Revival and Rehabilitation of Sick Companies

Posted on 13-05-2016        By ADMIN

Revival and Rehabilitation of Sick Companies cs professional corporate restructuring notes The provisions of Chapter XIX ofCompanies Act 2013 inter-alia includes the following aspect to deal with the challenges in revival of Sick Companies. • Provisions of revival and rehabilitation of sick companies to apply to all companies and not only to an "industrial company. • Inability to pay debts is be considered as criteria for determining a sick company. If a company fails to pay debts due to its secured creditor representing 50% or more of outstanding amount of debt within 30 days of demand, any secured creditor may file an application to National Company Law Tribunal(the tribunal) to declare such company as a “sick company”. The company may also file an application to the tribunal to declare it as a sick company on above ground. ? Where the Tribunal is satisfied that a company has become sick company, it shall after considering allthe relevant facts and circumstances of the case, decide, as soon as may be, by an order in writing, whether it is practicable for the company to make the repayment of its debts within a reasonable time. ? On the determination of sickness by the tribunal, the applicant shall make an application within 60 days of determination, for measures to be adopted for revival or rehabilitation. ? Where the Tribunal determines the Company as Sick and where the company has no draft scheme for its revival and rehabilitation, the Tribunal may direct the Interim administrator who shall be appointed by Tribunal from a panel maintained by the Central Govt. ? When the interim administrator submits his report about the possibility of revival, then company administrator is appointed who undertakes the approval process by creditors and submits the same to the tribunal who would sanction the scheme within 60 days

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