RECOVERY OF MONEY THROUGH IBC LAWS
Recovery of money through ibc laws- The present article is very critical with the view of recovery under a different situation, if you are worried about how to recover payments or loans, then this article will help you to understand the laws under which you can get the remedy.
As we all know that in our present economy, most of the payments between parties are procrastinated some are due to terms of policy and some are intentional. This situation may be covered as below:
- Delay in making payments by the debtor
- Property Builders not giving possessions
- Delay in the refund of Money
This is only due to specific laws which should have made in this regard and lack of knowledge about the platforms available, generally, it takes a longer period to resolve a simple matter. Further, due to pendancies of Lakhs of cases before District courts and High courts, remedy through these court becomes a cumbersome and time-consuming exercise.
However, with the enactment of Insolvency and Bankruptcy Code, 2016 (“IBC Code”). The central government establishes an Insolvency and Bankruptcy Board of India through before which the default can be submitted, and remedy can be obtained.
Understanding the term IBC
IBC is a code that came into effect on May 28, 2016. The objective of the Code is to provide protection to the interest of the creditors, different stakeholders and/or persons having any outstanding with the Corporates. Both types of creditors, ie., financial creditors and operational creditors, can file an application before the court and ask for a remedy against the Corporate person.
To understand financial creditors and operational creditors read our article: https://letscomply.com/procedure-on-how-to-recover-the-debt-due-from-companies-under-ibc/
Before the IBC was enacted, there was another mechanism as well which were available in India to recover the dues/outstanding form other parties, however, these are not that efficient in getting the Money recovered and do not provide a quick resolution to the individual being sick. Big Corporate eat smaller ones as they were benefited with these processes. Due to which smaller businesses find it very difficult to run in the long term due to the requirement of working capital. However, with the constitution of the board under the Act, the Central Government provided significant relief to the creditors.
How to file a case of recovery under IBC laws
Any aggrieved person, as defined under the IBC Code can file a petition under Section 7 or Section 9 of the IBC Code before the National Company Law Tribunal (“NCLT”). This will help the person to recover Money or relief from the Company not paying or delaying in making payment. Hence, one can say that it is a quick and efficient mechanism against traditional methods.
Before visiting court one has to serve a legal notice of payment to the Corporate not paying or delaying in making payment. After that, an application in the aforesaid section can be filed in order to initiate insolvency proceedings. Generally, Corporate settle their matter in the first stage only. It is provided under the Act that the insolvency proceedings has to be concluded within 180 days or 270 days which includes the extension period of 90 days however, it is still a presumption and not reality. On the ground, it takes more time than the one which is prescribed under the IBC Code. However, it is a better option than that of other courts.
Some statics of recovery till date:
As per Govt., after the enactment of the IBC Code, creditors benefitted with fasten the recovery of more than 3 Lakh crores since 2016. The government has promoted the Code on a different platform, initially, it was difficult for the government for implementation and execution of IBC code, however, now proceedings are so smooth and a significant benchmark in the future.
In the present writer, we have covered a critical part on the Recovery of Money through IBC Laws. Through this law, one can easily recovery money through NCLT however, it is as not simple as it seems because of the ground reality.
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