Insolvency Resolution Process (Sec. 94-120)

“(1) A debtor who commits a default may apply, either personally or through a
resolution professional, to the Adjudicating Authority for initiating the insolvency
resolution process, by submitting an application.
(2) Where the debtor is a partner of a firm, such debtor shall not apply under this
Chapter to the Adjudicating Authority in respect of the firm unless all or a majority of the
partners of the firm file the application jointly.
(3) An application under sub-section (1) shall be submitted only in respect of debts
which are not excluded debts.
(4) A debtor shall not be entitled to make an application under sub-section (1) if he is

( a ) an undischarged bankrupt;
(b ) undergoing a fresh start process;
(c ) undergoing an insolvency resolution process; or
(d ) undergoing a bankruptcy process.
(5) A debtor shall not be eligible to apply under sub-section (1) if an application
under this Chapter has been admitted in respect of the debtor during the period of twelve
months preceding the date of submission of the application under this section.
(6) The application referred to in sub-section (1) shall be in such form and manner
and accompanied with such fee as may be prescribed.
” VL Note : –

“(1) A creditor may apply either by himself, or jointly with other creditors, or through a
resolution professional to the Adjudicating Authority for initiating an insolvency resolution
process under this section by submitting an application.
(2) A creditor may apply under sub-section (1) in relation to any partnership debt
owed to him for initiating an insolvency resolution process against- (a) any one or more partners of the firm; or
(b) the firm.
(3) Where an application has been made against one partner in a firm, any other
application against another partner in the same firm shall be presented in or transferred to
the Adjudicating Authority in which the first mentioned application is pending for
adjudication and such Adjudicating Authority may give such directions for consolidating
the proceedings under the applications as it thinks just.
(4) An application under sub-section (1) shall be accompanied with details and
documents relating to-
( a )the debts owed by the debtor to the creditor or creditors submitting the
application for insolvency resolution process as on the date of application;
( b ) the failure by the debtor to pay the debt within a period of fourteen days of the
service of the notice of demand; and
(c) relevant evidence of such default or non-repayment of debt.
(5) The creditor shall also provide a copy of the application made under sub-section
(1) to the debtor.
(6) The application referred to in sub-section (1) shall be in such form and manner
and accompanied by such fee as may be prescribed.
(7) The details and documents required to be submitted under sub-section (4) shall
be such as may be specified.” VL Note : –

“(1) When an application is filed under section 94 or section 95 –
(a) an interim-moratorium shall commence on the date of the application in relation
to all the debts and shall cease to have effect on the date of admission of such
application; and
(b) during the interim-moratorium period –
( i ) any pending legal action or proceeding in respect of any debt shall be
deemed to have been stayed; and
(ii) the creditors of the debtor shall not initiate any legal action or proceedings
in respect of any debt.
(2) Where the application has been made in relation to a firm, the interimmoratorium under sub-section (1) shall operate against all the partners of the firm as on the
date of the application.
(3) The provisions of sub-section (1) shall not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator” VL Note : –

“(1) If the application under section 94 or 95 is filed through a resolution
professional, the Adjudicating Authority shall direct the Board within seven days of the date
of the application to confirm that there are no disciplinary proceedings pending against
resolution professional.
(2) The Board shall within seven days of receipt of directions under sub-section (1)
communicate to the Adjudicating Authority in writing either –
(a) confirming the appointment of the resolution professional; or
(b) rejecting the appointment of the resolution professional and nominating another
resolution professional for the insolvency resolution process.
(3) Where an application under section 94 or 95 is filed by the debtor or the creditor
himself, as the case may be, and not through the resolution professional, the Adjudicating
Authority shall direct the Board, within seven days of the filing of such application, to
nominate a resolution professional for the insolvency resolution process.
(4) The Board shall nominate a resolution professional within ten days of receiving the
direction issued by the Adjudicating Authority under sub-section (3).
(5 ) The Adjudicating Authority shall by order appoint the resolution professional
recommended under sub-section (2) or as nominated by the Board under sub-section (4).
(6) A resolution professional appointed by the Adjudicating Authority under subsection (5) shall be provided a copy of the application for insolvency resolution process. ” VL Note : –

“(1) Where the debtor or the creditor is of the opinion that the resolution professional
appointed under section 97 is required to be replaced, he may apply to the Adjudicating
Authority for the replacement of the such resolution professional.
(2) The Adjudicating Authority shall, within seven days of the receipt of the
application under sub-section (1) make a reference to the Board for replacement of the
resolution professional.
( 3 ) T h e Bo a rd s h all, wit hi n t en d a ys of th e r ec e ipt of a re f e r e n c e
f r om t h e Adjudicating Authority under sub-section (2), recommend the name of the
resolution professional to the Adjudicating Authority against whom no disciplinary
proceedings are pending.
( 4 ) Without prejudice to the provisions contained in sub-section (1), the creditors
may apply to the Adjudicating Authority for replacement of the resolution professional
where it has been decided in the meeting of the creditors, to replace the resolution
professional with a new resolution professional for implementation of the repayment plan. (5) Where the Adjudicating Authority admits an application made under sub-section
(1) or sub-section (4), it shall direct the Board to confirm that there are no disciplinary
proceedings pending against the proposed resolution professional.
(6) The Board shall send a communication within ten days of receipt of the direction
under sub-section (5) either-
(a) confirming appointment of the nominated resolution professional; or
(b) rejecting appointment of the nominated resolution professional and recommend
a new resolution professional.
(7) On the basis of the communication of the Board under sub-section (3) or subsection (6), the Adjudicating Authority shall pass an order appointing a new resolution
professional.
(8) The Adjudicating Authority may give directions to the resolution professional
replaced under sub-section (7) –
(a ) to share all information with the new resolution professional in respect of the
insolvency resolution process; and
(b) to co-operate with the new resolution professional in such matters as may be
required” VL Note : –

“(1) The resolution professional shall examine the application referred to in section 94
or section 95, as the case may be, within ten days of his appointment, and submit a report to
the Adjudicating Authority recommending for approval or rejection of the application.
(2) Where the application has been filed under section 95, the resolution professional
may require the debtor to prove repayment of the debt claimed as unpaid by the creditor by
furnishing –
(a) evidence of electronic transfer of the unpaid amount from the bank account of
the debtor;
(b) evidence of encashment of a cheque issued by the debtor; or
(c) a signed acknowledgment by the creditor accepting receipt of dues.
(3 ) Where the debt for which an application has been filed by a creditor is registered
with the information utility, the debtor shall not be entitled to dispute the validity of such
debt.
(4) For the purposes of examining an application, the resolution professional may seek
such further information or explanation in connection with the application as may be
required from the debtor or the creditor or any other person who, in the opinion of the
resolution professional, may provide such information. (5) The person from whom information or explanation is sought under sub-section (4)
shall furnish such information or explanation within seven days of receipt of the request.
(6) The resolution professional shall examine the application and ascertain that –
(a ) the application satisfies the requirements set out in section 94 or 95;
(b) the applicant has provided information and given explanation sought by the
resolution professional under sub-section (4).
(7) After examination of the application under sub-section (6), he may recommend
acceptance or rejection of the application in his report.
(8) Where the resolution professional finds that the debtor is eligible for a fresh start
under Chapter II, the resolution professional shall submit a report recommending that the
application by the debtor under section 94 be treated as an application under section 81 by
the Adjudicating Authority.
(9) The resolution professional shall record the reasons for recommending the
acceptance or rejection of the application in the report under sub-section (7).
(10) The resolution professional shall give a copy of the report under sub-section (7)
to the debtor or the creditor, as the case may be” VL Note : –

“(1) The Adjudicating Authority shall, within fourteen days from the date of
submission of the report under section 99 pass an order either admitting or rejecting the
application referred to in section 94 or 95, as the case may be.
(2) Where the Adjudicating Authority admits an application under sub-section (1),
it may, on the request of the resolution professional, issue instructions for the purpose of
conducting negotiations between the debtor and creditors and for arriving at a repayment
plan.
(3) The Adjudicating Authority shall provide a copy of the order passed under subsection ( 1 ) along with the report of the resolution professional and the application referred
to in section 94 or 95, as the case may be, to the creditors within seven days from the date
of the said order.
(4) If the application referred to in section 94 or 95, as the case may be, is rejected by
the Adjudicating Authority on the basis of report submitted by the resolution professional
or that the application was made with the intention to defraud his creditors or the resolution
professional, the order under sub-section (1) shall record that the creditor is entitled to file
for a bankruptcy order under Chapter IV.” VL Note : –

“(1) When the application is admitted under section 100, a moratorium shall commence in relation to all the debts and shall cease to have effect at the end of the period of one
hundred and eighty days beginning with the date of admission of the application or on the
date the Adjudicating Authority passes an order on the repayment plan under section 114,
whichever is earlier.
( 2 ) During the moratorium period-
( a ) any pending legal action or proceeding in respect of any debt shall be deemed
to have been stayed;
(b) the creditors shall not initiate any legal action or legal proceedings in respect of
any debt; and
(c) the debtor shall not transfer, alienate, encumber or dispose of any of the assets
or his legal right or beneficial interest therein;
(3) Where an order admitting the application under section 96 has been made in relation
to a firm, the moratorium under sub-section (1) shall operate against all the partners of the
firm.
(4) The provisions of this section shall not apply to such transactions as may be notified
by the Central Government in consultation with any financial sector regulator.” VL Note : –

“(1) The Adjudicating Authority shall issue a public notice within seven days of passing
the order under section 100 inviting claims from all creditors within twenty- one days of
such issue.
(2) The notice under sub-section (1) shall include–
(a) details of the order admitting the application;
(b) particulars of the resolution professional with whom the claims are to be
registered; and
(c) the last date for submission of claims.
(3) The notice shall be –
(a) published in at least one English and one vernacular newspaper which is in
circulation in the state where the debtor resides;
(b) affixed in the premises of the Adjudicating Authority; and
(c) placed on the website of the Adjudicating Authority.
” VL Note : –

“(1) The creditors shall register claims with the resolution professional by sending details
of the claims by way of electronic communications or through courier, speed post or registered letter.
(2 )In addition to the claims referred to in sub-section (1), the creditor shall provide to
the resolution professional, personal information and such particulars as may be prescribed.” VL Note : –

“(1) The resolution professional shall prepare a list of creditors on the basis of –
(a) the information disclosed in the application filed by the debtor under section 94
or 95, as the case may be;
(b ) claims received by the resolution professional under section 102.
(2) The resolution professional shall prepare the list mentioned in sub-section (1) within
thirty days from the date of the notice.” VL Note : –

“(1) The debtor shall prepare, in consultation with the resolution professional, a
repayment plan containing a proposal to the creditors for restructuring of his debts or affairs.
( 2 ) The repayment plan may authorise or require the resolution professional to –
(a) carry on the debtor’s business or trade on his behalf or in his name; or
(b) realise the assets of the debtor; or
(c) administer or dispose of any funds of the debtor.
( 3 )The repayment plan shall include the following, namely: –
(a ) justification for preparation of such repayment plan and reasons on the basis
of which the creditors may agree upon the plan;
(b) provision for payment of fee to the resolution professional;
(c) such other matters as may be specified. ” VL Note : –

“(1) The resolution professional shall submit the repayment plan under section 105 along
with his report on such plan to the Adjudicating Authority within a period of twenty-one
days from the last date of submission of claims under section 102.
(2 )The report referred in sub-section (1) shall include that-
(a) the repayment plan is in compliance with the provisions of any law for the time
being in force;
(b)the repayment plan has a reasonable prospect of being approved and im- plemented; and
(c) there is a necessity of summoning a meeting of the creditors, if required, to
consider the repayment plan:
Provided that where the resolution professional recommends that a meeting of the
creditors is not required to be summoned, reasons for the same shall be provided.
( 3 ) The report referred to in sub-section (2) shall also specify the date on which, and
the time and place at which, the meeting should be held if he is of the opinion that a meeting
of the creditors should be summoned.
( 4 ) For the purposes of sub-section (3) –
(a ) the date on which the meeting is to be held shall be not less than fourteen days
and not more than twenty-eight days from the date of submission of report under subsection( 1 );
(b )the resolution professional shall consider the convenience of creditors in fixing
the date and venue of the meeting of the creditors.
” VL Note : –

“(1) The resolution professional shall issue a notice calling the meeting of the creditors
at least fourteen days before the date fixed for such meeting.
(2 ) The resolution professional shall send the notice of the meeting to the list of
creditors prepared under section 104.
(3) The notice sent under sub-section (1) shall state the address of the Adjudicating
Authority to which the repayment plan and report of the resolution professional on the
repayment plan has been submitted and shall be accompanied by –
(a) a copy of the repayment plan;
(b) a copy of the statement of affairs of the debtor;
(c) a copy of the said report of the resolution professional; and
(d) forms for proxy voting.
(4) The proxy voting, including electronic proxy voting shall take place in such manner
and form as may be specified.
” VL Note : –

“(1) The meeting of the creditors shall be conducted in accordance with the provisions
of this section and sections 109,110 and 111.
(2) In the meeting of the creditors, the creditors may decide to approve, modify or reject
the repayment plan (3) The resolution professional shall ensure that if modifications are suggested by the
creditors, consent of the debtor shall be obtained for each modification.
(4) The resolution professional may for a sufficient cause adjourn the meeting of the
creditors for a period of not more than seven days at a time.” VL Note : –

“( 1 ) A creditor shall be entitled to vote at every meeting of the creditors in respect of
the repayment plan in accordance with voting share assigned to him.
(2) The resolution professional shall determine voting share to be assigned to each
creditor in the manners specified by the Board.
(3)A creditor shall not be entitled to vote in respect of a debt for an unliquidated
amount.
(4) A creditor shall not be entitled to vote in a meeting of the creditors if he ––
(a ) is not a creditor mentioned in the list of creditors under section 104; or
(b ) is an associate of the debtor.
” VL Note : –

“(1) Secured creditors shall be entitled to participate and vote in the meetings of the
creditors.
(2) A secured creditor participating in the meetings of the creditors and voting in
relation to the repayment plan shall forfeit his right to enforce the security during the period
of the repayment plan in accordance with the terms of the repayment plan.
(3) Where a secured creditor does not forfeit his right to enforce security, he shall
submit an affidavit to the resolution professional at the meeting of the creditors stating –
(a) that the right to vote exercised by the secured creditor is only in respect of the
unsecured part of the debt; and
(b) the estimated value of the unsecured part of the debt.
(4) In case a secured creditor participates in the voting on the repayment plan by
submitting an affidavit under sub-section (3), the secured and unsecured parts of the debt
shall be treated as separate debts.
(5) The concurrence of the secured creditor shall be obtained if he does not participate
in the voting on repayment plan but provision of the repayment plan affects his right to
enforce security.
Explanation. – For the purposes of this section, “”period of the repayment plan”” means the
period from the date of the order passed under section 114 till the date on which the notice
is given by the resolution professional under section 117 or report submitted by the resolution professional under section 118, as the case may be” VL Note : –

“The repayment plan or any modification to the repayment plan shall be approved by a
majority of more than three-fourth in value of the creditors present in person or by proxy
and voting” VL Note : –

“(1) The resolution professional shall prepare a report of the meeting of the creditors on
repayment plan.
( 2 )The report under sub-section (1) shall contain –
(a) whether the repayment plan was approved or rejected and if approved, the list
the modifications, if any;
(b ) the resolutions which were proposed at the meeting and the decision on such
resolutions;
(c ) list of the creditors who were present or represented at the meeting, and the
voting records of each creditor for all meetings of the creditors; and
(d) such other information as the resolution professional thinks appropriate to make
known to the Adjudicating Authority.
” VL Note : –

“The resolution professional shall provide a copy of the report of the meeting of creditors
prepared under section 99 to –
( a ) the debtor;
( b ) the creditors, including those who were not present at the meeting; and
(c) the Adjudicating Authority” VL Note : –

“(1) The Adjudicating Authority shall by an order approve or reject the repayment
plan on the basis of the report of the meeting of the creditors submitted by the resolution
professional under section 112:
Provided that where a meeting of creditors is not summoned, the Adjudicating
Authority shall pass an order on the basis of the report prepared by the resolution
professional under section 106.
(2)The order of the Adjudicating Authority approving the repayment plan may also
provide for directions for implementing the repayment plan. (3) Where the Adjudicating Authority is of the opinion that the repayment plan requires
modification, it may direct the resolution professional to re-convene a meeting of the
creditors for reconsidering the repayment plan” VL Note : –

“(1) Where the Adjudicating Authority has approved the repayment plan under section
114, the repayment plan shall –
(a ) take effect as if proposed by the debtor in the meeting; and
( b ) b e binding on creditors mentioned in the repayment plan and the debtor.
(2)Where the Adjudicating Authority rejects the repayment plan under section 114, the
debtor and the creditors shall be entitled to file an application for bankruptcy under Chapter
IV.
(3) A copy of the order passed by the Adjudicating Authority under sub-section (2)
shall be provided to the Board, for the purpose of recording an entry in the register referred
to in section 196.
” VL Note : –

“(1 )The resolution professional appointed under section 97 or under section 98 shall
supervise the implementation of the repayment plan.
(2) The resolution professional may apply to the Adjudicating Authority for directions,
if necessary, in relation to any particular matter arising under the repayment plan.
(3) The Adjudicating Authority may issue directions to the resolution professional on
the basis of an application under sub-section (2)” VL Note : –

“(1) The resolution professional shall within fourteen days of the completion of the
repayment plan, forward to the persons who are bound by the repayment plan under section
115 and the Adjudicating Authority, the following documents, namely –
(a ) a notice that the repayment plan has been fully implemented; and
(b) a copy of a report by the resolution professional summarising all receipts and
payments made in pursuance of the repayment plan and extent of the implementation
of such plan as compared with the repayment plan approved by the meeting of the
creditors.
(2 )The resolution professional may apply to the Adjudicating Authority to extend the
time mentioned in sub-section (1) for such further period not exceeding seven days.” VL Note : –

“(1) A repayment plan shall be deemed to have come to an end prematurely if it has not been fully implemented in respect of all persons bound by it within the period as mentioned
in the repayment plan.
(2 ) Where a repayment plan comes to an end prematurely under this section, the
resolution professional shall submit a report to the Adjudicating Authority which shall state

(a) t h e receipts and payments made in pursuance of the repayment plan;
(b) t h e reasons for premature end of the repayment plan; and
(c) the details of the creditors whose claims have not been fully satisfied.
(3) The Adjudicating Authority shall pass an order on the basis of the report submitted
under sub-section (2) by the resolution professional that the repayment plan has not been
completely implemented.
(4) The debtor or the creditor, whose claims under repayment plan have not been fully
satisfied, shall be entitled to apply for a bankruptcy order under Chapter IV.
( 5 )The Adjudicating Authority shall forward to the persons bound by the repayment
plan under section 115, a copy of the –
(a ) report submitted by the resolution professional to the Adjudicating Authority
under sub-section (2); and
(b) order passed by the Adjudicating Authority under sub-section ( 3 ).
(6)The Adjudicating Authority shall forward a copy of the order passed under subsection (4) to the Board, for the purpose of recording entries in the register referred to in
section 196″ VL Note : –

“(1) On the basis of the repayment plan, the resolution professional shall apply to the
Adjudicating Authority for a discharge order in relation to the debts mentioned in the
repayment plan and the Adjudicating Authority may pass such discharge order.
(2 ) The repayment plan may provide for –
(a) early discharge; or
(b)discharge on complete implementation of the repayment plan.
(3) The discharge order shall be forwarded to the Board, for the purpose of recording
entries in the register referred to in section 196.
(4) The discharge order under sub-section (3) shall not discharge any other person from
any liability in respect of his debt” VL Note : –

“The resolution professional shall perform his functions and duties in compliance with
the code of conduct provided under section 208″ VL Note : –