Beruflich Dokumente
Kultur Dokumente
Bankruptcy is a legally declared inability of an individual or organization to pay their creditors. Filing bankruptcy can make it possible to eliminate the legal obligation to pay most of debts.
PURPOSE OF BANKRUPTCY : To give an honest start to debtors life, by reliving him from most of the debts. To repay creditors in an orderly manner to the extent that the debtor has the means available for payment.
Liquidation
Liquidation or winding up, refers to a process whereby the assets of a business are converted to money. The person legally put in charge of the implementation of liquidation is called liquidator.
History of Bankruptcy
This word is formed from the ancient Latin bancus (a bench or table), & ruptus (broken). When a banker failed, he broke his bank, to advertise to the public that the person to whom bank belonged was no longer in a condition to continue his business.
PROVISIONS
Companies Act, 1956
Under this act, liquidation of a co. facing distress can be accomplished via 2 modes, voluntary or involuntary. In the first & the more efficient case, shareholders vote for liquidation & hand over the control of the process to secured creditors, who then hire a private or an official liquidator to oversee the asset sales & distribution of proceeds. In the second case, a creditor after giving 3 weeks notice to the debtor, can petition the court for involuntary liquidation.
Alternatives to BIFR
Recommend liquidation to the court Rehabilitation in public interest Approve a plan requiring major concessions & sacrifices from the various parties including subsidies from the govt.
STEP 2:- Tribunal appoints an Operating Agency to conduct an initial exploration to see whether sick company should be restructured or not. A Director is appointed to see the day-2-day operations of the co.
STEP 3:- Management, Creditors, Operating agency, Director report would give info. whether it needs to be restructured or needs time to get in order.
STEP 4:- Operating agency prepares a restructuring plan. (co. & creditors can also do so) STEP 5:- Tribunal has the power to make modifications.