How to Declare Insolvency in India

In case you have indeed gone insolvent in India, then there are not many venues that you can go through to resolve this particular issue. In the case that you, as a company have gone insolvent, then you need to file the section 9 insolvency petition under the IBC code. When you file this application, the process of insolvency resolution is initiated. In this blog, we are going to tell you how to declare insolvency in India.

Insolvency Declaration in India

Insolvency refers to a tumultuous financial state where the debtor is not able to fully or at all able to pay his debtors. In such a case, the only one that can help resolve this issue is the government. Therefore, the debtors declare insolvency. When they do so, they become bankrupt and pulling these debtors out of the mud of insolvency is the responsibility of the government. However, this cannot happen without the proper due diligence.

Section 9 insolvency petition

In India, when it comes to debtor companies, filing for insolvency is not something that is done. Declaring insolvency is the right given only to the individuals. However, in the case of companies, declaring insolvency does have a form, and it is called filing the petition for insolvency resolution process under section 9 of IBC. Once the application for insolvency is filed, the following takes place:

1. Insolvency resolution process initiates
2. An insolvency professional is appointed
3. The professional takes the control of the business interests of the company
4. The professional then extracts information about the debts and credits of the company from the information utility
5. An insolvency resolution plan is formulated
6. The plan is then presented to the NCLT and the Committee of Creditors.

The final decision as to whether the insolvent debtor is going to devoured or rescued rest upon the decision of the COC.

Now, as for filing the petition of insolvency, it needs to be filed in the prescribed Format of Section 9 insolvency petition. This form needs to be filled with the following documents as well:

1. The books of the company that support insolvency
2. Recently unpaid demand notices to the company, if any.
3. Other details that might support the insolvency declaration.

For more information regarding insolvency, declaring insolvency, the insolvency resolution process, filing insolvency and pretty much everything pertaining to insolvency and bankruptcy code of India, you can visit Registrationwala.

Also, know here how to file insolvency petition in India.