A writ petition has been filed in the Bombay High Court challenging the constitutional validity of the Insolvency & Bankruptcy Code, more particularly, Section 7 of the Code.
Section 7 allows the initiation of a corporate insolvency resolution process by a financial creditor, that could be any person to whom a debt is owed. This is a departure from the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), which provides qualifications for initiation of proceedings.
Similar to winding up proceedings, here also, once the process is initiated by the creditor, a Resolution Professional is appointed by the NCLT to take over the management of the corporate borrower and operat…
Read the full article at: http://barandbench.com/bombay-hc-insolvency-bankruptcy-code/