The procedure under the IBC takes shape when a company/borrower fails to clear its debt. In this case, the creditor approaches the National Company Law Tribunal (NCLT) to initiate the ‘insolvency proceedings.’ In simple terms, Insolvency refers to the state of being unable to pay one’s debt.
At first, a ‘demand notice’ under section 8 of the IBC is filed. Once the proceedings are initiated, a minimum of two valuers are appointed by the NCLT to assign a fair value and a liquidation value to the company (defaulter) in light of its financial records and physical examination of its assets.
A ‘fair value’ is assigned based on the total estimated value of assets under the company/defaulter at present. On the other hand,…