In this article share about the procedural aspects of recovery of debts due from the corporates under the insolvency and bankruptcy codeInsolvency and bankruptcy code provides that if the debt due to the corporate debtor (Company or LLP) is more than the amount of rupees one lakh than the operational creditor can send the demand notice for repayment of such debt and if no reply is received within a period of 10 days or there is no existence of dispute between the corporate debtor and operational creditor operational creditor may file and application for commencement of insolvency proceedings with NCLT upon corporate debtor under Section 9.
Step by step procedure to be followed for recovery of debt due from corporate debitor and application to nclt under section 9
- Serving of demand notice by operational creditor
- On the occurrence of a default, operational creditor may send demand notice to the debtor for the amount involved in the default.
- Notice by corporate debtor to operational creditor within period of 10 days of the receipt of the demand notice for copy of the invoice demanding payment
- once the corporate debtor receives a notice from the operational creditor either corporate debitor will make the payment to the invoice demand notice or if there is an existence of any dispute to the invoice he will intimate the same to the operational creditor, please note the disputes should be prior to the sending of notice.
- Application by operational creditor to NCLT – if the payment has not been made by the corporate debit or there is no existence of dispute for payment between the operational creditor and corporate debtor then the operational creditor main file application to nclt for initiation of corporate insolvency resolution proceedings upon corporate debtor
- Appointment of interem resolution professional
- Acceptance of application by NCLT
- Commencement of CIRP from the date of admission of application
- Once the CIRP proceedings has been initiated upon the corporate debitor, the management of the corporate debtor goes with the insolvency professional that is interim resolution professional and the powers of the board of directors of the company gets suspended.