Introduction procedure on how to recover the debt- As we all know that debt recovery was a complicated process when there were no specific channels to recovery debt. Everybody has to apply with jurisdictional courts where there were already lakhs of cases pending to be completed. After the introduction of the Insolvency and Bankruptcy Code, 2016 (hereinafter “IBC”), an option has been provided to all corporate debtors for filing a case debt recovery before the National Company Law Tribunal (“NCLT”).

After reading the present article, you will be able to understand the complete procedure for the recovery of debt under IBC.

Before going into detail, first, we need to understand the meaning of a few terms like Default, Financial Creditor and Operational Creditor, etc.

• The word Default refers to the non-payment of debt, whether whole or any part in installment which becomes due and is payable and the same has not been paid by the corporate debtor.
• Financial Creditor refers to a person to whom a financial debt or Loan is owed).
• An Operational Creditor is a person to whom an operational debt or Loan is owed in respect of goods or services, any employment, or payment of dues to Government.
It is to be noted that aforesaid person can initiate the Recovery procedure in case of default by the Corporate Person.

Objective
The objective of the introduction of the IBC code was to improve the ease of doing business in India. The IBC Code contains the provisions to simplify the process of winding up of the companies which earlier was so complicated due to the involvement of multiple statuses and forums. On the other hand, the Code empowers the creditors to recover the dues form corporate sooner through the process of Corporate Insolvency Resolution or CIRP initiated by the Corporate Insolvency Resolution professional.

Applicability of Insolvency and Bankruptcy Code (IBC):
Cases in which a minimum default of 1 lakhs or more is involved come under the purview of Insolvency and Bankruptcy Code. The person as defined aforesaid can move an application before the NCLT in order to initiate proceeding against the debtor, however, he has to ensure that in order to get his application admitted, the default is ascertainable. Further, under the current Code, it is the Companies (Private and Public) and Limited Liability Partnerships (LLP) which shall be considered as defaulting corporate debtor. The provision regarding the insolvency of individuals are also contained in the Code however are yet to be notified. Consequently, cases with regard to unpaid debts filed against individuals and/or partnership entities will fall outside the purview of this Code.

procedure on how to recover the debt
Once the case admitted by NCLT, the court will appoint an Interim Resolution Professional (IRP) (as defined under the Code) having requisite qualification. IRP shall take over the management of the defaulting debtor. IPR plays a crucial role after he took over the management of the defaulting company. He will try to make the Company as a going concern as far as possible. Utmost efforts shall be made in order to ensure the maximum realization of company debts which can take in place as a consequence of the Corporate Insolvency Resolution Process (CIRP) process.

Corporate Insolvency Resolution Process (CIRP)
The CIRP process includes necessary action that will be taken to revive the Company like raising of fresh funds, finding for new buyers in order to dispose off the Company as going concern. A Resolution plan shall be submitted with the committee of creditors which shall be approved or disapproved by them considering different facts and in case the same is not approved by them then it will be as process of Corporate Insolvency Resolution have been failed and liquidation proceedings shall be commenced which is subject to the order of the hon’ble tribunal.

Timeline for Resolution Plan
In light of the amendment under the Code, for conducting the entire process, a time period is 330 days.
Will Limitation Period apply in IBC?
Section 238A was inserted under the IBC code which provides for the Limitation period. The period shall apply to old cases as filed with NCLT.
Person to bear Cost of the Resolution process
Applicant creditor has to bear all costs/expenses which are also known as Resolution Costs. But this expense is reimbursed at the time of resolution place is approved or when Liquidation arises.
Here is a short procedure to be followed by the applicant in order to recover the debt due from the corporate debtor as defined under Section 9 of the IBC code:
1. Serve a demand notice to the debtor asking the default amount;
2. The operational creditor will respond to the notice serve by the corporate debtor or make the payment of the disputed amount.
3. If no payment is being made an application shall be moved to NCLT.
4. NCLT after admitting application will initiate a proceeding,
5. Appointment of interim resolution professional
6. Commencement of CIRP proceeding.
7. IRP shall take over the management of the Company and will take the same further in order to provide a resolution plan.
Conclusion:
Hence, one can say that great initiative being taken by the Government to ease of doing business in India. There was a time when the process of recovery money was a cumbersome exercise but now it has been simplified and resolution proceeding has to be completed within a restrictive period of time which is a great relief to all of us.
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