The conundrum as whether section 29A of Insolvency and Bankruptcy Code, 2016 will apply to sche...
Earlier, the insolvency or liquidation procedures were lengthy and time-consuming procedures, but with the introduction of the Insolvency and Bankruptcy Code 2016, the procedure or insolvency or liquidation has been made easier. The objective behind the enactment was to ensure restructuring and to make insolvency resolutions easier for corporations, partnerships etc. In this article, we shall discuss the fast-track insolvency resolution process.
It is a state of a legal person who is unable to meet their obligation to pay its creditors. In this situation, the legal person fails to pay off his debts when they become due and payable. Different insolvency laws in the world permit the creditors of a debtor to realize the debt due to them by seizing the assets of the debtor and selling them off.
The IBC was enacted by the Bankruptcy Law Reforms Committee, and it contained a special provision which expedites the insolvency procedures for small businesses, start-ups and unlisted firms with a total asset value of lower than 1 crore rupees was covered.
The special provision of fast rack insolvency was covered under Part II- Chapter 4 under Section 55, 56, 57, 58, which includes specific provisions for the procedure. The code permits only the designated people to submit application to commence the process, and time duration involved in the said procedure is lesser than other laws to resolve disputes.
The fast track process was introduced to improve the insolvency resolution process for MSMEs. The fast track process is a method that lowers the time duration to make general insolvency law more suitable for MSMEs.
As the title of the chapter 4, IBC 2016 suggests, the fast track process involves less number of days for completing the insolvency proceedings of a legal company hence it is a quicker and efficient way of winding up the insolvency procedure of a small scale bankrupt company.
An application for the initiation of fast track insolvency resolution process can be filed with the NCLT by a creditor/Corporate debtor with the following particulars:
In a fast track resolution process, the following procedure is adopted:
The fast track method is a system that makes it easier for small businesses to do business.
The fast-track insolvency resolution process is a process intended to focus on a particular group of corporate debtors against whom the procedure of bankruptcy may be started by the lenders or corporate borrower himself. With this process, those less unpredictable cases can be completed swiftly, which will give enough opportunity to adjudicating authorities to focus on more complex issues and that which needs a lot of time.
Read our article:Pre-pack Insolvency Resolution Process Regulations for MSMEs