Insolvency and Bankruptcy For Operational Creditor

Understanding the Insolvency and Bankruptcy Process for Operational Creditors

Before discussing the role of professional assistance, let’s clarify what the insolvency and bankruptcy process for operational creditors entails:

1. Operational Creditor: An operational creditor is an entity that has provided goods or services to a corporate debtor, resulting in a financial claim.

2. Insolvency Resolution Process (IRP): The IRP is initiated when a corporate debtor defaults on its financial debt obligations. An insolvency professional is appointed as the IRP to manage the resolution process.

3. Committee of Creditors (CoC): The CoC, consisting of financial creditors, plays a central role in evaluating resolution plans and making key decisions.

4. Resolution Plan: Resolution applicants prepare and submit plans to revive the corporate debtor. These plans are evaluated by the CoC, which selects the most viable one.

5. Liquidation: If a resolution plan is not accepted or the IRP period expires without resolution, the company proceeds to liquidation. Liquidation involves the sale of assets to repay creditors.

Importance of Professional Assistance

Why is professional assistance crucial for operational creditors in the insolvency and bankruptcy process?

1. Legal Expertise: The insolvency process involves complex legal provisions. Legal professionals guide operational creditors through the process, ensuring compliance with regulations and protecting their legal rights.

2. Claim Verification: Professionals assist operational creditors in verifying their claims, including the identification of outstanding amounts and due dates.

3. CoC Representation: Professionals may represent operational creditors in the CoC, helping to protect their interests and influence critical decisions.

4. Negotiation Skills: Skilled negotiators can engage with resolution applicants or the corporate debtor to secure favorable terms for the repayment of operational creditors.

5. Resolution Plan Evaluation: Experts assess resolution plans to ensure they are in the best interest of operational creditors.

Part 3: The Insolvency and Bankruptcy Assistance Process for Operational Creditors

The assistance process for operational creditors in insolvency and bankruptcy generally involves the following steps:

1. Claim Verification: Operational creditors verify and submit their claims to the IRP for inclusion in the list of creditors.

2. Legal Consultation: Legal experts provide guidance on the rights and obligations of operational creditors under insolvency laws.

3. CoC Representation: Professionals may represent operational creditors in CoC meetings, making decisions on resolution plans and other matters.

4. Negotiation and Resolution: Negotiations with resolution applicants or the corporate debtor are conducted to secure favorable agreements.

5. Resolution Plan Evaluation: Experts assess resolution plans to ensure they are in the best interest of operational creditors.