Process of liquidating a company

World over, insolvency procedures help entrepreneurs close down unviable businesses and start up new ones.

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Process of liquidating a company olga belarus dating 26 years old

In such cases it is possible for the productivity of the enterprise to be restored at a low cost and without attendant trauma for the stakeholders by providing more capable managerial talent an opportunity to run it.

In fact recent times have shown possibility of growth by entrepreneurs, some of them Indian, who have become dominant business entities internationally by achieving turnaround of sick firms and revitalization of dormant capacities. The Indian system provides neither an opportunity for speedy and effective rehabilitation nor for an efficient exit.

Occasionally, a doubt is expressed as to whether developing countries should consider incorporation of such legal frameworks.

The Committee feel that the Indian economy is now at a stage where articulation of a comprehensive framework that addresses insolvency issues would make a material difference to the productivity of the economy.

6.2 Corporate insolvency should be addressed in the Company Law.

There is no need of a separate Insolvency Law for the present.

This will provide opportunity to businesses in liquidation to turnaround wherever possible.

Similarly, conversion to liquidation might be appropriate even after a rehabilitation plan has been approved if such a plan was procured by fraud or the plan can no longer be implemented.

The process for rehabilitation, regulated by the Sick Industrial Companies (Special Provisions) Act 1985 through the institutional structure of BIFR is amenable to delays and does not provide a balanced or effective framework for all stakeholders.

The process of liquidation and winding up is costly, inordinately lengthy and results in almost complete erosion of asset value. The Committee noted that a beginning towards reform was made with the enactment of Companies (Second Amendment) Act, 2002, which in addition to significant changes in the restructuring and liquidation provisions provided for the setting up of a new institutional structure in the form of the National Company Law Tribunal (NCLT)/Tribunal and its Appellate Body, the National Company Law Appellate Tribunal (NCLAT).

It should enable a timely and efficient resolution of insolvency and establish a framework for cross border insolvency.

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