The Insolvency and Bankruptcy Code (IBC) of India has introduced a streamlined process for resolving corporate and individual financial distress. One of the essential components of this process is claim filing under IBC. When a company or individual becomes insolvent, creditors need to file claims to recover their dues. The filing of claims is critical for creditors to participate in the insolvency resolution process and ensures that they are considered during the distribution of assets.
This blog provides an informative overview of claim filing under IBC, discussing its significance, the procedure involved, and how personal guarantors come into play. By understanding these processes, creditors and debtors alike can navigate the resolution process more effectively.
What Is Claim Filing Under IBC?
Claim filing under IBC refers to the formal submission of claims by creditors who are owed money by an insolvent corporate debtor or personal guarantor. These claims are filed with the resolution professional (RP) appointed to oversee the insolvency process. The RP is responsible for verifying claims and ensuring that they are taken into account during the resolution or liquidation of the debtor’s assets.
Creditors who fail to file their claims within the stipulated period may lose their right to recover their dues, which makes timely claim filing crucial.
Importance of Claim Filing in the Insolvency Process
For creditors, claim filing under IBC is the first step toward recovering their dues. Without filing a claim, creditors cannot participate in the insolvency process or receive any share of the distribution of assets. The filing of claims also helps the RP assess the total liabilities of the debtor, which is necessary for creating an accurate and fair resolution plan.
In the case of a personal guarantor under IBC, claim filing allows creditors to pursue the guarantor for repayment if the corporate debtor defaults on its obligations. This ensures that creditors have multiple avenues for recovering their dues, enhancing the overall efficiency of the insolvency process.
Steps for Claim Filing Under IBC
The process of claim filing under IBC is designed to be transparent and efficient. Here’s a step-by-step overview of the process:
1. Notice of Insolvency and Appointment of Resolution Professional
Once an insolvency petition is admitted by the National Company Law Tribunal (NCLT), a resolution professional is appointed to oversee the case. The RP is responsible for managing the debtor’s assets and liabilities during the resolution process. A public notice is issued, inviting creditors to submit their claims.
2. Filing the Claim Form
Creditors must submit their claims using specific forms prescribed under the IBC. Financial creditors file their claims using Form C, while operational creditors use Form B. Each form requires creditors to provide details of the debt owed, supporting documents, and other relevant information.
For claims involving a personal guarantor under IBC, creditors must also submit documents related to the guarantee agreement. This allows the RP to verify the validity of the guarantee and include it in the resolution process.
3. Supporting Documentation
Creditors are required to submit supporting documentation along with their claim forms. These documents may include loan agreements, invoices, contracts, and other evidence that demonstrates the existence of the debt. The RP reviews these documents to verify the authenticity of the claim.
In cases involving personal guarantees, creditors must provide the guarantee agreement, proof of default by the corporate debtor, and any communication related to the invocation of the guarantee.
4. Verification by the Resolution Professional
Once claims are submitted, the RP verifies the claims to ensure they are accurate and valid. This process may involve cross-referencing the debtor’s financial records, conducting interviews, and reviewing documentation. Claims that are verified are included in the list of creditors, while invalid or incomplete claims may be rejected.
5. Inclusion in the Resolution Plan
Once all claims have been verified, the RP prepares a list of creditors, outlining their claims and the amount owed to each. This list is used to develop the resolution plan, which details how the debtor’s assets will be distributed among the creditors.
Financial creditors generally have a greater say in approving the resolution plan, as they are typically owed larger amounts. However, all verified creditors are entitled to participate in the distribution of assets, based on the priority of their claims.
Conclusion
Claim filing under IBC is an essential part of the insolvency resolution process, allowing creditors to recover their dues through a structured and transparent process. Whether you are a financial creditor, an operational creditor, or pursuing claims against a personal guarantor under IBC, understanding the claim filing process is key to securing your rights.
For those looking to navigate the complexities of claim filing and insolvency, seeking expert guidance from professionals in the field can make a significant difference. Professional resolution services, such as Ancoraa Resolution, specialize in guiding creditors and debtors through the insolvency process, ensuring that all claims are properly filed and that financial resolution is achieved efficiently.
By ensuring that claims are filed correctly and on time, both creditors and debtors can benefit from a fair and transparent resolution process under the IBC framework.
