The Insolvency and Bankruptcy Law 2015
Dear Sehpaathians
Parliament recently passed the insolvency and bankruptcy law 2015 which is being regarded as a big financial reform which was required for a long time. This law expeeds the process of winding of the company under clear rules and regulations. Here we comes with an explanation of the whole law.
Explanation of the law.
This law basically makes it easier for the banks, supplier, or employee to take the assets of a company who defaults from a loan, payments. Anyone who owned money by a company, be it a supplier, employee or bank and finds that the company has defaulted on the payment he can go to the National Company Law Tribunal. The tribunal if it finds the application worthy will appoint a insolvancy professional who is basically a charted accountant. The charted accounting will immediately call for a calm period (A time when no one will ask money from the company) and will hold the meeting of all the creditors and access the complete required amount from the company and analyse the assets being held by the company. If 75% of the creditors deny to give the company more money and believe that the company cannot continue, the company will have 6 months time to pay her dues, else the company will automatically go into liquidation and dues are settled in this fashion
- Dues of Workmen (staff) 24 Months salary is paid
- Dues of Banks
- Then dues of unsecured loans
- Then dues of govt. departments.
But in case the creditors want to give more money to the company, settle her dues and continue operations, these bankruptcy rules wont be followed.
Setup Requirements:
This law has will require an year to be full applicable. An information utility is required to be set up which will be updated with all the company assets and details. They are basically data companies very much like CIBIL which keeps a tap on personal loans and details.
The government will setup 30 tribunals (one in each state) and appoint respective insolvency professional.
Here is a detailed Video:
The above article has been written from understanding the logics from the above video.
