IIBF Resolution of Stressed Assets flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Insolvency commencement date

The date on which the NCLT admits an insolvency application under s.7, s.9 or s.10; the CIRP timeline of 180 days runs from this date.

Default under IBC

Non-payment of a debt that is due and payable, as defined in s.3(12); a financial creditor can file without any minimum threshold, while operational creditors need a Rs 1 crore default.

Section 7 application

An application for initiation of CIRP filed by a financial creditor before the NCLT, which must be admitted if the NCLT is satisfied that a default has occurred.

Section 9 application

An application filed by an operational creditor after serving a 10-day demand notice under s.8; the corporate debtor can oppose it by showing a pre-existing dispute.

Section 10 application

A voluntary application filed by the corporate debtor itself to initiate its own CIRP; it cannot be filed if the corporate debtor has undergone CIRP in the preceding 12 months.

Moratorium under s.14

A protection order passed on admission of CIRP that bars suits, execution of judgments and transfer of assets by the corporate debtor, but does not protect its guarantors.

Committee of creditors

A body of financial creditors constituted by the resolution professional within 30 days of commencement, which decides on the resolution plan by a 66% vote by value.

Voting share of creditor

The proportion of the financial debt owed to a creditor divided by the total financial debt owed to all financial creditors, used to determine voting in the CoC.

Resolution professional

An insolvency professional appointed by the NCLT and confirmed by the CoC, who takes over management of the corporate debtor under s.17 and prepares the information memorandum.

Information memorandum

A document prepared by the resolution professional under s.29 containing the assets, liabilities and financial statements of the corporate debtor, provided to prospective resolution applicants.

Resolution plan

A plan submitted by a resolution applicant for insolvency resolution of the corporate debtor, approved by the CoC with 66% voting share and then by the NCLT under s.31.

Section 29A bar

A provision barring an undischarged insolvent, wilful defaulter, promoter of the corporate debtor or convicted person, and their connected persons, from submitting a resolution plan.

Section 31 approval

The NCLT order approving a resolution plan, which is binding on the corporate debtor, its employees, members, creditors, guarantors and other stakeholders, and is enforceable as a decree.

Section 32A immunity

Protection granted to the corporate debtor and resolution applicant from prosecution for offences committed before CIRP, provided the plan is approved and the applicant is not a party to the offence.

Section 53 waterfall

The order of priority for distribution of liquidation proceeds: costs, secured creditors and workmen dues, employee wages, unsecured financial creditors, government dues, then other creditors.

Section 52 secured creditor option

A secured creditor's right in liquidation to realise its security interest outside the s.53 waterfall, by enforcing it under SARFAESI or DRT, after relinquishing its claim on the estate.

Avoidance transactions

Preferential, undervalued or fraudulent transactions that the RP can ask the NCLT to avoid; the look-back period is 2 years for preferential and 1 year for undervalued transactions.

Look-back period

The period before the insolvency commencement date during which transactions can be examined for avoidance: 2 years for preferential transactions and 1 year for undervalued transactions.

Pre-packaged insolvency

A process under Chapter III-A available only to MSMEs, where the debtor prepares a base resolution plan and the CoC approves it before the NCLT admits the application.

Information utility

An entity registered with the IBBI, such as NeSL, that stores financial information and provides it to the resolution professional as evidence of default.

Adjudicating authority

The NCLT for corporate persons and the DRT for individuals and partnership firms; it admits applications, approves resolution plans and orders liquidation.

Appellate authority

The NCLAT, which hears appeals from NCLT orders within 30 days, extendable by 15 days on sufficient cause; appeals from NCLAT lie to the Supreme Court.

CIRP timeline

The period of 180 days from the insolvency commencement date, extendable by 90 days by the CoC, with a 330-day outer limit including extensions and litigation.

Section 238 overriding effect

A provision giving the Code overriding effect over other laws, including the SARFAESI Act and the Recovery of Debts Act, in case of inconsistency.

Section 60(5) jurisdiction

The NCLT's power to entertain applications by or against the corporate debtor, including questions of priorities and claims, but not contractual disputes unrelated to insolvency.

Essar Steel judgment

A 2019 Supreme Court decision holding that the CoC's commercial decision on distribution of proceeds between financial and operational creditors is not open to judicial review.

Swiss Ribbons judgment

A 2019 Supreme Court decision upholding the constitutional validity of the Code, including the differential treatment of financial and operational creditors and the s.29A bar.

Innoventive judgment

A 2018 Supreme Court decision holding that the NCLT must admit an application once default is shown, with limited scope to look behind the debt.

Mobilox Innovations judgment

A 2017 Supreme Court decision recognising the 'existence of dispute' defence for operational creditors, requiring the dispute to be genuine and not spurious.

Rainbow Papers judgment

A 2022 Supreme Court decision holding that statutory dues of the government can rank as secured creditors in liquidation if they have a first charge.

Gujarat Urja judgment

A 2021 Supreme Court decision holding that the NCLT's s.60(5) jurisdiction does not extend to contractual disputes unrelated to insolvency.

Section 66 fraudulent trading

A provision allowing the NCLT to order a person who carried on business with intent to defraud creditors to contribute to the corporate debtor's assets, with personal liability for directors.