In a significant move, the Ministry of Corporate Affairs (MCA) has notified that an application for fast track corporate insolvency resolution process may be made in respect of start-ups defined in the notification of the Government of India in the Ministry of Commerce and Industry.
As per a notification issued in July 2017, the Ministry stated that the application for fast track corporate insolvency resolution process may be made in respect of a small company as defined under clause (85) of section 2 of the Companies Act, 2013 and an unlisted company with total assets, as reported in the financial statement of the immediately preceding financial year, not exceeding rupees one crore.
A notification issued by the Ministry last week amended the above notification and stated that “In the said notification, for clause (b), the following clause shall be substituted, namely:- “(b) a Startup (other than the partnership firm) as defined in the notification of the Government of India in the Ministry of Commerce and Industry number G.S.R. 127(E), dated the 19th February, 2019, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), dated the 19th February, 2019 and as amended from time to time; or”.”
A corporate insolvency resolution process carried out in accordance with section 55 of the IBC shall be called a fast-track corporate insolvency resolution process.
1(2) An application for fast track corporate insolvency resolution process may be made in respect of the following corporate debtors, namely; (a) a corporate debtor with assets and income below a level as may be notified by the Central Government; or(b) a corporate debtor with such class of creditors or such amount of debt as may be notified by the Central Government; or(c) such other category of corporate persons as may be notified by the Central Government.
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