TMI BlogFORM CIRP – 8 – NEWLY INTRODUCED UNDER ‘CIRP’X X X X Extracts X X X X X X X X Extracts X X X X ..... FORM CIRP – 8 – NEWLY INTRODUCED UNDER ‘CIRP’ - By: - Mr. M. GOVINDARAJAN - Corporate Laws / IBC / SEBI - Dated:- 27-7-2021 - - Preferential transactions Section 43 of the Insolvency and Bankruptcy Code, 2016 ( Code for short) provides that where liquidator/resolution professional is of the opinion that the corporate debtor has at a relevant time has given a preference in such transactions to any person, he shall apply to the Adjudicating Authority for avoidance of preferential transactions. A preference shall be deemed to be given at a relevant time, if- it is given to a related party (other than by reason only of being an employee), during the period of two years preceding the insolvency commencement date; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or a preference is given to a person other than a related party during the period of one year preceding the insolvency commencement date. A corporate debtor shall be deemed to have given a preference, if- there is a transfer of property or an interest thereof of the corporate debtor for the benefit of a creditor or a surety or a guarantor for or on account of an antecedent financial debt or operational debt or other liabilities owed by the corporate debtor; and the said transfer has the effect of putting such creditor or a surety or a guarantor in a beneficial position than it would have been in the event of a distribution of assets being made in accordance with section 53 . A preference shall not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... include the following transfers- transfer made in the ordinary course of the business or financial affairs of the corporate debtor or the transferee; any transfer creating a security interest in property acquired by the corporate debtor to the extent that such security interest secures new value and was given at the time of or after the signing of a security agreement that contains a description of such property as security interest, and was used by corporate debtor to acquire such property; and such transfer was registered with an information utility on or before 30 days after the corporate debtor receives possession of such property. Any transfer made in pursuance of the order of a court sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll not, preclude such transfer to be deemed as giving of preference by the corporate debtor. Avoidance of undervalued transactions Section 45 provides that if the liquidator/the resolution professional on an examination of the transactions of the corporate debtor determines that certain transactions were made during the relevant period under section 46 , which were undervalued, he shall make an application to the Adjudicating Authority to declare such transactions as void and reverse the effect of such transaction. The following transactions shall not be considered as undervalued transactions- makes a gift to a person; or enters into a transaction with a person which involves the transfer of one or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... more assets by the corporate debtor for a consideration the value of which is significantly less than the value of the consideration provided by the corporate debtor, and such transaction has not taken place in the ordinary course of business of the corporate debtor. Extortionate credit transactions Section 50 provides that where the corporate debtor has been a party to an extortionate credit transaction involving the receipt of financial or operational debt during the period within 2 years preceding the insolvency commencement date, the liquidator/the resolution professional may make an application for avoidance of such transaction to the Adjudicating Authority if the terms of such transaction required exorbitan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t payments to be made by the corporate debtor. The Board may specify the circumstances in which a transaction which shall be covered under extortionate credit transactions. Any debt extended by any person providing financial services which is in compliance with any law for the time being in force in relation to such debt shall in no event be considered as an extortionate credit transaction. Fraudulent trading Section 66 of the Code provides that if during the corporate insolvency resolution process or a liquidation process, it is found that any business of the corporate debtor has been carried on with intent to defraud creditors of the corporate debtor or for any fraudulent purpose, the Adjudicating Authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty may on the application of the resolution professional pass an order that any persons who were knowingly parties to the carrying on of the business in such manner shall be liable to make such contributions to the assets of the corporate debtor as it may deem fit. On an application made by a resolution professional during the corporate insolvency resolution process, the Adjudicating Authority may by an order direct that a director or partner of the corporate debtor, as the case may be, shall be liable to make such contribution to the assets of the corporate debtor as it may deem fit, if- before the insolvency commencement date, such director or partner knew or ought to have known that the there was no reasonable prospect o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f avoiding the commencement of a corporate insolvency resolution process in respect of such corporate debtor; and such director or partner did not exercise due diligence in minimizing the potential loss to the creditors of the corporate debtor. Opinion by Resolution professional On or before the 75 th day of the insolvency commencement date, the resolution professional shall form an opinion whether the corporate debtor has been subjected to any transaction covered under sections 43 , 45, 50 or 66 . Then he shall make a determination on or before the 115 th day of the insolvency commencement date. Then he shall apply to the Adjudicating Authority for appropriate relief on or before the 135 th day of the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsolvency commencement date. Form CIRP 8 Regulation 40B (1B) was inserted vide Notification No. IBBI/2021-2022/GN/REG-075, dated 14.07.2021 which provides that the resolution professional shall file Form CIRP 8 intimating details of his opinion and determination, on or before the 140 th day of the insolvency commencement date. The filing of Form CIRP 8 shall not become due unless a period of 30 days has elapsed from the date of commencement of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Second Amendment) Regulations, 2021. The Form CIRP 8 is required to be filed for all corporate insolvency resolution processes ongoing or commencing on or after 14.07.2021. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The following details are to be entered in Form CIRP 8- Details of insolvency professional- Name of Resolution Professional; Registration Number; Corporate Debtor details- Name of corporate debtor; CIN/LLPIN of corporate debtor; Insolvency commencement date: NCLT Bench; Details of preferential and other transactions- In the opinion of resolution professional- The corporate debtor has been subjected to transactions under Regulation 35A (1); The corporate debtor has been subject to transactions under Regulation 35A(2) ; The Resolution Professional has filed to the Adjudicating Authority seeking relief in respect of transactions covered under section 43 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /45 / 50 / 66 The details of transactions covered under sections 43 , 45 , 50 , 66(1) and 66(2) , as determined by Resolution Professional are as under: Covered under section(s) 43 / 45 / 50 / 66(1) / 66(2) (Select more than one if the transaction is covered under more than one section); Date / period of transactions; Directors/ Partners at the relevant time- Name(s); DIN/DPIN; Beneficiaries of the transaction- Name(s); Identification No. (encrypted); Date of application to the Adjudicating Authority; Value underlying the transaction(s); The potential loss to creditors under section 66(2). The details of working of potential loss to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... creditors should be attached; The details of failure to do the exercise under regulation 35A ; Declaration. The Document(s) that prevented the resolution professional to undertake the exercise under regulation 35A should be attached. - - Scholarly articles for knowledge sharing authors experts professionals Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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