Time has always been considered as one of the most valuable assets of any organisation. Moreover, in BIFR cases, creditors could not take any action against any of their defaulters until the restructuring plan of their sick company was put forward. To deal with these issues and many more, the Insolvency and Bankruptcy Code, 2016 provides for a fast track corporate insolvency resolution process CIRP.
What Is Meant By Fast Track CIRP Process?
The Insolvency and Bankruptcy Board of India (Fast Track Insolvency Resolution Process for Corporate Persons) Regulations, 2017 lays down the definition of “fast track process period” in Regulation 2(1)(j), as per which it means that the process of fast track CIRP is a form of fast track resolution under IBC, which must be completed within 90 days from the date on which the process commences.
Applicability Of Fast Track CIRP Process?
The Code provides for a fast track insolvency process CIRP which applies to small corporate and can be initiated by a creditor or corporate debtor. The primary idea behind this process is to reduce the time taken for an insolvency resolution process. As per the Code, there are three categories of people who could initiate this process. These include-
- Corporate Debtor
- Financial and Operational Creditors of the debtor.
- Any other person specified by the Central Government.
As per Section 57 of the IBC Code, the application for fast track CIRP process can be filed by a corporate debtor or creditors along with the following-
- The evidence that shows that the default on the part of the corporate debtor exists.
- Information required by the NCLT to prove the eligibility of corporate debtor for fast track CIRP.
Further, the Ministry of Corporate Affairs via its notification dated 14th June 2017 notified that Section 55-58 of the Code are to be read with the notification whereby the fast track CIRP process can only apply to the following corporate debtors-
- A small companyUNDER section 2 of the Companies Act, 2013; or
- A Startup (other than the partnership firm)
- An unlisted company with total assets, in the immediately preceding financial year, not exceeding INR 1 crore.
Time Frame For Fast Track Resolution
According to Section 56 of the Code, a fast track CIRP process must be completed within 90 days from the date on which the insolvency commenced. An application may be filed to the Adjudicating Authority for extending the period of this fast track process beyond 90 days, however, for this to be done a resolution needs to be passed by 75% of the voting share in a meeting of the creditors.
Upon receiving the application, if the Adjudicating officer is satisfied that the fast track insolvency process could not be completed within 90 days, they may grant an extension for such further period, as they may think fit, but not exceeding 45 days. This extension of time can be taken only once by the resolution professional.
As per Section 58 of the Code, the process of conducting Corporate Insolvency Resolution Process given under chapter II and the penalties provided under chapter VII of the Code shall also apply to the Fast Track Insolvency Process as required.
To apply fast track CIRP resolution under IBC, it is essential that the applicant consults an expert corporate lawyer, who holds experience in corporate litigation. LetsComply’s corporate attorneys in India can help you with the fast track resolution with a CIRP application. To know more, call us at +91-9717070500 or send us an email at firstname.lastname@example.org.