Claim Verification

Under the Insolvency and Bankruptcy Code (Amendment) Bill, 2019 amends the Insolvency and Bankruptcy Code, 2016. Under the provisions of the amended code relating to claim verification, the interests of creditors are safeguarded against the debtor Companies through the filing of an insolvency petition initiating the Corporate Insolvency Resolution Process (‘CIRP’). The code effects ‘payment default’ as the basis of triggering insolvency resolution procedure and not the inability of the corporate debtor to repay a demand.

CIRP can be initiated by either financial creditors, operational creditors or a corporate debtor. The scheme under the Insolvency and Bankruptcy Code is divided into two phases, namely ‘revival’ and ‘liquidation’. Under Claim verification, creditors apply for CIRP against the corporate debtor through the constitution of a Committee of Creditors (‘COC’) and appointment of a resolution professional. Where no resolution plan is received or the resolution plan submitted by COC is not approved within the specified time, liquidation proceedings are initiated by court. As per the Insolvency and Bankruptcy Board of India (Liquidation Process) (Amendment) Regulations, 2019 (‘Amended Regulations’), where the debtor Company is under the liquidation process, the stakeholders can update their claims if they have submitted the same during CIRP on submission of a formal proof.

Liquidation under the Amended Regulations:

• The liquidator shall obtain or accumulate the claims of creditors within a period of thirty days from the date of the commencement of the liquidation process.
• A financial creditor may submit a claim verification application to the liquidator by providing a record of such claim with an information utility
• Where the information relating to the claim is not recorded in the information utility, the financial creditor may submit the claim in the same manner provided for the submission of claims for the operational creditor.
• An operational creditor may submit a claim to the liquidator in such form and in such manner and along with such supporting documents required to prove the claim as may be specified by the Board.
• A creditor may withdraw or vary his claim under this section within fourteen days of its submission. 

Verification of claims

1. The liquidator shall authenticate/ verify the claims and may accept or reject such a claim verification application within the specified time.
2. The liquidator may need any creditor or the corporate debtor or any other person to produce any other certificate or evidence which he thinks is essential for the purpose of verifying the whole or any part of the claim.

How ASC Helps?

• Claim filing with supporting documents.
• Obtaining Debit notes issued by the corporate debtor.
• Assistance in filing proof of claim before approval of the resolution plan.