An important aspect of the Insolvency and Bankruptcy Code, 2016, that needs to be addressed is whether an individual or a corporate body other than the operational creditor can act on behalf of the operational creditor when authorized to do so. Since the code has far reaching consequences once the process is set in motion, one needs to identify and understand the various checks and balances that must be in place to abide by the rules of the code.
Operational creditors need to meet the criterion of absence of any dispute over the defaulted amount, and to place on record a certificate from the financial institution as defined under the code along with a demand notice as stipulated. The demand notice must be strictly in accordance with the form as prescribed under the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (I&B Rules).
A few instances where the parties have failed to abide by the rules or strict instructions issued by the concerned authorities are outlined below.
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