PUBLIC ANNOUNCEMENT AND COLLATION OF CLAIMS UNDER INSOLVENCY AND BANKRUPTCY CODE, 2016

The functions of Interim Resolution Professional include making public announcement of Corporate Insolvency Resolution Process of the Corporate Debtor and call for claims from creditors of the Corporate Debtor. On the basis of collation of claims a list of claims is prepared and Committee of Creditors is constituted.

The Supreme Court in Swiss Ribbons¹ has held that Interim Resolution Professional or Resolution Professional has administrative as opposed to quasi-judicial powers in respect of collation of claims.  On the other hand, the Liquidator “determines” the value of claims admitted under Section 40, such determination is a “decision”, which is quasi-judicial in nature, and which can be appealed against to the Adjudicating Authority under Section 42 of the Code.

In S. Rajendran² the Hon’ble NCLAT has held that Interim Resolution Professional or Resolution Professional, as the case may be, has only jurisdiction to “collate” the claim based on evidence and record and not “determine” the claim.

PUBLIC ANNOUNCEMENT

Section 13 (1) (b) of the Code empowers the Adjudicating Authority to cause public announcement to be made and call for claims.

Section 15 of the Code provides that public announcement shall have details of Corporate Debtor; name of authority with which the Corporate Debtor is incorporated or registered; the last date of submission of claim; details of Interim Resolution Professional; penalties for false or misleading claims; and the date on which CIRP will close, which has to be 180 days from insolvency commencement date.

CIRP Regulation 6 provide detailed procedure of issuing of public announcement in respect of   initiation of CIRP of a Corporate Debtor and collation of claims received from creditors.

The public announcement has to be in Form A of CIRP Regulations. The public announcement has to be published in one English and one regional newspaper with wide circulation at the location of the registered office and principal office of the Corporate Debtor and any other location wherein the opinion of the Interim Resolution Professional the Corporate Debtor conducts material business operations. Such publication has to be made on the website of the Corporate Debtor.   Such publication has also to be made on the website, if any, designated by IBBI for that purpose.

The public announcement has also to state from where claim form can be downloaded or obtained.  The public announcement has to offer choice of three Insolvency Professionals identified under Regulation 4A to act as the authorised representative of creditor in a class i.e., allottees of real estate project. The public announcement has also to provide the last date for submission of proof of claim, which is fourteen days from the date of appointment of the Interim Resolution Professional.

The applicant, who has filed application for initiating Corporate Insolvency Resolution Process before the NCLT, has to bear the expenses of the public announcement which may be reimbursed by the Committee of Creditors to the extent it ratifies them.

Under  CIRP Regulation 6A, the Interim Resolution Professional has to  send a communication along with a copy of Public Announcement to all the creditors as per the last available books of accounts of the Corporate Debtor through post or electronic means wherever the information for communication is available. Where it is not possible to send a communication to creditors, the Public Announcement is deemed to be the communicated to such creditors

PROCESS E-MAIL

CIRP Regulation 4C provides that  the Interim Resolution Professional shall open an e-mail account and use it for all correspondences with stakeholders and in the event of his replacement by a Resolution Professional, shall handover the credentials of the e-mail to him. The Resolution Professional shall, in case of his replacement with another resolution professional or a Liquidator, hand over the credentials of the email to the other Resolution Professional or the Liquidator, as the case may be.

SUBMISSION OF CLAIMS

Every creditor has to submit his claim to the Interim Resolution Professional within the last date given in the public announcement in appropriate form mentioned in CIRP Regulation. Such creditors may submit supplementary documents or clarifications in support of the claim before the constitution of the Committee of Creditors. Creditors have to bear the cost of proving their debts.

According to CIRP Regulation 7, an Operational Creditor has to submit his claim in Form B along with proof of debt. An Operational Creditor may prove his debt on the basis of records available with information utility and other relevant documents including a contract for supply of goods and services with the Corporate Debtor; an invoice demanding payment for the goods and services supplied to the Corporate Debtor; or an order of a court or tribunal that has adjudicated upon the non-payment of debt or financial accounts.

According to CIRP Regulation 8, a Financial Creditor has to submit claim in Form C along with proof of debt. A Financial Creditor can prove his claim on the basis of records available with information utility; other relevant documents including a financial contract supported by financial statements as evidence of the debt;  record evidencing that the amounts committed by the Financial Creditor to the Corporate Debtor under a facility has been drawn by the Corporate Debtor;  financial statement showing that the debt has not been paid; or an order of a court or tribunal that has been adjudicated upon the non-payment of a debt.

According to CIRP Regulation 8A, a creditor in a class has to submit claim in Form CA of CIRP Regulations along with proof of debt. A creditor in a class can prove his claim on the basis of the records available with an information utility or other relevant documents including agreement of sale, letter of allotment, receipt of payment made, any other document evidencing existence of debt.   A creditor in a class has to indicate its choice of an Insolvency Professional from amongst the three choices provided by the Interim Resolution Professional in the public announcement to act as its authorised representative.

According to CIRP Regulation 9, a workman or an employee has to submit claim in Form D of CIRP Regulations along with proof by post or electronic means.  If there are dues to numerous workmen or employees of the Corporate Debtor, an authorised representative on behalf of such workmen or employees can submit one claim with proof for all such dues on their behalf in Form E. A workman or an employee can prove his claim on the basis of records available with an information utility or other relevant documents including a proof of employment such as contract of employment for the period for which such workmen or employee is claiming dues, evidence of notice demanding payment of unpaid dues and any documentary or other proof that payment has not been made, or an order of court or tribunal that has adjudicated upon the non-payment of a dues.

According to CIRP Regulation 9A, any other creditor can submit his claim in Form F of CIRP Regulations in person or by electronic means along with proof. Such creditor can prove his claim on the basis of record available in an information utility, other relevant documents sufficient to establish the claim including documentary evidence demanding satisfaction of claim, bank statements of the creditor showing non-satisfaction of claim or an order of court or tribunal that has adjudicated upon the non-satisfaction of claims.

A creditor has to update its claim as and when the claims is satisfied, partly or fully, from any source in any manner, after the insolvency commencement date.

LATE SUBMISSION OF CLAIM

A creditor has to submit proof of claim on or before the last date mentioned in the public announcement. 

A creditor, who fails to submit claim with proof within time stipulated in the public announcement, may submit the claim with proof to the Interim Resolution Professional or the Resolution Professional, as the case may be, on or before the ninetieth day of the insolvency commencement date.

Where creditor is a Financial Creditor under Regulation 8, it will be included in the Committee of Creditors from the date of admission of such claim, such inclusion will not affect the validity of any decision taken by the Committee of Creditors prior to such inclusion.

VERIFICATION OF CLAIM

The Interim Resolution Professional can call for additional evidence from a creditor for substantiating the whole or part of its claim.

Where the amount claimed by a creditor is not precise due to any contingency or other reason, the Interim Resolution Professional has to make the best estimate of the amount of the claim based on the information available with him. The Interim Resolution Professional has to revise the number    of claims admitted, including the estimates of claims as soon as may be practicable, when he comes across additional information warranting such revision.

The claims denominated in foreign currency has to be valued in Indian currency at the official exchange rate as on the insolvency commencement date.  Official exchange rate is the reference   rate published by the Reserve Bank of India or derived from such reference rate.

LIST OF CREDITORS

Under CIRP Regulation 13, the Interim Resolution Professional has to verify every claim as on the insolvency commencement date within seven days from the last date of receipt of the claims. After verification of claims, the Interim Resolution Professional has to prepare the List of Creditors containing names of creditors along with the amount claimed by them, the amount of their claims admitted and the security interest in respect of such claims and update the same.

The List of Creditors has to be available for inspection by the persons who submitted proof of claim and by members, partners, directors, and guarantors of the Corporate Debtor or their authorised representative. The List of Creditors has to be displayed on the website of the Corporate Debtor. The List of Creditors has also to be filed on the electronic platform of IBBI for dissemination on its website. The List of Creditors has also to be filed with the Adjudicating Authority and presented at the first meeting of the Committee of Creditors.

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1. Swiss Ribbons Pvt. Ltd. vs. Union of India; Writ Petition (Civil) No. 99 of 2018
2. Mr. S. Rajendran Resolution Professional of PRC International Hotels Pvt. Ltd. Vs. Jonathan Mouralidarane; Company Appeal (AT) (Insolvency) 1018 of 2019..