Satisfaction of claims is essential part of any liquidation. According to clause (6) of section 3 of the Insolvency and Bankruptcy Code, 2016, “claim” means—
(a) a right to payment, whether or not such right is reduced to judgment, fixed, disputed, undisputed, legal, equitable, secured or unsecured;
(b) right to remedy for breach of contract under any law for the time being in force, if such breach gives rise to a right to payment, whether or not such right is reduced to judgment, fixed, matured, unmatured, disputed, undisputed, secured or unsecured.
Proof of claim
According to regulation 15 of the Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017, a person, who claims to be a stakeholder, shall prove his claim for debt or dues to him, including interest, if any, as on the liquidation commencement date. These claims may be by financial creditors or operating creditors.
Claim by Operational creditors
According to sub – regulation (1) of regulation 16, A person claiming to be an operational creditor of the corporate person, other than a workman or employee, shall submit proof of claim to the liquidator in person, by post or by electronic means in Form B of Schedule I.
For voluntary winding up, according to sub- regulation (2) of regulation 15, existence of debt due to an operational creditor under this Regulation may be proved on the basis of-
(a) the records available with an information utility; or
(b) other relevant documents which adequately establish the debt, including any of the following –
(i) a contract for the supply of goods or services with corporate person, supported by an invoice demanding payment for the goods and services supplied to the corporate person;
(ii) an order of a court or tribunal that has adjudicated upon the non-payment of a debt, if any; and
(iii) financial accounts of the corporate person.
Claim by Financial creditors
According to sub – regulation (1) of regulation 17, A person claiming to be a financial creditor of the corporate person shall submit proof of claim to the liquidator in electronic means in Form C of Schedule I.
According to sub – regulation (2) of regulation 17, the existence of debt due to the financial creditor may be proved on the basis of-
(a) the records available in an information utility; or
(b) other relevant documents which adequately establish the debt, including any or all of the following –
(i) a financial contract supported by financial statements as evidence of the debt;
(ii) a record evidencing that the amounts committed by the financial creditor to the corporate person under a facility has been drawn by the corporate person;
(iii) financial statements showing that the debt has not been repaid; and
(iv) an order of a court or tribunal that has adjudicated upon the non-payment of a debt, if any.
Claims by workmen and employees
According to sub – regulation (1) of regulation 18, a person claiming to be a workman or an employee of the corporate person shall submit proof of claim to the liquidator in person, by post or by electronic means in Form D of Schedule I. Further, as per regulation 18(2), where there are dues to numerous workmen or employees of the corporate person, an authorized representative may submit one proof of claim for all such dues on their behalf in Form E of Schedule I.
According to sub – regulation (3) of regulation 18, the existence of dues to workmen or employees may be proved by them, individually or collectively, on the basis of-
(a) records available in an information utility; or
(b) other relevant documents which adequately establish the dues, including any or all of the following –
(i) a proof of employment such as contract of employment for the period for which such workman or employee is claiming dues;
(ii) evidence of notice demanding payment of unpaid amount and any documentary or other proof that payment has not been made; and
(iii) an order of a court or tribunal that has adjudicated upon the non-payment of dues, if any.
Sub – regulation (4) of regulation 18 casts a duty on liquidator. The liquidator shall admit the claims of a workman or an employee on the basis of the books of account of the corporate person if such workman or employee has not made a claim.
According to regulation 19, a person, claiming to be an stakeholder other than operational creditor, financial creditor, workmen or employee shall submit proof of claim to the liquidator in person, by post or by electronic means in Form F of Schedule I. The existence of the claim of the stakeholder may be proved on the basis of –
(a) the records available in an information utility; or
(b) other relevant documents which adequately establish the claim, including any or all of the following-
(i) documentary evidence of notice demanding payment of unpaid amount or bank statements of the claimant showing that the claim has not been paid and an affidavit that the documentary evidence and bank statements are true, valid and genuine;
(ii) documentary or electronic evidence of his shareholding; and
(iii) an order of a court, tribunal or other authority that has adjudicated upon the non-payment of a claim, if any.
Security interest of secured creditors
According to regulation 20, a secured creditor may prove existence of a security interest on the basis of-
(a) the records available in an information utility;
(b) certificate of registration of charge issued by the Registrar of Companies;
(c) proof of registration of charge with the Central Registry of Securitisation Asset Reconstruction and Security Interest of India; or
(d) other relevant documents which adequately establish the security interest.
Production of bills of exchange and promissory notes
According to regulation 21, where a person seeks to prove a debt in respect of a bill of exchange, promissory note or other negotiable instrument or security of a like nature for which the corporate person is liable, such bill of exchange, note, instrument or security shall be produced before the liquidator before the claim is admitted.
Substantiation of claims
The liquidator may, according to regulation 22, call for such other evidence or clarification as he deems fit from a claimant for substantiating the whole or part of its claim.
Cost of proof
According to regulation 23(1), a claimant shall bear the cost of proving its claim.
The Costs incurred by the liquidator for verification and determination of a claim shall, according to regulation 23(2), form part of liquidation cost. If a claim or part of the claim is found to be false, the liquidator shall endeavor to recover the costs incurred for verification and determination of claim from such claimant, and shall provide the details of the claimant to the Board.
Determination of quantum of claim
According to regulation 24, where the amount claimed by a claimant is not precise due to any contingency or any other reason, the liquidator shall make the best estimate of the amount of the claim, based on consultation with the claimant and the corporate person and the information available with him.
Debt in foreign currency
According to regulation 25, the claims denominated in foreign currency shall be valued in Indian currency at the official exchange rate as on the liquidation commencement date.
“The official exchange rate” is the reference rate published by the Reserve Bank of India or derived from such reference rates.
According to regulation 26, in the case of rent, interest and such other payments of a periodical nature, a person may claim only for any amounts due and unpaid up to the liquidation commencement date.
Therefore, such creditor cannot claim any further rent or interest from corporate creditor. Theoretically, this seems to be against such claimant but practically this will help them to realize, at least, their earlier claims.
Debt payable at future time
According to regulation 27, a person may prove for a claim whose payment was not yet due on the liquidation commencement date and is entitled to distribution in the same manner as any other stakeholder.
Value of such claim shall be in accordance with the contract of the person with the corporate debtor. In other cases, he is entitled to distribution of the admitted claim reduced as follows-
(a) “X” is the value of the admitted claim;
(b) “r” is the closing yield rate (%) of government securities of the maturity of “n” on the date of distribution as published by the Reserve Bank of India; and
(c) “n” is the period beginning with the date of distribution and ending with the date on which the payment of the debt would otherwise be due, expressed in years and months in a decimalised form.
Mutual credits and set-off
According to regulation 28, where there are mutual dealings between the corporate person and another party, the sums due from one party shall be set off against the sums due from the other to arrive at the net amount payable to the corporate person or to the other party.
Verification of claims
According to regulation 29, the liquidator shall verify the claims submitted within thirty days from the last date for receipt of claims and may either admit or reject the claim. A creditor may appeal to the Adjudicating Authority against the decision of the liquidator.
List of stakeholders
The liquidator shall, as per regulation 29, prepare a list of stakeholders on the basis of proofs of claims submitted and accepted under these Regulations, with-
(a) the amounts of claim admitted, if applicable,
(b) the extent to which the debts or dues are secured or unsecured, if applicable,
(c) the details of the stakeholders, and
(d) the proofs admitted or rejected in part, and the proofs wholly rejected.
The liquidator shall prepare the list of stakeholders within forty-five days from the last date for receipt of claims.
The list of stakeholders, as modified from time to time, shall be-
(a) available for inspection by the persons who submitted proofs of claim;
(b) available for inspection by members, partners, directors and guarantors of the corporate person;
(c) displayed on the website, if any, of the corporate person;
(d) displayed on the website, if any, designated by the Board for this purpose.