In the year 2018, Videocon, an Indian multinational business, ceased operations and declared corporate bankruptcy. The NCLT (National Company Law Tribunal) authorized Vedanta Groups, the parent company of Twin Star, to buy Videocon for Rs. 2,962 Crores in June 2021.

For a creditor to initiate a Corporate Insolvency Resolution Proceeding (CIRP) against a debtor, the debt owed to them should be “Financial Debt” under Section 5(8) of the Insolvency and Bankruptcy Code (IBC), 2016.

Liquidation brings about the formal end to a company, in case it has been insolvent or impotent to pay its responsibilities. It is a procedure of terminating the affairs of a company by the virtue of realizing the assets, discharging the liabilities, and distributing the surplus, among the shareholders. For such a proceeding to take place, an administrative person namely, a liquidator has to be appointed by the board of directors. Ultimately, the name of the company is stricken out from the register of companies.

INTRODUCTION

Earlier the courts have to be approached for insolvency and winding up process under the Companies Act. Application had to be filed before the Company Law Board or Court for insolvent bank to wind up. Later on came the RDBD and SARFAESI Courts for winding up. In order to avoid such overlapping of laws, Insolvency and Bankruptcy Code, 2016 (IBC) came into existence. This Code combines collections of existing laws which are amended in order to form a single Code.  

A Resolution professional means an Insolvency professional who is registered with the Insolvency and Bankruptcy Board of India. They are appointed to conduct the corporate insolvency resolution process and are vested with the management of the affairs of the corporate debtor. They are enrolled with an Insolvency Agency and are involved in the resolution and dissolution process of an insolvent individuals, companies, LLPs or partnerships.

Introduction