Insolvency Petition

Dear Client,
Your query lacks information and misleading for lack of transparency. It is not clear from the query whether Insolvency Petition is made either before the National Company Law Tribunal ('NCLT') or the Debt Recovery Tribunal (DRT). However, be informed that when a company or LLP becomes insolvent or commits a default, the financial creditor, operational creditor or the corporate debtor can file an application under Section 7, Section 9 and Section 10 of the Insolvency & Bankruptcy Code, 2016 to initiate the Corporate Insolvency Resolution Process(CIRP) before the Adjudicating Authority, i.e. National Company Law Tribunal ('NCLT') by filing Form 1, Form 5 and Form 6 respectively of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016.. The National Company Law Tribunal (NCLT) is a quasi-judicial body in India with adjudicating authority relating to Indian companies including proceedings relating to arbitration, compromise, arrangements, reconstructions and the winding up of companies, insolvency resolution process of companies and limited liability. The minimum amount of default for initiating CIRP is ₹ 1 crore. Part III of the Insolvency and Bankruptcy Code, 2016, regulates insolvency resolution and insolvency proceedings for individuals and partnership firms. The provisions of Part III fall under the jurisdiction of the Debt Recovery Tribunals (DRTs), which handle cases involving default amounts exceeding ₹1,000. An individual or partnership firm in financial distress may file a voluntary application for insolvency with the relevant Debt Recovery Tribunal (DRT) and a creditor, whether a financial or operational creditor, may file an application against a debtor if there is a default in repayment. Post admission of the IP, the DRT appoints a Resolution Professional (RP) who collects claims from creditors, formulate an all-inclusive insolvency resolution plan and supervising the debtor’s assets and financial affairs during the process. The RP consults creditors and the debtor to formulate a resolution plan and the creditors assess the resolution plan, which is approved by a minimum of 75% creditors by value. The plan will be binding to all stakeholders once approved. If the insolvency resolution process fails or if the debtor or creditors prefer bankruptcy over resolution, then bankruptcy proceedings is initiated. The petition is presented to the Debt Recovery Tribunal (DRT) along with the details of the debtor’s financial status, including assets, liabilities, and claims. The DRT governs the insolvency proceedings for individuals and partnership firms, providing the last solution to a debtor’s financial problem while trying to give maximum asset recovery for creditors. Given the provisions of relevant law and the adjudicating authority, you may be guided and take steps accordingly. However, as regards your specific query no.1) will I be declared ex-parte even though I have not received a notice? Response - Generally, a court did not proceed ex parte (in the absence of one party) unless it's proven that the defendant was properly served with a court notice. Even if you didn't receive the notice, the court might still proceed ex parte if they believe the plaintiff has provided sufficient evidence of proper service and notice via WhatsApp is not permissible under law. The burden of proof will be on you to convince the court that notice was not properly served upon you to have the ex parte order set aside. As regards query no.2) can I file for counter claim after the September hearing? Response - Once the ex-parte order is set aside on the ground non-service of notice, you may be allowed to file a counter claim post hearing.