Indian Law: Acts of Insolvency
Generally, a person who is unable to meet his debts or obligations is known as insolvent. Insolvency pertaining to a company refers to a company’s inability to pay off its debts. Further, when one of the creditors files a lawsuit in court and stops the individual actions by creditors, this is known as insolvency proceedings. In a petition involving insolvency, it is important to mention all the acts of insolvency, commissioned by the borrower. Until the act of insolvency is clearly mentioned in the petition, no order of adjudication can be passed. Further, a statement in affidavit is not adequate. It cannot be considered as part of the application.
Indian law: Types of Insolvency
- Administrative receivership: Administrative receivers are appointed by a bank under the terms of a debenture agreement, when a company violates the borrowing terms.
- Bankruptcy of individuals.
- Bankruptcy and winding up of partnerships.
- Company liquidation includes voluntary or compulsory winding up of the company.