What is the process for initiation of Corporate Insolvency
Resolution Process by financial creditors?
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A company is under a resolution process and NCLT has approved a resolution plan submitted by the resolution applicant and a copy of the order is yet to be received.
As per resolution plan submitted by the resolution applicant, below are the compliances which are need to be done:
v Shareholders/Share Application Money:
Ø On the Trigger Date (date of the NCLT order), the Resolution Applicant shall subscribe to the shares of the Corporate Debtor as per the provisions of this Resolution Plan. Thereafter, upon the issuance of the RA Equity Shares, pursuant to the implementation of the Resolution Plan, the Resolution Applicant and its Nominees shall hold the entire share capital of the Corporate Debtor.
Do we need to file PAS-3 in this case? If we file the same then the paid up capital of the company will be increased. So please guide me how to deal with this. And also guide me how to comply with the minimum shareholders criteria in this case.
Ø The existing capital shall be treated as Zero on the date of approval of the Resolution Plan and shares allotted in the name of erstwhile shareholders shall stand cancelled upon approval of Resolution Plan without any consideration or claim or rights. Further, Share Application Money and Unsecured Financial Creditors holding any rights for issuance of shares of Corporate Debtor at a future date shall not be paid any amount and/or no shares shall be issued to them.
When we file an NCLT order in the form INC-28, the cancellation of shares will reflect in the master data of the company, or we have to file some particular form for the same. Please guide me.
v Reconstitution of the Board and other matters:-
Ø On the Trigger Date, the Resolution Applicant/ its Nominees shall reconstitute the Board of Directors of the Corporate Debtor (“Reconstituted Board”) by appointing the directors nominated by the Resolution Applicant/ its Nominees on the Board.
Ø The powers of the existing Board of directors of the Corporate Debtor shall remain suspended till the formation of the Reconstituted Board and the said powers shall be discharged by the Monitoring Committee constituted as per the provisions of this Resolution Plan. The members of the Monitoring Committee shall be subject to and bound by the terms of this Resolution Plan. All filings required to be made to the Registrar of Companies (ROC) as per the provisions of the Companies Act for change in composition of board of directors shall be complied with by the Resolution Professional/ existing Board of Directors as the case may be.
In this case resignation from the existing directors would be required?
Can we file a form with the DSC of the resolution professional?
Section 10A was inserted in the Insolvency and Bankruptcy Code, 2016 (“Code”) for suspending the initiation of the corporate insolvency resolution process (“CIRP”) for any default arising on or after 25.03.2020 for a period of six months or such further period, not exceeding one year from such date. This amendment was introduced to provide relief to companies affected by COVID-19 pandemic by temporarily suspending the insolvency proceedings for a period six months i.e. w.e.f. 25.03.2020 till 25.09.2020.
Now, Ministry of Corporate Affairs vide notification dated 24.09.2020 has extended the temporary suspension of CIRP for a further period of three months i.e. w.e.f. 25.09.2020 to 25.12.2020.
As per the provisions of Section 10A, further extension of three months can still be granted further to the recent extension of three months.
As per circular dated 06/03/2020 regarding filing of necessary forms by Insolvency Professional appointed under Insolvency Bankruptcy Code, 2016, Pls confirm that if the status of the Company is under CIRP, thenm do we need to file INC -28 and do execute annual filing.
Pls confirm if anyone has filed the same or not.
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