Changes in Winding Up Procedure in IBC Code 2016
- Blog|Insolvency and Bankruptcy Code|
- 3 Min Read
- By Taxmann
- Last Updated on 27 December, 2022
Insolvency and Bankruptcy Code, 2016 basically consolidates the insolvency laws for various entities under a single legislation. It is equally applicable to companies, partnership firms, and limited liability partnership firms. What Insolvency and Bankruptcy Code, 2016 have empowered to creditors is the time-bound resolution to their insolvency process rather than must dwell for years to get their money back from a company going on a bad debt. This Code empowers creditors and thus gives them the freedom to lend money to Indian entrepreneurs with ease.
IBC Code 2016 or Insolvency and Bankruptcy Code 2016 must amend ended various laws of Winding up of a company under Companies Act, 2013. As per IBC Code 2016, the definition of winding up was formatted to be winding up or liquidation under the Insolvency and Bankruptcy Code 2016. All the laws in section 270 of Winding up of a company under Companies Act, 2013 which relates to Modes of winding up were deleted and substituted by Winding up by Tribunal.
A circumstance under which a company could be wound up by the Tribunal are as follows –
• If a special resolution has been passed by the Tribunal for winding up of the company. • If it is found that company has acted against the sovereignty, integrity, and security of India’s friendly relations with foreign states. • If Tribunal has found that company have enacted fraudulently or in an unlawful manner. • If the concerned people of the company especially management are found to be guilty of fraud or misconduct. • If the company is found to be a defaulter in filing its financial statements for preceding financial years with Company Registrar. •In the case for any reason, Tribunal thinks that a company should be wound up. • The Section 275 of Winding up of a company under the Companies Act, 2013 for the appointment of Company Liquidators have been replaced by Insolvency Professionals, who are appointed and governed by the Tribunal as per Insolvent and Bankruptcy Code 2016. • The section 304 for Voluntary Winding Up of the companies under Winding up of a company under the Companies Act, 2013 have been totally omitted in Insolvency and Bankruptcy Code 2016.
As per the resolution passed on 7th Dec 2016, the pending cases were passed on to NCLT as per below criteria –
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