Legal Document View

Unlock Advanced Research with PRISMAI

Integrated with over 4 crore judgments and laws — designed for legal practitioners, researchers, students and institutions

- Know your Kanoon - Doc Gen Hub - Counter Argument - Case Predict AI - Talk with IK Doc - ...
Upgrade to Premium
[Cites 0, Cited by 0] [Entire Act]

Union of India - Section

Section 2A in Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016

2A. [ Contributions to liquidation costs. [Inserted by Notification No. IBBI/2019-20/GN/REG047, dated 25.7.2019 (w.e.f. 15.12.2016).]

(1)Where the committee of creditors did not approve a plan under sub-regulations (3) of regulation 39B of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, the liquidator shall call upon the financial creditors, being financial institutions, to contribute the excess of the liquidation costs over the liquid assets of the corporate debtor, as estimated by him, in proportion to the financial debts owed to them by the corporate debtor.Illustration
Sl. No. Financial creditors Amount of debt due to financial creditors(Rs.) Amount to be contributed towards liquidationcost (Rs.)
(1) (2) (3) (4)
1 Financial institution A 40 04
2 Financial institution B 60 06
3 Non-financial institution A 50 00
4 Non-financial institution B 50 00
Total 200 10
Assume that the excess of liquidation costs over liquid assets is Rs.10, as estimated by the liquidator. Financial creditors will be called upon to contribute, as under:
(2)The contributions made under the plan approved under sub-regulation (3) of regulation 39B of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 or contributions made under sub-regulation (1), as the case may be, shall be deposited in a designated escrow account to be opened and maintained in a scheduled bank, within seven days of the passing of the liquidation order.
(3)The amount contributed under sub-regulation (2) shall be repayable with interest at bank rate referred to in section 49 of the Reserve Bank of India Act, 1934 (2 of 1934) as part of liquidation cost.