Bankruptcy filing
Querist :
Anonymous
(Querist) 04 September 2011
This query is : Resolved
Hi,
What is the process and criteria to file the bankruptcy for a Private Limited Company in the state of Delhi?
prabhakar singh
(Expert) 04 September 2011
The following are the act of insolvency if committed by a debtor under Provincial insolvency Act 1920,under section 6
6. Acts of insolvency.-
(1) A debtor commits an act of insolvency in each of the following cases, namely:--
(a) if, in India or elsewhere, he makes a transfer of all or substantially all his property to a third person for the benefit of his creditors generally;
(b) if, in India or elsewhere, he makes a transfer of his property or of any part thereof with intent to defeat or delay his creditors;
(c) if, in India or elsewhere, he makes any transfer of his property, or of any part thereof, which would, under this or any other enactment for the time being in force, be void as a fraudulent preference if he were adjudged an insolvent;
(d) if, with intent to defeat or delay his creditors,--
(i) he departs or remains out of the territories to which this Act extends,
(ii) he departs from his dwelling-house or usual place of business or otherwise absents himself,
(iii) he secludes himself so as to deprive his creditors of the means of communicating with him;
(e) if any of his property has been sold in execution of the decree of any Court for the payment of money;
(f) if he petitions to be adjudged an insolvent under the provisions of this Act;
(g) if he gives notice to any of his creditors that he has suspended, or that he is about to suspend, payment of his debts; or
(h) if he is imprisoned in execution of the decree of any Court for the payment of money.
7. Petition and adjudication.-
Subject to the conditions specified in this Act, if a debtor commits an act of insolvency, an insolvency petition may be presented either by a creditor or by the debtor, and the Court may on such petition make an order (hereinafter called an order of adjudication) adjudging him an insolvent.
Explanation.-- The presentation of a petition by the debtor shall be deemed an act of insolvency within the meaning of this section, and on such petition the Court may make an order of adjudication.
prabhakar singh
(Expert) 04 September 2011
11. Court to which petition shall be presented. -
Every insolvency petition shall be presented to a Court having jurisdiction under this Act in any local area in which the debtor ordinarily resides or carries on business, or personally works for gain, or if he has been arrested or imprisoned, where he is in custody:
12. Verification of petition.-
Every insolvency petition shall be in writing and shall be signed and verified in the manner prescribed by the Code of Civil Procedure, 1908 (5 of 1908), for signing and verifying plaints.
Guest
(Expert) 04 September 2011
I agree with the advice of Shri Prabhakar Singh.
prabhakar singh
(Expert) 04 September 2011
13. Contents of petition.-
(1) Every insolvency petition presented by a debtor shall contain the following particulars, namely:--
(a) a statement that the debtor is unable to pay his debts;
(b) the place where he ordinarily resides or carries on business or personally works for gain, or, if he has been arrested or imprisoned, the place where he is in custody;
(c) the Court (if any) by whose order he has been arrested or imprisoned, or by which an order has been made for the attachment of his property, together with particulars of the decree in respect of which any such order has been made;
(d) the amount and particulars of all pecuniary claims against him, together with the names and residences of his creditors so far as they are known to, or can by the exercise of reasonable care and diligence be ascertained by, him;
(e) the amount and particulars of all his property, together with--
(i) a specification of the value of all such property not consisting of money;
(ii) the place or places at which any such property is to be found; and
(iii) a declaration of his willingness to place at the disposal of the Court all such property save in so far as it includes such particulars (not being his books of account) as are exempted by the Code of Civil Procedure, 1908, (5 of 1908), or by any other enactment for the time being in force from liability to attachment and sale in execution of a decree;
(f) a statement whether the debtor has on any previous occasion filed a petition to be adjudged an insolvent, and (where such a petition has been filed)--
(i) if such petition has been dismissed, the reasons for such dismissal, or
(ii) if the debtor has been adjudged an insolvent, concise particulars of the insolvency, including a statement whether any previous adjudication has been annulled and, if so, the grounds therefor.
prabhakar singh
(Expert) 04 September 2011
18. Procedure for admission of petition. -
The procedure laid down in the Code of Civil Procedure, 1908 (5 of 1908), with respect to the admission of plaints, shall, so far as it is applicable, be followed in the case of insolvency petitions.
19. Procedure on admission of petition. -
(1) Where an insolvency petition is admitted, the Court shall make an order fixing a date for hearing the petition.
(2) Notice of the order under sub-section (1) shall be given to creditors in such manner as may be prescribed.
(3) Where the debtor is not the petitioner, notice of the order under sub-section (1) shall be served on him in the manner provided for the service of summons.
20. Appointment of interim receiver. -
The Court when making an order admitting the petition may, and where the debtor is the petitioner ordinarily shall, appoint an interim receiver of the property of the debtor or of any part thereof, and may direct him to take immediate possession thereof or of any part thereof, and the interim receiver shall thereupon have such of the powers conferrable on a receiver appointed under the Code of Civil Procedure, 1908 (5 of 1908), as the Court may direct. If an interim receiver is not so appointed, the Court may make such appointment at any subsequent time before adjudication, and the provisions of this section shall apply accordingly.
21. Interim proceedings against debtor.-
At the time of making an order admitting the petition or at any subsequent time before adjudication the Court may either of its own motion or on the application of any creditor make one or more of the following orders, namely:--
(1) order the debtor to give reasonable security for his appearance until final orders are made upon the petition, and direct that, in default of giving such security, he shall be detained in the civil prison;
(2) order the attachment by actual seizure of the whole or any part of the property in the possession or under the control of the debtor, other than such particulars (not being his books of account) as are exempted by the Code of Civil Procedure, 1908 (5 of 1908), or by any other enactment for the time being in force from liability to attachment and sale in execution of a decree;
(3) order a warrant to issue with or without bail for the arrest of the debtor, and direct either that he be detained in the civil prison until the disposal of the petition, or that he be released on such terms as to security as may be reasonable and necessary:
Provided that an order under clause (2) or clause (3) shall not be made unless the Court is satisfied that the debtor, with intent to defeat or delay his creditors or to avoid any process of the Court,--
(i) has absconded or has departed from the local limits of the jurisdiction of the Court, or is about to abscond or to depart from such limits, or is remaining outside them, or
(ii) has failed to disclose or has concealed, destroyed, transferred or removed from such limits, or is about to conceal, destroy, transfer or remove from such limits, any documents likely to be of use to his creditors in the course of the hearing, or any part of his property other than such particulars as aforesaid.
22. Duties of debtors.-
The debtor shall on the making of an order admitting the petition produce all books of account, and shall at any time thereafter give such inventories of his property, and such lists of his creditors and debtors and of the debts due to and from them, respectively, submit to such examination in respect of his property or his creditors, attend at such times before the Court or receiver, execute such instruments, and generally do all such acts and things in relation to his property as may be required by the Court or receiver, or as may be prescribed.
prabhakar singh
(Expert) 04 September 2011
24. Procedure at hearing.-
(1) On the day fixed for the hearing of the petition, or on any subsequent day to which the hearing may be adjourned, the Court shall require proof of the following matters, namely:--
(a) that the creditor or the debtor, as the case may be, is entitled to present the petition:
Provided that, where the debtor is the petitioner, he shall, for the purpose of proving his inability to pay his debts, be required to furnish only such proof as to satisfy the Court that there are prima facie grounds for believing the same and the Court, if and when so satisfied, shall not be bound to hear any further evidence thereon;
(b) that the debtor, if he does not appear on a petition presented by a creditor, has been served with notice of the order admitting the petition; and
(c) that the debtor has committed the act of insolvency alleged against him.
(2) The Court shall also examine the debtor, if he is present, as to his conduct, dealings and property in the presence of such creditors as appear at the hearing, and the creditors shall have the right to question the debtor thereon.
(3) The Court shall, if sufficient cause is shown, grant time to the debtor or to any creditor to produce any evidence which appears to it to be necessary for the proper disposal of the petition.
(4) A memorandum of the substance of the examination of the debtor and of any other oral evidence given shall be made by the Judge, and shall form part of the record of the case.
prabhakar singh
(Expert) 04 September 2011
23. Release of debtor.-
(1) At the time of making an order admitting the petition or at any subsequent time before adjudication, the Court may, if the debtor is under arrest or imprisonment in execution of the decree of any Court for the payment of money, order his release on such terms as to security as may be reasonable and necessary.
(2) The Court may at any time order any person who has been released under this section to be re-arrested and re-committed to the custody from which he was released.
(3) At the time of making any order under this section, the Court shall record in writing its reasons therefor.
prabhakar singh
(Expert) 04 September 2011
25. Dismissal of petition.-
(1) In the case of a petition presented by a creditor, where the Court is not satisfied with the proof of his right to present the petition or of the service on the debtor of notice of the order admitting the petition, or of the alleged act of insolvency, or is satisfied by the debtor that he is able to pay his debts, or that for any other sufficient cause no order ought to be made, the Court shall dismiss the petition.
(2) In the case of a petition presented by a debtor, the Court shall dismiss the petition if it is not satisfied of his right to present the petition.
prabhakar singh
(Expert) 04 September 2011
26. Award of compensation.-
(1) Where a petition presented by a creditor is dismissed under sub-section (1) of section 25, and the Court is satisfied that the petition was frivolous or vexatious, the Court may, on the application of the debtor, award against such creditor such amount, not exceeding one thousand rupees, as it deems a reasonable compensation to the debtor for the expense or injury occasioned to him by the petition and the proceedings thereon, and such amount may be realised as if it were a fine.
(2) An award under this section shall bar any suit for compensation in respect of such petition and the proceedings thereon.
Querist :
Anonymous
(Querist) 04 September 2011
Thank you Mr Prabhakar. I want to know what if a Private Limited company is unable to pay the debt then how it can file for bankruptcy or declare itself unable to pay the debt legally so that no creditor can sue /file case against the company. Also, If a creditor takes any legal action, if it will be against company or personally against directors of companies..can creditors takes legal action on directors directly or if directors liable to pay the debt personally.
prabhakar singh
(Expert) 04 September 2011
As your question was too general law was bombarded.
The petition can be filled not only by creditors bur also by "debtor himself "u/s 7 of the said ACT(posted above)which you have over looked ,hence repeated below:
7. Petition and adjudication.-
Subject to the conditions specified in this Act, if a debtor commits an act of insolvency, an insolvency petition may be presented either by a creditor or by the debtor, and the Court may on such petition make an order (hereinafter called an order of adjudication) adjudging him an insolvent.
Explanation.-- The presentation of a petition by the debtor shall be deemed an act of insolvency within the meaning of this section, and on such petition the Court may make an order of adjudication.
prabhakar singh
(Expert) 04 September 2011
If it is a company registered as" private limited "with registrar of companies, then its liabilities does NOT extend beyond the assets owned by the company and shareholders liabilities is restricted the extent of their shares capital only irrespective of their office of director ship,hence personal properties of share holders can not be held liable to discharge the debts of company as it happens in cases of proprietor or partnership FIRMS.
Raj Kumar Makkad
(Expert) 04 September 2011
Prabhakar Singh has provided much details more than required so follow him.
