Key Points
It is a struggling companys financial creditors (banks) and operational creditors (who supply goods and services) who typically initiate proceedings under The Insolvency and Bankruptcy Code (IBC), 2016 for non-payment of their dues..
Broadly, if a company is unable to service its obligations (payments that are due to its financial and operational creditors), one of two processes could follow: (i) the companys liabilities are restructured, and it gets a chance to continue its operations, perhaps under new owners; (ii) its assets are liquidated, and the money is recovered...
The threat of losing their company under this framework, as soon the proceedings are initiated, the existing promoters/ management lose control over the firm works as a powerful deterrent for errant promoters and puts pressure on them to honour their obligations...
Data from the Insolvency and Bankruptcy Board of India show that of all the cases admitted under IBC, proceedings in almost half have been initiated by operational creditors, signalling how widely this is being used by these firms...
Since the airlines request for initiation of proceedings was admitted, there have been reports that its promoters, the Wadia Group, and the banks who have lent the airline money, are trying to put together a revival package..
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Government mulls new framework to put IBC cases on fast track
09, May, 23The details will be finalised after broader stakeholder consultations. The government has studied the best practices of several jurisdictions and a similar, if not the same, insolvency mechanism is followed in the UK, said an official aware of details. Various aspects and structures of the planned framework are being examined and a final decision would be taken in due course.
Go First's Insolvency Plea Admitted, Tribunal Orders No Retrenchment
10, May, 23The National Company Law Tribunal (NCLT) on Wednesday admitted Go First's voluntary plea to initiate the insolvency resolution process against the airline.
IBC rejig: Better realisation for operational creditors
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