Government introduces Bankruptcy bill in Parliament to improve ease of doing Business
Team SoOLEGAL 23 Jun 2016

Government introduces Bankruptcy bill in Parliament to improve ease of doing Business

According to the bankruptcy bill introduced by the government in the parliament all the lenders, employees and shareholders can seek attachment of immovable assets (even it’s in abroad). The bankruptcy code approved by the parliament allow creditors, employees, and shareholders to start resolution process as a first sign of financial stress like default on the repayment of bank loans. In case the issue still persists even after that then they can ask for an attachment of all the immovable assets, including the broad ones, which the promoter had given as the personal guarantee to have a loan.

  1. This new law will change the complete architecture of financial sector in India because it creates the vibrant ecosystem where the decree of the companies which are facing financial distress can be possible now and in a limited time period.
  2. But now power to start the process of the resolution or may be falling the liquidation resolution is the right of almost every stakeholder. These stakeholders could be financial creditors, operational creditors, creditors, workmen, and employees.
  3. And if the employees and workers are not getting salaries from a very long time then it the company is definitely facing financial distress and the employees have the right to claim and start with the resolution proceeding. Employees can even go for the liquidation.
  4. Thus, as and when you find the earliest sign of your company’s financial distress you can file an application and NCLT will be decided within 14 days whether this case should be taken into consideration or not.
  5. Once the resolution process starts CoC (Committee of Creditors) will then be formed in the 180 states. In case resolution looks impossible then liquidation process will then be initiated. Any guarantee by promoter can be sold in order to pay back creditors or employees. This would include properties either in India or abroad.
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