NATIONAL COMPANY LAW TRIBUNAL - ECONOMY
News: Go
First moves NCLT, says total dues to creditors at over ₹11k crore
What's in the news?
● Go
First approached the National Company Law Tribunal (NCLT) seeking the admission
of its insolvency plea. It owes creditors ₹11,463 crore, the airline said in
its insolvency filing.
● The
total dues, includes dues to banks, financial institutions, vendors and
aircraft lessors. Of these, the amount owed to financial institutions stood at
₹6,521 crore.
● The
company has defaulted on payments to operational creditors, including ₹1,202
crore to vendors and ₹2,660 crore to aircraft lessors.
Insolvency Procedure:
● When insolvency is
triggered under the IBC, there can be two outcomes: resolution or liquidation.
● All
attempts are made to resolve the insolvency by either coming up with a
restructuring or new ownership plan and if resolution attempts fail, the
company’s assets are liquidated.
● The
Tribunal has 14 days to admit or reject
the application or has to provide a reason if the admission is delayed.
● The
resolution process begins once an application is admitted.
● Once
the NCLT processes Go First’s application, an interim resolution professional
(IRP) will take over and operate Go First. Go First’s board and management will
cooperate fully with the IRP.
● The
amended mandatory deadline for the completion of the resolution process is 330
days.
National Company Law Tribunal:
● It
is a statutory body constituted
under the section 408 of the Companies
Act, 2013.
● It
was established on 1st June, 2016, under the Companies Act, 2013 and is a
successor body of the Company Law Board.
● The
current NCLT traces its formation to the recommendations of the Justice Eradi Committee which was set
up by Central Government in the year 1998
● It
is a quasi-judicial authority
incorporated for dealing with corporate disputes that are of civil nature
arising under the Companies Act.
● It
has power to regulate its own
procedures.
Organization:
● The
NCLT bench is chaired by a Judicial member who is supposed to be a retired or a
serving High Court Judge and a Technical member who must be from the Indian
Corporate Law Service, ICLS Cadre.
Appointment: Central government
appoints all the members.
Term:
● Every
Member shall hold office for a period of
5 years (subject to 65 years of age criteria) from the date of entering
upon office.
● Members
are eligible for re-appointment for
another term of 5 years.
Powers:
● Erstwhile
Company Law Board (which are mostly related to dealing with oppression and
mismanagement).
● Board
for Industrial and Financial Reconstruction (BIFR)(revival of sick companies).
● Powers
related to winding up of companies (which was available only with the High
Courts.
Appeals:
● Decisions
of the tribunal may be appealed to the
National Company Law Appellate Tribunal.
● This
authority was also formed under the Companies Act, 2013, for hearing appeals
against NCLT judgements.