INSOLVENCY MATTERS IN THE SUPREME COURT OF INDIA
What Is Insolvency?
Insolvency is when an individual or company can no longer meet their financial obligations to lenders as debts become due. Before an insolvent company or person gets involved in insolvency proceedings, they may be involved in informal arrangements with creditors, such as setting up alternative payment arrangements. Insolvency can arise from poor cash management, a reduction in cash inflow, or an increase in expenses.
INSOLVENCY MATTERS –
· Insolvency is a state of financial distress in which a person or business is unable to pay their debts.
· Insolvency is when liabilities are greater than the value of the company, or when a debtor cannot pay the debts they owe.
· A company can become insolvent due to a number of situations that lead to poor cash flow.
· When faced with insolvency, a business or individual can contact creditors directly and restructure debts to pay them off.
Ø Court Liquidations
Whenever a creditor is overdue they can issue a statutory demand and when that is not satisfied make a petition to the court to place the company in liquidation.Brenton has been involved with various court appointed liquidations.
Ø Voluntary Liquidations
Whenever the shareholder of the company believe the company is insolvent then pursuant to S241 Companies Act 1993/ S Companies Act 2013 they can pass major transaction ( i.e 75% of shareholders) to place their company into liquidation. The liquidation then proceeds to warp up the company affairs, realise company assets and distribute funds pursunt to Schedule 7 Companies Act 1993. Over the last ten years Brenton has been invovled with hundreds of voluntary liquidations acreoss the south Island, in all sorts of industries.
Ø Solvent Liquidations
Whenever a company has ceased trading and is no longer required, in order to wrap up everything tidily, and disburse any capital profits, a solvent liquidation is the best option. The directions sign a resolution to confirm the company is solvent shareholders appoint a liquidator then wraps everything up and distributes funds. Brenton has completed a number of solvent liquidations for clients.
Ø Receiverships
If a secured creditor has a General Security Agreement (GSA) and a lion is in default then they can appoint a receiver. It is important to ensure that all of the paperwork is in place. The receiver will then realise the assets which are subject to the security and repay the secured creditor. The receiver has various obligation to other creators at the same time. Brenton has been appointed the receiver on a number of companies and can assist as required.
Ø Creditors Compromise
Whenever a compromise can be reached with a company’s creators to accept a scheme of arrangement to pay outstanding debts or a portion of those debts. This is never a simple process and involves putting together a proposal, organising a meeting with creditors and appointing a compromise administrator.It can be a useful tool to keep a company operational while it settles its old debts in a timely manner.
Ø Voluntary Administration
A director and/or a shareholder have the ability to appoint an Administrator pursuant to the Companies Act 1993. There is then a moratorium period where a plan or DOCA (Deed of Company Arrangement) is prepared and submitted to creditors for approval. Not very commonly used these days, its is a costly and time consuming exercise. But in some circumstances for larger companies can be a useful mechanism to keep a company trading while a resolution is sought.
ADVOCATE JAYPRAKASH SOMANI has published 61 books on different matters of Supreme Court’s latest leading case laws and one book is related to INSOLVENCY Matters. Name of the book is given below:-
List of Adv. Jayprakash Somani’s Books
1. Insolvensy Matters - Supreme Court of India’s Leading Case Laws on ‘Insolvency & Bankruptcy Code 2016
Books are available online in India
1. Notion Press: https://notionpress.com/author/jayprakash_somani
2. Amazon: https://www.amazon.in/s?k=jayprakash+somani
3. Flipkart: https://www.flipkart.com/search?q=Jayprakash%20Somani
Books are available online at International Market
4. Amazon International: https://www.amazon.com/s?k=jayprakash+somani
5. Amazon United Kingdom: https://www.amazon.co.uk/s?k=jayprakash+somani
6. E-Books/Kindle edition at National & International Level: https://www.amazon.in/s?k=jaypraksh+somani