Structuring of Stressed Assets and the 5/25 scheme —to enable lenders to formulateaplan of action and restructure debts of companies facing financial difficulties onatimely basis.
While these schemes had the essence ofaresolution plan, they were prescriptive and lacked flexibility.
The resolution plan under the IBC is expected to be more objective, flexible and resolutionoriented.
Agood resolution plan should be based onarobust business strategy, and list material assumptions underpinning the business plan, including current laws.
It should also highlight key critical factors and milestones, and clearly define the implementation and monitoring mechanism.
An approved resolution plan under the IBC should beamanifestation of the combined judgment of all stakeholders, having the objective of maximising eventual returns to the creditors, thereby preserving the value of the business.
Lastly, it is expected to provide better results than prospective liquidation byacorporate debtor.
The writer is Partner, KPMG in India.
These views are personal

IBC CODE LIQUIDATION PROCESS REGULATIONS 2016 BRIEF PART II

REGULATION 19   CLAIMS BY  WORKMEN AND EMPLOYEES  1)  A  person  claiming  to be   a workman or an  employee  of the corporate debtor  sh...