Eligibility Criteria for Resolution Applicants under IBC
Insolvency and Bankruptcy Code (IBC), 2016, aims to consolidate and amend laws relating to reorganisation and insolvency resolution of corporate debtors, personal guarantors, and other entities in a time-bound manner. A crucial aspect of this process is the identification and approval of Resolution Applicants who can submit a viable resolution plan. This module delves into the eligibility criteria that a prospective applicant must meet to be considered.
Who Can Be a Resolution Applicant?
The Insolvency and Bankruptcy Code (IBC) defines a 'Resolution Applicant' broadly. It includes any person who initiates the corporate insolvency resolution process (CIRP) or submits a resolution plan. This definition encompasses a wide range of entities, but specific criteria are laid down to ensure the suitability and integrity of the applicant.
Key Eligibility Criteria
| Criterion | Description | Implication |
|---|---|---|
| Financial Capacity | Ability to implement the resolution plan. | Ensures feasibility and viability of the proposed solution. |
| Absence of Disqualification | Not being a person barred by the Code or regulations. | Maintains integrity and prevents malfeasance. |
| No Conflict of Interest | Not having a direct or indirect interest that compromises impartiality. | Guarantees fair play and protects stakeholder interests. |
The IBC, through various amendments and judicial pronouncements, has refined the understanding of these criteria. For instance, the 'person aggrieved' by an order of the Adjudicating Authority can also be a Resolution Applicant, provided they meet the other eligibility norms.
Disqualifications for Resolution Applicants
Certain individuals and entities are explicitly disqualified from submitting a resolution plan. These typically include:
- Individuals who are disqualified to be a director under the Companies Act, 2013.
- Persons who have been convicted of any offense involving fraud or dishonesty.
- Persons who have been declared bankrupt and have not been discharged.
- Persons who have been promoters or in the management of the corporate debtor during the period leading to insolvency and have been found responsible for the company's mismanagement or fraud.
- Related parties of the corporate debtor, unless they meet specific conditions.
The disqualification criteria are crucial for maintaining the integrity of the resolution process and ensuring that only suitable candidates are allowed to take over distressed companies.
Role of the Committee of Creditors (CoC)
While the eligibility criteria are laid down by the law, the Committee of Creditors (CoC) plays a pivotal role in evaluating the resolution plans submitted by eligible applicants. The CoC assesses the feasibility, viability, and the terms of the resolution plan, and ultimately decides which plan, if any, to approve. The eligibility of an applicant is a prerequisite, but the quality and attractiveness of their plan are paramount for approval.
Financial capacity and absence of disqualifications.
Understanding the Nuances
The interpretation and application of these eligibility criteria have evolved through various judgments by the National Company Law Tribunal (NCLT) and appellate bodies. It's essential to stay updated with these legal developments to fully grasp the scope and limitations of who can be a Resolution Applicant.
Learning Resources
The official and most authoritative source for the Insolvency and Bankruptcy Code, 2016. Essential for understanding the foundational legal provisions.
Provides access to all regulations framed under the IBC, which detail specific procedures and criteria, including those for resolution applicants.
Access to judgments and orders from the National Company Law Tribunal, crucial for understanding the judicial interpretation of eligibility criteria.
Key Supreme Court judgments that have shaped the interpretation and application of IBC provisions, including those related to resolution applicants.
Provides insightful articles and analyses on various aspects of IBC, often covering eligibility and resolution processes.
Offers expert commentary and updates on the IBC, including discussions on eligibility criteria and their practical implications.
A series of educational videos explaining various facets of the IBC, likely including sections on resolution applicants and their eligibility.
A detailed legal article specifically addressing the eligibility criteria for resolution applicants under the IBC.
Official overview of the Corporate Insolvency Resolution Process from IBBI, which contextualizes the role and eligibility of resolution applicants.
A general overview of the IBC, providing background and key concepts, which can help in understanding the broader context of resolution applicant eligibility.