National Company Law Tribunal (NCLT) is a quasi judicial body. It has 11 benches and is headquartered at New Delhi.
This course hears the proceedings under Insolvency and Bankruptcy Code (IBC). IBC is one of the biggest reforms India has undertaken in the recent years to strengthen its corporate sector. IBC has given a clear message to the Indian promoters that if their companies default, the management and ownership will be snatched away form them. It seems the promoters have understood the message. On Feb 12, 2018, RBI clearly advised the banks that instead of waiting for 90 days, the banks should classify a customer as NPA on the first day of default itself. Within 180 days, monies not coming, the bank should take it to NCLT under IBC. The appeals against NCLT can be heard in the Supreme Court.
IBC came into force from August 2016. IBBI came into force in October 2016. IBC Section 29 was introduced in January 2018 which prohibits defaulting promoters, any wilful defaulters or former directors of defaulting companies to bid for the assets of a company under IBC.
Before IBC, failing businesses could prolong the legal proceedings against the unscrupulous promoters for years or even for decades. Not anymore. Under IBC, it is mandatory to resolve the bankruptcy proceedings within 180 days. This 180 day period can be further extended if majority of the creditors agree to do so. But not anymore.
IBC provides a highly timebound resolution. In this way it is superior to its counterpart laws / courts in London and Singapore. No wonder, IBC and NCLT have attracted global attention in a positive manner. It has already been hailed as one of the best financial sector reforms in India by the current government.
Banks and Finance Companies are known as Financial Creditors (FC). All others are known as Other Creditors (OC). A company is considered defaulter if it fails to pay either FCs or OCs on due date. These creditors are entitled to approach NCLT under IBC.
IBC is governed by Insolvency and Bankruptcy Board of India. The country already has more than 1800 certified professionals in the country.
Status of the first 12 (dirty dozen) companies which were brought to NCLT under IBC:
Hence, resolution of 7 out of 10 as at 30/09/18 is a wonderful success rate.
