Sick Company
Suppose the Tribunal declares a Company Registration as a sick company under section 253. In that case, any secured creditor of that Company or the Company itself can apply to the Tribunal to determine the measures they adopted to revive and rehabilitate such a company.
Suggesting scheme for Company’s Revival
Suppose the Company had made a reference before the Tribunal and submitted a scheme for revival and rehabilitation. In that case, the Registrar will abate such reference if the secured creditors represent three-fourths in value of the amount outstanding against financial assistance disbursed to the borrower. The borrowers must take measures to recover their secured debt under section 13 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act of 2002.
Company Registration: Recovering Secured Debts
Also, the Company must not refer to this section if the secured creditors represent three-fourths of the amount. This amount is outstanding against financial assistance disbursed to the borrower. The Company must take measures to recover its secured debt under section 13 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act of 2002.
Financial Assets Acquisition
Suppose any securitization or reconstruction company has acquired the financial assets of the sick Company. In that case, the Company must not make any application without their consent. The sick Company must obtain the consent of the securitization or reconstruction company that has acquired such assets.
Also Read: Private Limited Company Registration
Company Registration: Required Documentation for Revival Application
The following documents must accompany an application for revival:
- Audited Financial Statements of the sick Company of the preceding financial year
- Sick Company must duly authenticate its particulars and documents in the prescribed manner
- Requisite revival processing fee
- Draft Sick Company’s revival and rehabilitation in the prescribed manner
If the Sick Company cannot draft a revival and rehabilitation scheme, then it must file such a declaration along with the revival application. Also, the applicant must submit the revival application to the Tribunal within two months from the date the Tribunal declared the Company as a sick company.
Administrator Appointment
After receiving the application, the Tribunal can, within seven days from the receipt, fix a date for a hearing not later than ninety days from its receipt. They will also appoint an interim administrator. The administrator will convene a meeting of creditors of the Company. The provisions of section 257 will conduct the meeting.
The meeting must not be held not later than forty-five days from receipt of the order of the Tribunal. If provided, the Tribunal can appoint the administrator. The appointment must be based on the particulars and documents furnished with the application and the draft scheme. If the application is filed along with the relevant material, the Company can be revived and rehabilitated from its sick state. Then, the interim administrator can consider what is necessary for the purpose. Hence, he can submit his report to the Tribunal within two months from the order date.
Also Read: Convert Partnership Firm into Limited Liability Partnership
The Tribunal can direct the administrator to take over the Company’s management if the Company does not file any draft scheme and the Board of Directors made the declaration to that effect.
