CIRP (Sec. 6-32)

Section 6 Persons who may initiate corporate insolvency resolution process

“Where any corporate debtor commits a default, a financial creditor, an operational creditor or the corporate debtor itself may

initiate corporate insolvency resolution process in respect of such corporate debtor in the manner as provided under this

Chapter.”

VL Note : –

Section 7 Initiation of corporate insolvency resolution process by financial creditor

“(1) A financial creditor either by itself or jointly with other financial creditors, or any other person on behalf of the financial creditor, as

may be notified by the Central Government] may file an application for initiating corporate insolvency resolution process against a

corporate debtor before the Adjudicating Authority when a default has occurred.

Explanation. – For the purposes of this sub-section, a default includes a default in respect of a financial debt owed not only to the

applicant financial creditor but to any other financial creditor of the corporate debtor.

(2) The financial creditor shall make an application under sub-section (1) in such form and manner and accompanied with such fee as

may be prescribed.

(3) The financial creditor shall, along with the application furnish –

(a) record of the default recorded with the information utility or such other record or evidence of default as may be specified;

(b) the name of the resolution professional proposed to act as an interim resolution professional; and

(4) The Adjudicating Authority shall, within fourteen days of the receipt of the application under sub-section (2), ascertain the existence

of a default from the records of an information utility or on the basis of other evidence furnished by the financial creditor under sub

section (3):

Provided that if the Adjudicating Authority has not ascertained the existence of default and passed an order under sub-section (5) within

such time, it shall record its reasons in writing for the same.

(5) Where the Adjudicating Authority is satisfied that –

(a) a default has occurred and the application under sub-section (2) is complete, and there is no disciplinary proceedings pending against

the proposed resolution professional, it may, by order, admit such application; or

(b) default has not occurred or the application under

sub-section (2) is incomplete or any disciplinary proceeding is pending against the proposed resolution professional, it may, by order,

reject such application:

Provided that the Adjudicating Authority shall, before rejecting the application under clause (b) of sub-section (5), give a notice to the

applicant to rectify the defect in his application within seven days of receipt of such notice from the Adjudicating Authority.

(6) The corporate insolvency resolution process shall commence from the date of admission of the application under sub-section (5).

(7) The Adjudicating Authority shall communicate-

(a) the order under clause (a) of sub-section (5) to the financial creditor and the corporate debtor;

(b) the order under clause (b) of sub-section (5) to the financial creditor, within seven days of admission or rejection of such application,

as the case may be”

VL Note : –

Section 8 Insolvency resolution by operational creditor

“(1) An operational creditor may, on the occurrence of a default, deliver a demand notice of unpaid operational debtor copy of an invoice

demanding payment of the amount involved in the default to the corporate debtor in such form and manner as may be prescribed.

(2) The corporate debtor shall, within a period of ten days of the receipt of the demand notice or copy of the invoice mentioned in sub

section (1) bring to the notice of the operational creditor –

(a) existence of a dispute, if any, or record of the pendency of the suit or arbitration proceedings filed before the receipt of such notice

or invoice in relation to such dispute;

(b) the payment of unpaid operational debt-

(i) by sending an attested copy of the record of electronic transfer of the unpaid amount from the bank account of the corporate debtor; or

(ii) by sending an attested copy of record that the operational creditor has encashed a cheque issued by the corporate debtor.

Explanation. – For the purposes of this section, a “demand notice” means a notice served by an operational creditor to the corporate

debtor demanding payment of the operational debt in respect of which the default has occurred. ”

VL Note : –

Section 9 Application for initiation of corporate insolvency resolution process by operational creditor. –

“(1) After the expiry of the period of ten days from the date of delivery of the notice or invoice demanding payment under sub-section (1)

of section 8, if the operational creditor does not receive payment from the corporate debtor or notice of the dispute under sub – section

(2) of section 8, the operational creditor may file an application before the Adjudicating Authority for initiating a corporate insolvency

resolution process.

(2) The application under sub-section (1) shall be filed in such form and manner and accompanied with such fee as may be prescribed.

(3) The operational creditor shall, along with the application furnish-

(a) a copy of the invoice demanding payment or demand notice delivered by the operational creditor to the corporate debtor;

(b) an affidavit to the effect that there is no notice given by the corporate debtor relating to a dispute of the unpaid operational debt;

(c) a copy of the certificate from the financial institutions maintaining accounts of the operational creditor confirming that there is no

payment of an unpaid operational debt by the corporate debtor, if available;

(d) a copy of any record with information utility confirming that there is no payment of an unpaid operational debt by the corporate

debtor, if available; and

(e) any other proof confirming that there is no payment of any unpaid operational debt by the corporate debtor or such other

information, as may be prescribed.

(4) An operational creditor initiating a corporate insolvency resolution process under this section, may propose a resolution professional

to act as an interim resolution professional.

(5) The Adjudicating Authority shall, within fourteen days of the receipt of the application under sub-section (2), by an order–

(i) admit the application and communicate such decision to the operational creditor and the corporate debtor if, –

(a) the application made under sub-section (2) is complete;

(b) there is no 3[payment] of the unpaid operational debt; (c) the invoice or notice for payment to the corporate debtor has been

delivered by the operational creditor;

(d) no notice of dispute has been received by the operational creditor or there is no record of dispute in the information utility; and

(e) there is no disciplinary proceeding pending against any resolution professional proposed under sub-section (4), if any.

(ii) reject the application and communicate such decision to the operational creditor and the corporate debtor, if –

(a) the application made under sub-section (2) is incomplete;

(b) there has been payment of the unpaid operational debt;

(d) notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility; or

(e) any disciplinary proceeding is pending against any proposed resolution professional:

Provided that Adjudicating Authority, shall before rejecting an application under subclause (a) of clause (ii) give a notice to the applicant

to rectify the defect in his application within seven days of the date of receipt of such notice from the Adjudicating Authority.

(6) The corporate insolvency resolution process shall commence from the date of admission of the application under sub-section (5) of

this section.”

VL Note : –

Section 10 Initiation of corporate insolvency resolution process by corporate applicant

“(1) Where a corporate debtor has committed a default, a corporate applicant thereof may file an application for initiating corporate

insolvency resolution process with the Adjudicating Authority.

(2) The application under sub-section (1) shall be filed in such form, containing such particulars and in such manner and accompanied

with such fee as may be prescribed.

(3) The corporate applicant shall, along with the application, furnish-

(a) the information relating to its books of account and such other documents for such period as may be specified;

(b) the information relating to the resolution proposed to be appointed as an interim resolution professional; and

(c) the special resolution passed by shareholders of the corporate debtor or the resolution passed by at least three-fourth of the total

number of partners of the corporate debtor, as the case may be, approving filing of the application.]

(4) The Adjudicating Authority shall, within a period of fourteen days of the receipt of the application, by an order-

(a) admit the application, if it is complete and no disciplinary proceeding is pending against the proposed resolution professional]; or

(b) reject the application, if it is incomplete or any disciplinary proceeding is pending against the proposed resolution professional]:

Provided that Adjudicating Authority shall, before rejecting an application, give a notice to the applicant to rectify the defects in his

application within seven days from the date of receipt of such notice from the Adjudicating Authority.

(5) The corporate insolvency resolution process shall commence from the date of admission of the application under sub-section (4) of

this section.”

VL Note : –

Section 11 Persons not entitled to make application. –

“The following persons shall not be entitled to make an application to initiate corporate insolvency resolution process under this

Chapter, namely: –

(a) a corporate debtor undergoing a corporate insolvency resolution process; or

(b) a corporate debtor having completed corporate insolvency resolution process twelve months preceding the date of making of the

application; or

(c) a corporate debtor or a financial creditor who has violated any of the terms of resolution plan which was approved twelve months

before the date of making of an application under this Chapter; or

(d) a corporate debtor in respect of whom a liquidation order has been made.

Explanation. – For the purposes of this section, a corporate debtor includes a corporate applicant in respect of such corporate debtor. ”

VL Note : –

Section 12 Time-limit for completion of insolvency resolution process

“(1) Subject to sub-section (2), the corporate insolvency resolution process shall be completed within a period of one hundred and eighty

days from the date of admission of the application to initiate such process.

(2) The resolution professional shall file an application to the Adjudicating Authority to extend the period of the corporate insolvency

resolution process beyond one hundred and eighty days, if instructed to do so by a resolution passed at a meeting of the committee

of creditors by a vote of sixty-six per cent of the voting shares.

(3) On receipt of an application under sub-section (2), if the Adjudicating Authority is satisfied that the subject matter of the case is such

that corporate insolvency resolution process cannot be completed within one hundred and eighty days, it may by order extend

the duration of such process beyond one hundred and eighty days by such further period as it thinks fit, but not exceeding ninety days:

Provided that any extension of the period of corporate insolvency resolution process under this section shall not be granted more than

once:

Provided further that the corporate insolvency resolution process shall mandatorily be completed within a period of three hundred and

thirty days from the insolvency commencement date, including any extension of the period of corporate insolvency resolution process

granted under this section and the time taken in legal proceedings in relation to such resolution process of the corporate debtor:

Provided also that where the insolvency resolution process of a corporate debtor is pending and has not been completed within the

period referred to in the second proviso, such resolution process shall be completed within a period of ninety days from the date of

commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2019.”

VL Note : –

Section 12A Withdrawal of application admitted under section 7, 9 or 10

“The Adjudicating Authority may allow the withdrawal of application admitted under section 7 or section 9 or section 10, on an

application made by the applicant with the approval of ninety per cent. voting share of the committee of creditors, in such manner as

may be specified.”

VL Note : –

Section 13 Declaration of moratorium and public announcement

“(1) The Adjudicating Authority, after admission of the application under section 7 or section 9 or section 10, shall, by an order –

(a) declare a moratorium for the purposes referred to in section 14;

(b) cause a public announcement of the initiation of corporate insolvency resolution process and call for the submission of claims

under section 15; and

(2) The public announcement referred to in clause (b) of sub-section (1) shall be made immediately after the appointment of the interim

resolution professional”

VL Note : –

Section 14 Moratorium

“(1) Subject to provisions of sub-sections (2) and (3), on the insolvency commencement date, the Adjudicating Authority shall by order

declare moratorium for prohibiting all of the following, namely: –

(a) the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any

judgement, decree or order in any court of law, tribunal, arbitration panel or other authority;

(b)transferring, encumbering, alienating or disposing off by the corporate debtor any of its assets or any legal right or beneficial

interest therein;

(c) any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property

including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002

(54 of 2002);

(d) the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate

debtor.

(2) The supply of essential goods or services to the corporate debtor as may be specified shall not be terminated or suspended or

interrupted during moratorium period.

(3) The provisions of sub-section (1) shall not apply to —

(a) such transaction as may be notified by the Central Government in consultation with any financial regulator;

(b) a surety in a contract of guarantee to a corporate debtor.

(4) The order of moratorium shall have effect from the date of such order till the completion of the corporate insolvency resolution

process:

Provided that where at any time during the corporate insolvency resolution process period, if the Adjudicating Authority approves the

resolution plan under sub-section (1) of section 31 or passes an order for liquidation of corporate debtor under section 33, the

moratorium shall cease to have effect from the date of such approval or liquidation order, as the case may be.”

VL Note : –

Section 15 Public announcement of corporate insolvency resolution process

“(1) The public announcement of the corporate insolvency resolution process under the order referred to in section 13 shall contain the

following information, namely: –

(a) name and address of the corporate debtor under the corporate insolvency resolution process;

(b) name of the authority with which the corporate debtor is incorporated or registered;

(d) details of the interim resolution professional who shall be vested with the management of the corporate debtor and be

responsible for receiving claims;

(e) penalties for false or misleading claims; and

(f) the date on which the corporate insolvency resolution process shall close, which shall be the one hundred and eightieth day from

the date of the admission of the application under section 7, 9 or section 10, as the case may be.

(2) The public announcement under this section shall be made in such manner as may be specified.”

VL Note : –

Section 16 Appointment and tenure of interim resolution professional.

“(1) The Adjudicating Authority shall appoint an interim resolution professional within fourteen days from the insolvency

commencement date.

(2) Where the application for corporate insolvency resolution process is made by a financial creditor or the corporate debtor, as the case

may be, the resolution professional, as proposed respectively in the application under section 7 or section 10, shall be appointed

as the interim resolution professional, if no disciplinary proceedings are pending against him.

(3) Where the application for corporate insolvency resolution process is made by an operational creditor and-

(a) no proposal for an interim resolution professional is made, the Adjudicating Authority shall make a reference to the Board for the

recommendation of an insolvency professional who may act as an interim resolution professional;

(b) a proposal for an interim resolution professional is made under sub-section (4) of section 9, the resolution professional as

proposed, shall be appointed as the interim resolution professional, if no disciplinary proceedings are pending against him.

(4) The Board shall, within ten days of the receipt of a reference from the Adjudicating Authority under sub-section (3), recommend the

name of an insolvency professional to the Adjudicating Authority against whom no disciplinary proceedings are pending.

(5) The term of the interim resolution professional shall continue till the date of appointment of the resolution professional under

section 22.”

VL Note : –

Section 17 Management of affairs of corporate debtor by interim resolution professional

“(1) From the date of appointment of the interim resolution professional, –

(a) the management of the affairs of the corporate debtor shall vest in the interim resolution professional;

(b) the powers of the board of directors or the partners of the corporate debtor, as the case may be, shall stand suspended and be

exercised by the interim resolution professional;

(c) the officers and managers of the corporate debtor shall report to the interim resolution professional and provide access to such

documents and records of the corporate debtor as may be required by the interim resolution professional;

(d) the financial institutions maintaining accounts of the corporate debtor shall act on the instructions of the interim resolution

professional in relation to such accounts and furnish all information relating to the corporate debtor available with them to the

interim resolution professional.

(2) The interim resolution professional vested with the management of the corporate debtor, shall-

(a) act and execute in the name and on behalf of the corporate debtor all deeds, receipts, and other documents, if any;

(b)take such actions, in the manner and subject to such restrictions, as may be specified by the Board;

(c) have the authority to access the electronic records of corporate debtor from information utility having financial information of the

corporate debtor;

(d) have the authority to access the books of accounts, records and other relevant documents of corporate debtor available with

government authorities, statutory auditors, accountants and such other persons as may be specified; and

(e) be responsible for complying with the requirements under any law for the time being in force on behalf of the corporate debtor. “

VL Note : –

Section 18 Duties of interim resolution professional

“The interim resolution professional shall perform the following duties, namely: –

(a) collect all information relating to the assets, finances and operations of the corporate debtor for determining the financial position of

the corporate debtor, including information relating to –

(i) business operations for the previous two years;

(ii) financial and operational payments for the previous two years;

(iii) list of assets and liabilities as on the initiation date; and

(iv) such other matters as may be specified;

(b) receive and collate all the claims submitted by creditors to him, pursuant to the public announcement made under sections 13 and

15;

(d) monitor the assets of the corporate debtor and manage its operations until a resolution professional is appointed by the committee

of creditors;

(e) file information collected with the information utility, if necessary; and

(f) take control and custody of any asset over which the corporate debtor has ownership rights as recorded in the balance sheet of the

corporate debtor, or with information utility or the depository of securities or any other registry that records the ownership of assets

including –

(i) assets over which the corporate debtor has ownership rights which may be located in a foreign country;

(ii) assets that may or may not be in possession of the corporate debtor;

(iii) tangible assets, whether movable or immovable;

(iv) intangible assets including intellectual property;

(v) securities including shares held in any subsidiary of the corporate debtor, financial instruments, insurance policies;

(vi) assets subject to the determination of ownership by a court or authority;

(g) to perform such other duties as may be specified by the Board.

Explanation. – For the purposes of this section, the term “assets” shall not include the following, namely: –

(a) assets owned by a third party in possession of the corporate debtor held under trust or under contractual arrangements including

bailment;

(b) assets of any Indian or foreign subsidiary of the corporate debtor; and

VL Note : –

Section 19 . Personnel to extend co-operation to interim resolution professional

“(1) The personnel of the corporate debtor, its promoters or any other person associated with the management of the corporate debtor

shall extend all assistance and cooperation to the interim resolution professional as may be required by him in managing the affairs

of the corporate debtor.

(2) Where any personnel of the corporate debtor, its promoter or any other person required to assist or cooperate with the interim

resolution professional does not assist or cooperate, the interim resolution professional may make an application to the Adjudicating

Authority for necessary directions.

(3) The Adjudicating Authority, on receiving an application under sub-section (2), shall by an order, direct such personnel or other person

to comply with the instructions of the resolution professional and to cooperate with him in collection of information and management of

the corporate debtor.”

VL Note : –

Section 20 Management of operations of corporate debtor as going concern

“(1) The interim resolution professional shall make every endeavour to protect and preserve the value of the property of the corporate

debtor and manage the operations of the corporate debtor as a going concern.

(2) For the purposes of sub-section (1), the interim resolution professional shall have the authority-

(a) to appoint accountants, legal or other professionals as may be necessary;

(b) to enter into contracts on behalf of the corporate debtor or to amend or modify the contracts or transactions which were entered

into before the commencement of corporate insolvency resolution process;

(c) to raise interim finance provided that no security interest shall be created over any encumbered property of the corporate debtor

without the prior consent of the creditors whose debt is secured over such encumbered property:

Provided that no prior consent of the creditor shall be required where the value of such property is not less than the amount equivalent

to twice the amount of the debt.

(d) to issue instructions to personnel of the corporate debtor as may be necessary for keeping the corporate debtor as a going concern;

and (e) to take all such actions as are necessary to keep the corporate debtor as a going concern.”

VL Note : –

Section 21 Committee of creditors

“(1) The interim resolution professional shall after collation of all claims received against the corporate debtor and determination of the

financial position of the corporate debtor, constitute a committee of creditors.

(2) The committee of creditors shall comprise all financial creditors of the corporate debtor:

Provided that a financial creditor or the authorised representative of the financial creditor referred to in sub-section (6) or sub-section

(6A) or sub-section (5) of section 24, if it is a related party of the corporate debtor, shall not have any right of representation,

participation or voting in a meeting of the committee of creditors:

Provided further that the first proviso shall not apply to a financial creditor, regulated by a financial sector regulator, if it is a related

party of the corporate debtor solely on account of conversion or substitution of debt into equity shares or instruments convertible into

equity shares, prior to the insolvency commencement date.

(3) Subject to sub-sections (6) and (6A), where] the corporate debtor owes financial debts to two or more financial creditors as part of a

consortium or agreement, each such financial creditor shall be part of the committee of creditors and their voting share shall be

determined on the basis of the financial debts owed to them.

(4) Where any person is a financial creditor as well as an operational creditor, –

(a) such person shall be a financial creditor to the extent of the financial debt owed by the corporate debtor, and shall be included in

the committee of creditor, with voting share proportionate to the extent of financial debts owed to such creditor;

(b) such person shall be considered to be an operational creditor to the extent of the operational debt owed by the corporate debtor

to such creditor.

(5) Where an operational creditor has assigned or legally transferred any operational debt to a financial creditor, the assignee or

transferee shall be considered as an operational creditor to the extent of such assignment or legal transfer.

(6) Where the terms of the financial debt extended as part of a consortium arrangement or syndicated facility provide for a single trustee

or agent to act for all financial creditors, each financial creditor may-

(a) authorise the trustee or agent to act on his behalf in the committee of creditors to the extent of his voting share;

(b) represent himself in the committee of creditors to the extent of his voting share;

(c) appoint an insolvency professional (other than the resolution professional) at his own cost to represent himself in the committee

of creditors to the extent of his voting share; or

(d) exercise his right to vote to the extent of his voting share with one or more financial creditors jointly or severally.

(6A) Where a financial debt—

(a) is in the form of securities or deposits and the terms of the financial debt provide for appointment of a trustee or agent to act as

authorised representative for all the financial creditors, such trustee or agent shall act on behalf of such financial creditors;

(b) is owed to a class of creditors exceeding the number as may be specified, other than the creditors covered under clause (a) or

sub-section (6), the interim resolution professional shall make an application to the Adjudicating Authority along with the list

of all financial creditors, containing the name of an insolvency professional, other than the interim resolution professional, to act as

their authorised representative who shall be appointed by the Adjudicating Authority prior to the first meeting of the committee of

creditors;

(c) is represented by a guardian, executor or administrator, such person shall act as authorised representative on behalf of such

financial creditors, and such authorised representative under clause (a) or clause (b) or clause (c) shall attend the meetings of the

committee of creditors, and vote on behalf of each financial creditor to the extent of his voting share.

(6B) The remuneration payable to the authorised representative-

(i) under clauses (a) and (c) of sub-section (6A), if any, shall be as per the terms of the financial debt or the relevant documentation;

and

(ii) under clause (b) of sub-section (6A) shall be as specified which shall be form part of the insolvency resolution process costs.]

(7) The Board may specify the manner of voting and the determining of the voting share in respect of financial debts covered under sub

sections (6) and (6A).

(8) Save as otherwise provided in this Code, all decisions of the committee of creditors shall be taken by a vote of not less than fifty-one

per cent. of voting share of the financial creditors:

Provided that where a corporate debtor does not have any financial creditors, the committee of creditors shall be constituted and shall

comprise of such persons to exercise such functions in such manner as may be specified.

(9) The committee of creditors shall have the right to require the resolution professional to furnish any financial information in relation

to the corporate debtor at any time during the corporate insolvency resolution process.

(10) The resolution professional shall make available any financial information so required by the committee of creditors under sub

section (9) within a period of seven days of such requisition”

VL Note : –

Section 22 Appointment of resolution professional

“(1) The first meeting of the committee of creditors shall be held within seven days of the constitution of the committee of creditors.

(2) The committee of creditors, may, in the first meeting, by a majority vote of not less than sixty-six per cent. of the voting share of the

financial creditors, either resolve to appoint the interim resolution professional as a resolution professional or to replace the interim

resolution professional by another resolution professional.

(3) Where the committee of creditors resolves under sub-section (2)-

(a) to continue the interim resolution professional as resolution professional subject to a written consent from the interim

resolution professional in the specified form, it shall communicate its decision to the interim resolution professional, the

corporate debtor and the Adjudicating Authority; or

(b) to replace the interim resolution professional, it shall file an application before the Adjudicating Authority for the appointment of

the proposed resolution professional along with a written consent from the proposed resolution professional in the specified form.

(4) The Adjudicating Authority shall forward the name of the resolution professional proposed under clause (b) of sub-section (3) to the

Board for its confirmation and shall make such appointment after confirmation by the Board.

(5) Where the Board does not confirm the name of the proposed resolution professional within ten days of the receipt of the name of

the proposed resolution professional, the Adjudicating Authority shall, by order, direct the interim resolution professional to

continue to function as the resolution professional until such time as the Board confirms the appointment of the proposed resolution

professional. ”

VL Note : –

Section 23 Resolution professional to conduct corporate insolvency resolution process

“(1) Subject to section 27, the resolution professional shall conduct the entire corporate insolvency resolution process and manage the

operations of the corporate debtor during the corporate insolvency resolution process period:

Provided that the resolution professional shall, if the resolution plan under sub-section (6) of section 30 has been submitted, continue to

manage the operations of the corporate debtor after the expiry of the corporate insolvency resolution process period until an order is

passed by the Adjudicating Authority under section 31.

(2) The resolution professional shall exercise powers and perform duties as are vested or conferred on the interim resolution

professional under this Chapter.

(3) In case of any appointment of a resolution professional under sub-sections (4) of section 22, the interim resolution professional shall

provide all the information, documents and records pertaining to the corporate debtor in his possession and knowledge to the

resolution professional. ”

VL Note : –

Section 24 Meeting of committee of creditors

“(1) The members of the committee of creditors may meet in person or by such other electronic means as may be specified.

(2) All meetings of the committee of creditors shall be conducted by the resolution professional.

(3) The resolution professional shall give notice of each meeting of the committee of creditors to-

(a) members of committee of creditors, including the authorised representatives referred to in sub-sections (6) and (6A) of section

21 and sub-section (5)];

(b) members of the suspended Board of Directors or the partners of the corporate persons, as the case may be;

(c) operational creditors or their representatives if the amount of their aggregate dues is not less than ten per cent. of the debt.

(4) The directors, partners and one representative of operational creditors, as referred to in sub-section (3), may attend the meetings of

committee of creditors, but shall not have any right to vote in such meetings:

Provided that the absence of any such director, partner or representative of operational creditors, as the case may be, shall not

invalidate proceedings of such meeting.

(5) Subject to sub-sections (6), (6A) and (6B) of section 21, any creditor] who is a member of the committee of creditors may appoint an

insolvency professional other than the resolution professional to represent such creditor in a meeting of the committee of creditors:

Provided that the fees payable to such insolvency professional representing any individual creditor will be borne by such creditor.

(6) Each creditor shall vote in accordance with the voting share assigned to him based on the financial debts owed to such creditor.

(7) The resolution professional shall determine the voting share to be assigned to each creditor in the manner specified by the Board.

(8) The meetings of the committee of creditors shall be conducted in such manner as may be specified”

VL Note : –

Section 25 Duties of resolution professional

“(1) It shall be the duty of the resolution professional to preserve and protect the assets of the corporate debtor, including the continued

business operations of the corporate debtor.

(2) For the purposes of sub-section (1), the resolution professional shall undertake the following actions, namely: –

(a) take immediate custody and control of all the assets of the corporate debtor, including the business records of the corporate

debtor;

(b) represent and act on behalf of the corporate debtor with third parties, exercise rights for the benefit of the corporate debtor in

judicial, quasi-judicial or arbitration proceedings;

(d) appoint accountants, legal or other professionals in the manner as specified by Board;

(e) maintain an updated list of claims;

(f) convene and attend all meetings of the committee of creditors;

(g) prepare the information memorandum in accordance with section 29;

(h) invite prospective resolution applicants, who fulfil such criteria as may be laid down by him with the approval of committee of

creditors, having regard to the complexity and scale of operations of the business of the corporate debtor and such other conditions

as may be specified by the Board, to submit a resolution plan or plans.

(i) present all resolution plans at the meetings of the committee of creditors;

(j) file application for avoidance of transactions in accordance with Chapter III, if any; and

(k) such other actions as may be specified by the Board. 2

25A. Rights and duties of authorised representative of financial creditors. –

(1) The authorised representative under sub-section (6) or sub-section (6A) of section 21 or sub-section (5) of section 24 shall have

the right to participate and vote in meetings of the committee of creditors on behalf of the financial creditor he represents in

accordance with the prior voting instructions of such creditors obtained through physical or electronic means.

(2) It shall be the duty of the authorised representative to circulate the agenda and minutes of the meeting of the committee of

creditors to the financial creditor he represents.

(3) The authorised representative shall not act against the interest of the financial creditor he represents and shall always act in

accordance with their prior instructions:

Provided that if the authorised representative represents several financial creditors, then he shall cast his vote in respect of each

financial creditor in accordance with instructions received from each financial creditor, to the extent of his voting share:

Provided further that if any financial creditor does not give prior instructions through physical or electronic means, the authorised

representative shall abstain from voting on behalf of such creditor.

(3A) Notwithstanding anything to the contrary contained in sub-section (3), the authorised representative under sub-section (6A) of

section 21 shall cast his vote on behalf of all the financial creditors he represents in accordance with the decision taken by a vote of

more than fifty per cent. of the voting share of the financial creditors he represents, who have cast their vote:

Provided that for a vote to be cast in respect of an application under section 12A, the authorised representative shall cast his vote in

accordance with the provisions of subsection (3).

(4) The authorised representative shall file with the committee of creditors any instructions received by way of physical or electronic

means, from the financial creditor he represents, for voting in accordance therewith, to ensure that the appropriate voting

instructions of the financial creditor he represents is correctly recorded by the interim resolution professional or resolution professional,

as the case may be.

Explanation.- For the purposes of this section, the “electronic means” shall be such as may be specified.”

VL Note : –

Section 26 . Application for avoidance of transactions not to affect proceedings

“The filing of an avoidance application under clause (j) of sub-section (2) of section 25 by the resolution professional shall not affect the

proceedings of the corporate insolvency resolution process.”

VL Note : –

Section 27 Replacement of resolution professional by committee of creditors

“(1) Where, at any time during the corporate insolvency resolution process, the committee or creditors is of the opinion that a resolution

professional appointed under section 22 is required to be replaced, it may replace him with another resolution professional in the

manner provided under this section.

(2) The committee of creditors may, at a meeting, by a vote of sixty-six per cent of voting shares, resolve to replace the resolution

professional appointed under section 22 with another resolution professional, subject to a written consent from the proposed
resolution professional in the specified form.

(3) The committee of creditors shall forward the name of the insolvency professional proposed by them to the Adjudicating Authority.

(4) The Adjudicating Authority shall forward the name of the proposed resolution professional to the Board for its confirmation and a

resolution professional shall be appointed in the same manner as laid down in section 16.

(5) Where any disciplinary proceedings are pending against the proposed resolution professional under sub-section (3), the resolution

professional appointed under section 22 shall continue till the appointment of another resolution professional under this section.”

VL Note : –

Section 28 Approval of committee of creditors for certain actions

“(1) Notwithstanding anything contained in any other law for the time being in force, the resolution professional, during the corporate

insolvency resolution process, shall not take any of the following actions without the prior approval of the committee of creditors

namely: –

(a) raise any interim finance in excess of the amount as may be decided by the committee of creditors in their meeting;

(b) create any security interest over the assets of the corporate debtor;

(c) change the capital structure of the corporate debtor, including by way of issuance of additional securities, creating a new class of

securities or buying back or redemption of issued securities in case the corporate debtor is a company;

(d) record any change in the ownership interest of the corporate debtor;

(e) give instructions to financial institutions maintaining accounts of the corporate debtor for a debit transaction from any such

accounts in excess of the amount as may be decided by the committee of creditors in their meeting;

(f) undertake any related party transaction;

(g) amend any constitutional documents of the corporate debtor;

(h) delegate its authority to any other person;

(i) dispose of or permit the disposal of shares of any shareholder of the corporate debtor or their nominees to third parties;

(j) make any change in the management of the corporate debtor or its subsidiary;

(k) transfer rights or financial debts or operational debts under material contracts otherwise than in the ordinary course of business;

(l) make changes in the appointment or terms of contract of such personnel as specified by the committee of creditors; or

(m) make changes in the appointment or terms of contract of statutory auditors or internal auditors of the corporate debtor.

(2) The resolution professional shall convene a meeting of the committee of creditors and seek the vote of the creditors prior to taking

any of the actions under sub-section (1).

(3) No action under sub-section (1) shall be approved by the committee of creditors unless approved by a vote of sixty-six per cent. of

the voting shares.

(4) Where any action under sub-section (1) is taken by the resolution professional without seeking the approval of the committee of

creditors in the manner as required in this section, such action shall be void.

(5) The committee of creditors may report the actions of the resolution professional under sub-section (4) to the Board for taking

necessary actions against him under this code.”

VL Note : –

Section 29 Preparation of information memorandum

“(1) The resolution professional shall prepare an information memorandum in such form and manner containing such relevant

information as may be specified by the Board for formulating a resolution plan.

(2) The resolution professional shall provide to the resolution applicant access to all relevant information in physical and electronic form,

provided such resolution applicant undertakes-

(a) to comply with provisions of law for the time being in force relating to confidentiality and insider trading;

(b) to protect any intellectual property of the corporate debtor it may have access to; and

(c) not to share relevant information with third parties unless clauses (a) and (b) of this sub-section are complied with.

Explanation. – For the purposes of this section, “relevant information” means the information required by the resolution applicant to

make the resolution plan for the corporate debtor, which shall include the financial position of the corporate debtor, all information

related to disputes by or against the corporate debtor and any other matter pertaining to the corporate debtor as may be specified.

29A. Persons not eligible to be resolution applicant. –

A person shall not be eligible to submit a resolution plan, if such person, or any other person acting jointly or in concert with such

person—

(a) is an undischarged insolvent;

(b) is a wilful defaulter in accordance with the guidelines of the Reserve Bank of India issued under the Banking Regulation Act, 1949

(10 of 1949);

(c) at the time of submission of the resolution plan has an account,] or an account of a corporate debtor under the management or

control of such person or of whom such person is a promoter, classified as non-performing asset in accordance with the guidelines

of the Reserve Bank of India issued under the Banking Regulation Act, 1949 (10 of 1949) or the guidelines of a financial sector

regulator issued under any other law for the time being in force, and at least a period of one year has lapsed from the date of such

classification till the date of commencement of the corporate insolvency resolution process of the corporate debtor:

Provided that the person shall be eligible to submit a resolution plan if such person makes payment of all overdue amounts with interest

thereon and charges relating to nonperforming asset accounts before submission of resolution plan:

Provided further that nothing in this clause shall apply to a resolution applicant where such applicant is a financial entity and is not a

related party to the corporate debtor.

Explanation I.- For the purposes of this proviso, the expression “”related party”” shall not include a financial entity, regulated by a

financial sector regulator, if it is a financial creditor of the corporate debtor and is a related party of the corporate debtor solely on

account of conversion or substitution of debt into equity shares or instruments convertible into equity shares, prior to the insolvency

commencement date.

Explanation II.— For the purposes of this clause, where a resolution applicant has an account, or an account of a corporate debtor under

the management or control of such person or of whom such person is a promoter, classified as non-performing asset and such account

was acquired pursuant to a prior resolution plan approved under this Code, then, the provisions of this clause shall not apply to such

resolution applicant for a period of three years from the date of approval of such resolution plan by the Adjudicating Authority under

this Code;

(d) has been convicted for any offence punishable with imprisonment –

(i) for two years or more under any Act specified under the Twelfth Schedule; or

(ii) for seven years or more under any law for the time being in force:

Provided that this clause shall not apply to a person after the expiry of a period of two years from the date of his release from

imprisonment:

Provided further that this clause shall not apply in relation to a connected person referred to in clause(iii) of Explanation I;

(e) is disqualified to act as a director under the Companies Act, 2013 (18 of 2013):

Provided that this clause shall not apply in relation to a connected person referred to in clause (iii) of Explanation I;]

(f) is prohibited by the Securities and Exchange Board of India from trading in securities or accessing the securities markets;

(g) has been a promoter or in the management or control of a corporate debtor in which a preferential transaction, undervalued

transaction, extortionate credit transaction or fraudulent transaction has taken place and in respect of which an order has been

made by the Adjudicating Authority under this Code:

Provided that this clause shall not apply if a preferential transaction, undervalued transaction, extortionate credit transaction or

fraudulent transaction has taken place prior to the acquisition of the corporate debtor by the resolution applicant pursuant to a

resolution plan approved under this Code or pursuant to a scheme or plan approved by a financial sector regulator or a court, and such

resolution applicant has not otherwise contributed to the preferential transaction, undervalued transaction, extortionate credit

transaction or fraudulent transaction;]

(h) has executed a guarantee in favour of a creditor in respect of a corporate debtor against which an application for insolvency

resolution made by such creditor has been admitted under this Code and such guarantee has been invoked by the creditor and

remains unpaid in full or part];

(i) is subject to any disability, corresponding to clauses (a) to (h), under any law in a jurisdiction outside India; or

(j) has a connected person not eligible under clauses (a) to (i).

Explanation I — For the purposes of this clause, the expression “connected person” means—

(i) any person who is the promoter or in the management or control of the resolution applicant; or

(ii) any person who shall be the promoter or in management or control of the business of the corporate debtor during the

implementation of the resolution plan; or

(iii) the holding company, subsidiary company, associate company or related party of a person referred to in clauses (i) and (ii):

Provided that nothing in clause (iii) of Explanation I shall apply to a resolution applicant where such applicant is a financial entity and is

not a related party of the corporate debtor:

Provided further that the expression “related party” shall not include a financial entity, regulated by a financial sector regulator, if it is a

financial creditor of the corporate debtor and is a related party of the corporate debtor solely on account of conversion or substitution

of debt into equity shares or instruments convertible into equity shares, prior to the insolvency commencement date;

Explanation II—For the purposes of this section, “financial entity” shall mean the following entities which meet such criteria or conditions

as the Central Government may, in consultation with the financial sector regulator, notify in this behalf, namely:—

(a) a scheduled bank;

(b) any entity regulated by a foreign central bank or a securities market regulator or other financial sector regulator of a

jurisdiction outside India which jurisdiction is compliant with the Financial Action Task Force Standards and is a signatory to the

International Organisation of Securities Commissions Multilateral Memorandum of Understanding;

(c) any investment vehicle, registered foreign institutional investor, registered foreign portfolio investor or a foreign venture

capital investor, where the terms shall have the meaning assigned to them in regulation 2 of the Foreign Exchange Management

(Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2017 made under the Foreign Exchange

Management Act, 1999 (42 of 1999);

(d) an asset reconstruction company register with the Reserve Bank of India under section 3 of the Securitisation and

Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002);

(e) an Alternate Investment Fund registered with Securities and Exchange Board of India;

(f) such categories of persons as may be notified by the Central Government.”

VL Note : –

Section 30 Submission of resolution plan

“(1) A resolution applicant may submit a resolution plan along with an affidavit stating that he is eligible under section 29A] to the

resolution professional prepared on the basis of the information memorandum.

(2) The resolution professional shall examine each resolution plan received by him to confirm that each resolution plan –

(a) provides for the payment of insolvency resolution process costs in a manner specified by the Board in priority to the payment of

other debts of the corporate debtor;

(b) provides for the payment of debts of operational creditors in such manner as may be specified by the Board which shall not be

less than-

(i) the amount to be paid to such creditors in the event of a liquidation of the corporate debtor under section 53; or

(ii) the amount that would have been paid to such creditors, if the amount to be distributed under the resolution plan had been

distributed in accordance with the order of priority in sub-section (1) of section 53, whichever is higher, and provides for the

payment of debts of financial creditors, who do not vote in favour of the resolution plan, in such manner as may be specified by

the Board, which shall not be less than the amount to be paid to such creditors in accordance with sub-section (1) of section 53 in

the event of a liquidation of the corporate debtor.

Explanation 1. — For removal of doubts, it is hereby clarified that a distribution in accordance with the provisions of this clause shall be

fair and equitable to such creditors.

Explanation 2. — For the purpose of this clause, it is hereby declared that on and from the date of commencement of the Insolvency and

Bankruptcy Code (Amendment) Act, 2019, the provisions of this clause shall also apply to the corporate insolvency resolution process of

a corporate debtor-

(i) where a resolution plan has not been approved or rejected by the Adjudicating Authority;

(ii) where an appeal has been preferred under section 61 or section 62 or such an appeal is not time barred under any provision

of law for the time being in force; or (iii) where a legal proceeding has been initiated in any court against the decision of the

Adjudicating Authority in respect of a resolution plan;]

(d) The implementation and supervision of the resolution plan;

(e) does not contravene any of the provisions of the law for the time being in force

(f) confirms to such other requirements as may be specified by the Board.

Explanation. — For the purposes of clause (e), if any approval of shareholders is required under the Companies Act, 2013(18 of 2013) or

any other law for the time being in force for the implementation of actions under the resolution plan, such approval shall be deemed to

have been given and it shall not be a contravention of that Act or law.

(3) The resolution professional shall present to the committee of creditors for its approval such resolution plans which confirm the

conditions referred to in sub-section (2).

(4) The committee of creditors may approve a resolution plan by a vote of not less than sixty-six per cent. of voting share of the financial

creditors, after considering its feasibility and viability, the manner of distribution proposed, which may take into account the order of

priority amongst creditors as laid down in sub-section (1) of section 53, including the priority and value of the security interest of a

secured creditor] and such other requirements as may be specified by the Board:

Provided that the committee of creditors shall not approve a resolution plan, submitted before the commencement of the Insolvency

and Bankruptcy Code (Amendment) Ordinance, 2017 (Ord. 7 of 2017), where the resolution applicant is ineligible under section 29A and

may require the resolution professional to invite a fresh resolution plan where no other resolution plan is available with it:

Provided further that where the resolution applicant referred to in the first proviso is ineligible under clause (c) of section 29A, the

resolution applicant shall be allowed by the committee of creditors such period, not exceeding thirty days, to make payment of overdue

amounts in accordance with the proviso to clause (c) of section 29A:

Provided also that nothing in the second proviso shall be construed as extension of period for the purposes of the proviso to sub-section

(3) of section 12, and the corporate insolvency resolution process shall be completed within the period specified in that sub section]:

Provided also that the eligibility criteria in section 29A as amended by the Insolvency and Bankruptcy Code (Amendment) Ordinance,

2018 shall apply to the resolution applicant who has not submitted resolution plan as on the date of commencement of the Insolvency

and Bankruptcy Code (Amendment) Ordinance, 2018.

(5) The resolution applicant may attend the meeting of the committee of creditors in which the resolution plan of the applicant is

considered:

Provided that the resolution applicant shall not have a right to vote at the meeting of the committee of creditors unless such resolution

applicant is also a financial creditor.

(6) The resolution professional shall submit the resolution plan as approved by the committee of creditors to the Adjudicating Authority”

VL Note : –

Section 31 Approval of resolution plan

“(1) If the Adjudicating Authority is satisfied that the resolution plan as approved by the committee of creditors under sub-section (4) of

section 30 meets the requirements as referred to in sub-section (2) of section 30, it shall by order approve the resolution plan which

shall be binding on the corporate debtor and its employees, members, creditors, including the Central Government, any State

Government or any local authority to whom a debt in respect of the payment of dues arising under any law for the time being in force,

such as authorities to whom statutory dues are owed,] guarantors and other stakeholders involved in the resolution plan.

Provided that the Adjudicating Authority shall, before passing an order for approval of resolution plan under this sub-section, satisfy that

the resolution plan has provisions for its effective implementation.

(2) Where the Adjudicating Authority is satisfied that the resolution plan does not confirm to the requirements referred to in sub-section

(1), it may, by an order, reject the resolution plan.

(3) After the order of approval under sub-section (1), –

(a) the moratorium order passed by the Adjudicating Authority under section 14 shall cease to have effect; and

(b) the resolution professional shall forward all records relating to the conduct of the corporate insolvency resolution process and

the resolution plan to the Board to be recorded on its database

(4) The resolution applicant shall, pursuant to the resolution plan approved under sub-section (1), obtain the necessary approval

required under any law for the time being in force within a period of one year from the date of approval of the resolution plan by the

Adjudicating Authority under sub-section (1) or within such period as provided for in such law, whichever is later:

Provided that where the resolution plan contains a provision for combination, as referred to in section 5 of the Competition Act, 2002,

the resolution applicant shall obtain the approval of the Competition Commission of India under that Act prior to the approval of such

resolution plan by the committee of creditors.”

VL Note : –

Section 32 Appeal

“Any appeal from an order approving the resolution plan shall be in the manner and on the grounds laid down in sub-section (3) of

section 61″

VL Note : –