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9 unknown facts about insolvency

9 unknown facts about insolvency

What is insolvency?

Insolvency is a state where a company does not have enough assets to cover its debt. Moreover, an insolvent company or an insolvent individual is unable to pay debts as they fall due.

Below are some undiscovered facts about insolvency:-

 Driven or Invoked – The condition of insolvency can be called upon by the company itself or even the creditors.

Homebuyer Creditors – Creditors who do not fall into the category of financial creditors or operational creditors, a classification is introduced for them named as ‘homebuyers’.

Homebuyer rights – If homebuyers are assured returns then they are considered as financial creditors and hence are entitled to invoke insolvency proceedings; government introduced form F to reserve the rights of homebuyers.

Assured Interest – In any case if there is no assured return, but there is a promised interest, the interest of the homebuyer needs to be protected. Here, they aren’t the actual creditors but a financial debt is created.

Control on Resolution – Temporary debt problems is only addressed while insolvency is called upon for which the entire control of the business affairs is taken away from the management by the creditors.

No Penalty for Delay –  If a due date is missed by the homebuyers or in case the creditors have done a delay to claim their amount, the amount can be cleared in 30 days period without paying any penalty.

Filing of the Claim – As per civil law, even if a buyer or a creditor does not file his/her claim, the individual is still entitled of the claim i.e the claim has not been removed even if there is no filing of the claim.

Moratorium Period – Once the insolvency proceedings have started, or there a situation of liquidation, the insolvent firm gets a moratorium period of 270 days in which no proceedings would be implemented.

Interest of all– Every company under insolvency has to disclose its resolution plan and clearly state how it has considered the interest of all stakeholders; this rule is amended to protect the interests of all stakeholders.


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