Context: A recent study of Investment Information and Credit Rating Agency (ICRA) revealed that as of FY24, creditors realized only 4% of their claims under the Insolvency and Bankruptcy Code (IBC).
Insolvency and Bankruptcy Code (IBC)
o Initiation: Filed by either the (financial or operational) to the NCLT. debtor or creditors
o Threshold: Default amount must be at least ₹1 crore.
o Deadline: 330 days for the completion of the resolution process
o NCLT Decision: The tribunal has 14 days to accept or reject the application, providing reasons if rejected.
o Duties: Collects information, constitutes the Committee of Creditors CoC, and manages the company's affairs.
o CoC Powers: Decides to continue with the IRP or appoint a new Insolvency Professional (IP).
o Approval: A plan needs a 66% vote in favor from the CoC members.
o Submission to NCLT: The approved plan is submitted to the NCLT for final approval.
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