{"id":2361,"date":"2022-03-22T09:37:56","date_gmt":"2022-03-22T09:37:56","guid":{"rendered":"https:\/\/www.akgvg.com\/blog\/?p=2361"},"modified":"2022-03-22T10:21:23","modified_gmt":"2022-03-22T10:21:23","slug":"petition-for-cirp","status":"publish","type":"post","link":"https:\/\/www.akgvg.com\/blog\/petition-for-cirp\/","title":{"rendered":"Petition for CIRP"},"content":{"rendered":"

\"\"<\/p>\n

WHAT IS A CIRP?<\/strong><\/p>\n

The Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 defines the expression \u201ccorporate insolvency resolution process\u201d as \u201cthe insolvency resolution process for corporate persons under Chapter II of Part II of the Code.\u201d<\/p>\n

A Corporate Insolvency Process means a process where \u2013<\/p>\n

    \n
  1. the financial creditors assess the viability of debtor\u2019s business; and<\/li>\n
  2. the seek options for its revival and rehabilitation.<\/li>\n<\/ol>\n

    The failure of a CIRP results in the Liquidation of the Company.<\/p>\n

    Liquidation is the process by which the assets of the debtor are realized and distributed by the<\/p>\n

    liquidator in order to discharge its debts.<\/p>\n

    PERSONS WHO MAY INITIATE A CIRP<\/strong><\/p>\n

    Section 6 of the IB Code, 2016 provides for three categories of people who may initiate a CIRP<\/p>\n

    against a Corporate Debtor. They are \u2013<\/p>\n

      \n
    1. Financial Creditors<\/li>\n
    2. Operational Creditors<\/li>\n
    3. Corporate Applicant<\/li>\n<\/ol>\n

      PROCEDURE FOR MAKING APPLICATION<\/strong><\/p>\n

      The IB Code, 2016 has envisaged the procedure for initiation of CIRP by different sets of people in<\/p>\n

      different sections. These are \u2013<\/p>\n

      -Section 7 \u2013 Financial Creditors<\/p>\n

      -Section 8 & 9\u2013 Operational Creditors<\/p>\n

      -Section 10 \u2013 Corporate Applicant\u00a0<\/strong><\/p>\n

      Initiation of Corporate Insolvency Resolution Process by Financial Creditors (Section 7)
      \n<\/strong><\/p>\n

      \"\"<\/p>\n

      The Financial Creditor shall file Form 1<\/em><\/strong> with NCLT to initiate insolvency proceedings against the<\/p>\n

      Corporate Debtor.<\/p>\n

      The Application u\/s 7 of the IB Code, 2016 can be filed by \u2013<\/p>\n

      – A financial creditor by itself;<\/p>\n

      – A financial creditor jointly with other financial creditors;<\/p>\n

      – Any other person on behalf of the financial creditor.<\/p>\n

      NOTE –<\/strong> A financial creditor can apply corporate insolvency resolution process even<\/p>\n

      if the default is in respect of a debt of another financial creditor.<\/p>\n

      Further, If the NCLT finds that \u2013<\/p>\n