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RETURNS TO BE FILED UNDER COMPANIES ACT, 2013 DURING CIRP/LIQUIDATION PROCESS

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RETURNS TO BE FILED UNDER COMPANIES ACT, 2013 DURING CIRP/LIQUIDATION PROCESS
By: Mr. M. GOVINDARAJAN
September 19, 2020
All Articles by: Mr. M. GOVINDARAJAN       View Profile
  • Contents

Introduction

The Insolvency and Bankruptcy Code, 2016 (‘Code’ for short) provides for the initiation of corporate insolvency resolution process (‘CIRP’ for short) by the Financial Creditors under section 7 of the Code, by the operational creditors under section 9 of the Code and by the corporate debtor under section 10 of the Code.  The insolvency professional is appointed for the conduct of CIRP.  The CIRP is not able to conclude within the stipulated period the liquidation will be order.  The insolvency resolution professional, besides complying with the provisions of the Code, is also to comply with the provisions of the Companies Act, 2013.  Since the CIRP is conducted on the concept of ongoing concern and the insolvency professional is in charge of the affairs of the corporate debtor he has to comply with the provisions of Companies Act by filing the required returns under the Companies Act, 2013 in MCA site.

Appointment of interim resolution professional

The Adjudicating Authority, if it is satisfied that the application filed by-

shall admit the application for initiation of CIRP.  The Adjudicating Authority shall, after admission of the application, appoint an interim resolution professional on the insolvency commencement date.    The term of the interim resolution professional shall continue till the date of appointment of the resolution professional under section 22.

Appointment of resolution professional

Section 22(2) of the Code provide that the committee of creditors, may, in the first meeting, by a majority vote of not less than   66%   of the voting share of the financial creditors, either resolve to appoint the interim resolution professional as a resolution professional or to replace the interim resolution professional by another resolution professional.   Where the committee of creditors resolves to continue the interim resolution professional as resolution profession it shall communicate its decision to the interim resolution professional, the corporate debtor and the Adjudicating Authority.

Where the committee of creditors resolves to replace the interim resolution professional, it shall file an application before the Adjudicating Authority for the appointment of the proposed resolution professional along with a written consent from the proposed resolution professional in the specified form.  The Adjudicating Authority shall forward the name of the resolution professional proposed by the Committee of Creditors to the Board for its confirmation and shall make such appointment after confirmation by the Board.   Where the Board does not confirm the name of the proposed resolution professional within ten days of the receipt of the name of the proposed resolution professional, the Adjudicating Authority shall, by order, direct the interim resolution professional to continue to function as the resolution professional until such time as the Board confirms the appointment of the proposed resolution professional.

Appointment of liquidator

Section 33 of the Code provides various grounds on which the Adjudicating Authority can order for the liquidation of a corporate debtor.  The corporate debtor may be ordered for liquidation-

  • if the CIRP could not be completed within 180 days and the extended period as approved by the Adjudicating Authority;
  • if there is no resolution plan has been received by the resolution professional;
  • the Committee of Creditors decide to liquidate the corporate debtor;

The Resolution professional may be allowed to act as liquidator by the order of the Adjudicating Authority.  The Adjudicating Authority may replace the resolution professional and another insolvency professional may be appointed as liquidator.

Filing of INC – 28

Ministry of Corporate Affairs issued a General Circular No. 08/2020, dated 06.03.2020 in which the Ministry issued clarifications for statutory compliances in respect of companies in respect of companies under CIRP.

The Interim Resolution Professional/Resolution Professional/Liquidator is to file the order of the Adjudicating Authority appointing him as interim resolution professional/resolution professional/liquidator in Form INC – 28.  The said person shall select the appropriate section of the Code.  After filling the said form the interim resolution professional or resolution professional or liquidator shall sign the said form by choosing his designation of ‘CEO, in the declaration box for the purpose of filing only and chose ‘others’ from the drop down menu.

Change of Master Data

The master data for change in the status of the company from ‘Active’/’Inactive’ to CIRP/Liquidation or CIRP/Liquidation to ‘Active’ shall be effected on the basis of formal change request form submitted by the Insolvency and Bankruptcy Board of India to e-governance Cell, Ministry of Corporate Affairs (HQ).

Responsibility for filing the form

The interim resolution professional/resolution professional/liquidator shall be responsible for filing all the e-forms required to be filed under the Companies Act, 2013 in the MCA portal and sign the form in the capacity of CEO in order to meet filing protocol in the existing forms architecture.  All filings of e-forms including AOC – 4 (Form for filing financial statements and other documents with the Registrar of Companies) and MGT – 7 (Annual Return) shall be filed through e-form GNL – 2 (Form for submission of documents with the Registrar) by way of attachment till the company is under CIRP.  In the GNL – 2 form they have to choose the radio button ‘Filing under IBC’.  Against the date of event and Board resolution in INC – 28 and GNL – 2 date of order the Adjudicating Authority/NCLAT may be mentioned.

It is also clarified by the Ministry of Corporate Affairs that in respect of companies under CIRP in the Registry, Annual Return and Financial Statement and other documents shall be filed as attachments in accordance with the directions of the Adjudicating Authority/NCLAT with GNL – 2 against the payment of one time normal fee only, till such time the company remains under CIRP.  Separate GNL – 2 form shall be filed for each such document by the interim resolution professional/resolution professional.

 It is further clarified that the concerned interim resolution professional/resolution professional of every company which was under CIRP prior to the issue of this circular shall also file e-form INC – 28 for such companies and thereafter proceed to file other documents as required under the Companies Act and rules made there under through e-Form GNL – 2.

 

By: Mr. M. GOVINDARAJAN - September 19, 2020

 

 

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