At Shoplegal, we specialize in resolving Insolvency and Bankruptcy stages. The Insolvency and Bankruptcy Code facilitates timely resolution of insolvency issues. In cases of loan repayment failure, creditors gain control over debtor assets to resolve insolvency promptly. This code allows both debtors and creditors to initiate proceedings.

Distinguishing between Insolvency and Bankruptcy is crucial. Insolvency refers to a financial state where obligations can't be met on time. Conversely, Bankruptcy is a legal process aimed at resolving Insolvency issues effectively.

India's financial sector operates in a rapidly evolving regulatory landscape, emphasizing transparency and efficiency. Understanding the tax and regulatory structures is vital for businesses, ensuring they align with their objectives.

Start off of the process:

In case of repayment default, either the debtor or creditor can start the resolution process. An insolvency professional manages this procedure, handling the debtor's financial information and managing their assets and liabilities. This resolution period lasts for 180 days, during which no legal action can be taken against the debtor.

Findings to resolve the insolvency:

The insolvency professional forms a committee comprising the financial creditors who lent money to the debtor. This committee decides the fate of the outstanding debt they're owed. Creditors can opt to restructure the owed debt, alter repayment terms, or sell the debtor's assets to settle the debts. If no decision is made within 180 days, the debtor's assets might enter liquidation.

Final stage -Liquidation:

Insolvency professional will administrate the liquidation process If the debtor moves to liquidation The value derived or received out of sale of the debtor’s assets will be distributed in the following order:

Costs related to insolvency resolution, such as the insolvency professional's remuneration.

Secured creditors holding loans backed by collateral.

Dues owed to employees and workers.

Loans from unsecured creditors.

Debts owed to government departments.

Dues to preferential shareholders.

Finally, the dues on the capital invested by equity shareholders.