Insolvency and Bankruptcy Code, 2016: Declaration of Moratorium and Public Announcement by the Adjudicating Authority

here are the notes on the declaration of moratorium and public announcement by the Adjudicating Authority under the Insolvency and Bankruptcy Code, 2016 (IBC):

  • Section 13 of the IBC provides for the declaration of moratorium by the Adjudicating Authority after admitting an application for initiation of the corporate insolvency resolution process (CIRP).
  • The moratorium is a temporary stay on the enforcement of all claims against the corporate debtor, except for certain specified claims.
  • The moratorium is intended to provide the corporate debtor with a breathing space to reorganize its affairs and to facilitate the CIRP.
  • The moratorium comes into effect from the date of the order of moratorium and continues till the completion of the CIRP.

The following are the specified claims that are not stayed by the moratorium:

  • Wages and salaries of employees up to a maximum of one month
  • Claims of secured creditors to the extent of the security
  • Claims of the Central Government or a State Government for taxes, duties, cess, or fees
  • Claims of employees for contribution to provident fund, gratuity, and other retirement benefits
  • Claims of customers for the supply of essential goods or services

The Adjudicating Authority shall cause a public announcement of the initiation of the CIRP and call for the submission of claims under section 15.

The public announcement shall be made immediately after the appointment of the interim resolution professional.

The public announcement shall contain the following information:

  • The name of the corporate debtor
  • The date of admission of the application for CIRP
  • The name of the interim resolution professional
  • The contact details of the interim resolution professional
  • The details of the CIRP process
  • The deadline for submission of claims

Here are some MCQs on the declaration of moratorium and public announcement:

  1. The moratorium under the IBC is a stay on the enforcement of all claims against the corporate debtor, except for:
    • Wages and salaries of employees up to a maximum of one month
    • Claims of secured creditors to the extent of the security
    • Claims of the Central Government or a State Government for taxes, duties, cess, or fees
    • Claims of customers for the supply of essential goods or services
    • The answer is Wages and salaries of employees up to a maximum of one month.
  2. The public announcement of the initiation of the CIRP shall be made immediately after the appointment of:
    • The liquidator
    • The interim resolution professional
    • The committee of creditors
    • The creditors
    • The answer is The interim resolution professional.
  3. The deadline for submission of claims under the CIRP is:
    • 30 days from the date of the public announcement
    • 60 days from the date of the public announcement
    • 90 days from the date of the public announcement
    • 120 days from the date of the public announcement
    • The answer is 90 days from the date of the public announcement.