World Bank Doing Business Insolvency rating for 2016: 136/189 countries (against 136/189 countries in 2015).

Collecting in India

• DSOinIndiaishighwithpaymentsusuallytakingplacearound75daysonaverage.Latepaymentsarenotregulatedandownershipprotectionmaybedifficulttoenforce.

• Thecourtsystemiscomplexwhilstextensivedelaysandcostsmakelegalactiondifficult.Acceleratedproceedingsarenotavailableforundisputeddebtsandforeigndebtjudgmentswouldbeenforcedwithdifficulty.

• Theinsolvencyframeworkismadeupofseveraloverlappingbodiesoflawsappliedbyconflictingpublicauthorities.Thus,itisextremelydifficulttoseethroughthesystem.

Collection complexity

Complexity relating to

Notable High Very High Severe

Payments

Court proceedings

Insolvency proceedings

NotableSevere

Euler Hermes Collections

CollectionProfileIndia

ContentsGeneral Information........................................................................................................................................3

Availabilityoffinancialinformation................................................................................................................3Maincorporatestructures...............................................................................................................................3Regulatoryenvironment..................................................................................................................................3

Getting Paid........................................................................................................................................................4

DaysSalesOutstanding(DSO).......................................................................................................................4Latepaymentinterest.......................................................................................................................................4Debtcollectioncosts.........................................................................................................................................4Ownershipprotection......................................................................................................................................4Payments.............................................................................................................................................................4

Collecting Overdues........................................................................................................................................5

Amicableaction................................................................................................................................................. 5Legalaction......................................................................................................................................................... 5Alternativestolegalaction..............................................................................................................................6

Handling Insolvent Debtors.......................................................................................................................... 7

Insolvencyproceedings................................................................................................................................... 7

Days Sales Outstanding (DSO): PaymentsinIndiausuallytakeplacearound75daysonaverage.

General information

Availability of financial informationAccessingfinancialinformationinIndiaisverydifficultasmostbusinessesarerunthroughnon-incorporatedSoleProprietorshipandPartnershipmodelswhichdonotrequirecommunicatinganyfinancialinformationtothepublic.Informationprovidedbyincorporatedentitiesisfairlyreliable,otherwiseitisnecessarytorelyonspecializedproviders.EulerHermesallocateseachcompanyagradereflectingitsfinancialhealthandhowitconductsbusiness.EHgradesrepresentacoreofEulerHermes’knowledgeandanalyses,andhelpclientsidentifyandavoidrisk.Dataiscontinuouslymonitoredtoofferthemostup-to-dateinformationtosupportmanagementdecisions.

Main corporate structuresLiabilityforbusinessdebtsisdeterminedbylegalstructures,whichmaybedescribedasfollows:

◾ SoleProprietorshipisavailableforsmallbusinessesmanagedbyanindividualandforwhichnocommercialstructureisnecessary.Inthiscase,theownerisheldliableforallbusinessdebts.Twoormore(uptoteninthebankingbusiness,uptotwentyotherwise)individualsmayalsodecidetoshareownershipandresponsibilitiesthroughPartnerships(undertheIndianPartnershipActof1932),inwhichcasethepartnersmaybejointly,individuallyandunlimitedlyliablefortheactionsoftheotherpartners.LimitedLiabilityPartnerships(LLPs)mayalternativelyofferlimitedliabilitytothepartners(undertheLimitedLiabilityPartnershipActof2008).

◾ PrivateLimitedCompanies(regulatedundertheCompaniesActof1956)areinpracticethemostfavoredlegalentitiesbecausetheyrequirenominimumcapitalfundswhilstthepartners’liabilityislimitedtotheircontribution.PublicLimitedCompaniesareratherusedforlargerstructureswhichcapitalmustbedividedintotradableshares.Intheseentities,theshareholders’liabilityislimitedtothevalueoftheirshares.

◾ ForeignbusinessestendtosettleinIndiathroughJointVentureCompaniesandWhollyOwnedSubsidiaryCompanies(WOS).RepresentativeOfficesmayalsobesetupinordertoconductliaisonfunctionswithoutpursuingcorebusinessactivitiesandincomecreation.Alternatively,BranchOfficesareallowedtoconductbusinessactivitiesundertheForeignExchangeManagementRegulations.

◾ TheCompaniesActof2013wasenactedinAugust2013butisonlypartiallyinplacesothatitseffectsarenotfullyoperationalyet.Nonetheless,itmaybeaddedatthispointthattheActwouldsoonprovideforanewOnePersonCompany(OPC)aswellasaSmallCompanyandaDormantCompany(conductingactivitieswithnoeconomicsignificance).

Regulatory environmentThecourtsysteminIndiaisnotveryefficientbecauseitisoverlyslow.Basedonaquasi-federalstructure,thecountryiscomposedoftwenty-eightStateswhichusuallypossessorshareaHighCourt(twenty-fourintotal)andofseveralhundredsofadministrativedistrictswhicheachpossessaDistrictCourt.Asageneralrule,commercialdisputesmustbebroughtbeforeDistrictCourtswherethecauseofactionaroseorwherethedebtorresides/carriesonbusinessorpersonallyworksforgain,butthequantumofdebtindisputealsomatters.TheDelhiHighCourthasoriginaljurisdictionandisalsocompetenttohearrecoverysuits,howevertheBombayHighCourt(Mumbai)hasnoauthoritytodealwithsuchclaims.Inaddition,variousspecializedcourtsdealspecificallywithspecificdebtrecoveryissues(bankloans,etc.),competitionandanti-trustlitigation,consumerprotection,etc.

3

Getting Paid

Days Sales Outstanding (DSO)PaymentsinIndiausuallytakeplacearound75daysonaverage.Thelocalpaymentcultureisgoodbutlocalpartnersusuallyinsistonobtainingfavorablepaymenttermsof60daysormoreeventhoughonly20%oftransactionsarepaidontime.Thereforeapprovingsuchtermsisnotadvisable.

Late payment interestIndianlawdoesnotregulatelatepaymentsanddoesnotprovideforalegallatepaymentinterestrate.Havingsaidthis,thecourtsgenerallyawardspaymentofinterestontheoverdueamountintheirjudgments,evenifthereisnoagreementrelatedtopaymentofinterestbetweentheparties.Howeverinamicablecollection,asapractice,debtorsdonotpayinterestontheoverdueamounts.

Debt collection costsAsageneralrule,collectioncostsarenotchargedtothedebtorinIndiaandmustberecoveredthroughlegalproceedings.

Ownership protectionThelawentitlesasellertoretainownershipovergoodsuntilitsbuyerhaspaidtheinvoiceinfull,aslongasawrittenagreementhasbeenconcludedbetweentheparties.RetentionofTitle(RoT)provisionsarefairlycommoninsupplycontracts,butitisuncertainwhetherthecourtswouldinpracticerecognizethemostsophisticated‘allmonies’provisionsaimingatretainingownershipdespitetransformationorsaleofthegoodstoathirdparty.

PaymentsThemostcommonpaymentmethodsasfollows:SwiftbanktransfersarebecomingincreasinglypopularinIndiaastheyarefast,secured,andsupportedbyanincreasinglydevelopedbankingnetworkinternationallyanddomestically.Forexporttransactions,transfersshouldnonethelessbeguaranteedthroughanExportCreditInsurance,whichhelpsminimizingtheriskofsuddenorunexpectedcustomerinsolvency.EulerHermes’worldwidenetworkofriskofficesmonitorsthefinancialwell-beingofyourcustomersandgrantsthemaspecificcreditlimituptowhichyoumaytradeandclaimshouldsomethinggowrong.Alternatively,StandbyLettersofCredit(abankguaranteesthedebtor’screditqualityandrepaymentabilities)constitutereliableguarantees.IrrevocableandconfirmedDocumentaryLettersofCredit(adebtorguaranteesthatacertainamountofmoneyismadeavailabletoabeneficiarythroughabankoncecertaintermsspecificallyagreedbythepartieshavebeenmet)mayalsobeconsidered.Suchbankguaranteeshowevertendtobeexpensive,whilstobtainingthemrequirespatience.Asaresult,negotiatingdownpaymentsiscommonandadvisable.post-datedchequesisalsofrequentastheseconstituteamethodofpaymentaswellasadebtrecognitiontitleallowingthesellertoinitiatelegal(andinsolvency)proceedingsagainstthedebtorwhenthechequeremainsunpaid.

Late payment interest: Indianlawdoesnotregulatelatepaymentsanddoesnotprovideforalegallatepaymentinterestrate.

4

Collecting overdues

Amicable actionNegotiatingBecausethejudicialsystemisoverlyslowandcostly,amicablesettlementopportunitiesconstitutethestrongestalternativetoformalproceedings.Beforestartinglegalproceedingsagainstadebtor,assessingitsassetsisessentialasitallowsverifyingwhetherthelatterisstillinactivityandwhetherrecoverychancesareatbest.Inaddition,itisessentialtobeawareofthedebtor’ssolvencystatus:ifinsolvencyproceedingshavebeeninitiated,itindeedoftenbecomesimpossibletoenforceadebt.Inpractice,althoughconciliationandmediationarenoprerequisitestoconductinglegalaction,thecourtsseemtobeincreasinglyinvolvedinhelpingthepartiestoreachanamicablesettlement.Sometimes,thejudgeswouldactuallydraftthetermsofanagreementsandleavethepartiestodecideontheiracceptabilitybeforereferringthecasetoADR.

Legal action

Ordinary proceedingsIftheamicablephasefailsorifthedebtorquestionstheclaim,theoptionofstartinglegalproceedingsremains.Nofast-trackproceedingsareavailableandtheoutcomeofalawsuitishaphazard,buttheprocesswouldnonethelesstakeplaceasfollows.Aclaimmustbefiledwiththecourt,whichthenservesthedebtorwithsummonsiftheclaimisdeemedadmissible.Thedebtoristhengiventhirtydays(sixtydaysiftherespondentisapublicentity)topayorbringadefence.Failuretodosowouldentitletheclaimanttorequestadefaultjudgmentfromthecourt,butinpracticethecourtsareflexiblewiththistimerequirement.Hearingswouldthenbeorganizedandevidencewouldbecross-examinedbeforeajudgmentisrendered.Inaddition,judgesmustgivethebeneficeofthedoubttodefendantswheretheevidenceisquestionable,sothatgoingtocourtwhentheclaimischallengedmaybeextremelyrisky.Courtstypicallyawardremediesintheformofdeclaratorydecisions(astoatitle,arightoralegalstatus),specificperformance,compensatorydamagesorinjunctions.Thecourtswouldneverawardpunitivedamages.

Necessary documentsThefollowingdocumentswouldbenecessary:Invoices,salescontract,purchaseorder,billoflading/airwaybill,anyemail/letterwhereindebtorhasacknowledgedthedebtorpromisedpayment.Furtherthesaiddocumentsarerequiredinoriginalatthetimeofinitiatinglegalactionorlatestatevidencestage.

Time limitationsCommercialclaimsmustbebroughtbeforeIndianCourtswithinthreeyears,startingfromtheinvoiceduedate.Thelimitationperiodmaybeextendedforanadditionalthreeyearsifthedebtoracknowledgesthedebtinwritingorpaysthedebtinpart.

Otherwise,thislimitationisconsideredamatterofsubstantivelawwhichthecourtshavenoauthoritytobypass.Beyondthisperiod,legalactionwillthereforenotbeadmitted.

Precautionary measuresPrecautionarymeasuresmayhelptopreservethedebtor’sinterestspendingafinaldecision.Indeed,thecourtsmayorderinterimmeasuresorinjunctionsaimingatprotectingassets(attachmentorders)orevidence(searchorders).Theclaimantmusthoweverdemonstratethatithasaprimafaciecase,thatthebalanceofconvenienceisinhisfavorandthatorderingsuchmeasureswouldpreventtheoccurrenceofirreparableharm.Same-dayordersmaybeobtainedinemergencysituationsifthecourtsagreetorenderexpartedecisions(inthedebtor’sabsence),buttheclaimantwouldbeaskedtoprovidesecurityoncostsinordertoprotecttherespondentfromirresponsibleaction.

Lodging an appealThedefeatedpartymaylodgeanappealbeforeaHighCourtagainstthedecision(decree)renderedinfirstinstance,withinthirtydaysofnotificationofthecourtdecision.Thecourtwouldthenreviewthejudgmenttakingquestionsoflawandfactintoaccount.DecisionsrenderedinsecondinstancemayalsobeappealedagainstbeforetheSupremeCourtwithinninetydays,butthelattermustgrantaleaveforappealtothiseffectandwillonlyconsiderquestionsoflawofgeneralimportance.DecreesandordersissuedinfirstinstancebyanyHighCourtmaybeappealedinthesamecourtwithinthirtydays.

Enforcing court decisionsEnforcementofdomesticjudgmentsmaycommenceonceajudgmentisfinal(i.e.isnoappealislodgedwithinninetydays).Ifthedebtorfailstosatisfythejudgment,itispossibletorequestthecourttocommendexecutionbywayofanattachmentandsaleofthedebtor’sassets.Actiontoobtainanenforcementordermaybebarredaftertwelveyears.

Collection @ Euler HermesItisalwaysadvisedtoattemptcollectionpriortoanylegalactioninordertomaximizechancesofsuccessfulrecoveryandavoidlegalcostsanddelays.Ourkeyprincipleistocollectincloseproximitytothedebtor,usingaseriesofletters,emailsandphonecallsinthelocaldebtorlanguage.OurWorldCollectionNetworkofEulerHermesofficesandExternalProvidersareexpertsinprofessionaltradedebtcollectionandnegotiation,ensuringpositiveoutcomeswhilstretainingimportantclientrelationships.EulerHermescanhandlethecompletecollectionsprocessfromamicable,pre-legalactionthroughtojudgmentandenforcement.

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How long could legal action take?ThedurationoflegalproceedingsinIndiawouldvary,dependingonthetypeoflegalproceedingsandthecourtsbeforewhichlegalactionisinitiated.Nonetheless,itwouldbefairlyreasonabletosaythatlegalactioncouldrequirethreetofouryearsonaverage.Difficultenforcementconditionsinthemostcomplexcasescoulddoublethisduration.ThecourtsinIndiadonotdifferentiatebetweendomesticandInternationallitigationproceedings,thereforenospecificdelaysoughttobeexpectedinthisregard.

How much could this cost?Thewinningpartymayobtainfromthecourtthatpartofthecostsdeemednecessarytodefendtheclaimbepaidbythedefeatedparty.Inpractice,thecourtshavehoweverimposedsignificantlimitationstothebenefitofthelatter.Significantcourtfeesmustbepaidwhilstinitiatingarecoverysuitagainstadebtor.ThefeesmayvaryimportantlyfromonStatetoanothersince,intheabsenceofuniformregulation,thesearenotalwayscapped.Thecostsofproceedingsotherwiseincludethelawyer’sfees,thefeesofprocessserver,thebailiff’sfees,publicationcostsandothermiscellaneousexpenses.Asfarasattorneyfeesareconcerned,conditionalarrangementsandcontingencyarrangementswherebylegalfeesarenotpaidupfrontbutratherconsistofapercentageoftheawardeddamages(i.e.‘no-win-no-fee’)areprohibitedbylaw.

Alternatives to legal action

Alternative Dispute Resolution methods (ADR)Giventhedifficultytoobtaincourtdecisionsthroughtheordinarylegalprocess,AlternativeDisputeResolutionmethodsmayproveveryeffective.TheArbitrationandConciliationAct1996isbasedontheUNCITRALModelLawonInternationalCommercialArbitrationof1985andwouldallowthepartiestosolvetheirdisputebyeitherreachingavoluntarycompromise(conciliation)orhavingthedisputedecidedbyaneutralthird-partywhosedecisionisbindingontheparties(arbitration).Theseproceedingsalsobringconfidentialitytothedisputesettlementproceedingsandmaythusconstituteaseriousmeansofprotectingtradeorcommercialsecrets.

Foreign forumsEventhoughrecognitionandenforcementmaybecomplicated(seebelow),foreigntradersmayalsoescapedomesticcourtsbysubjectingbusinessdisputestoaforeignforum(i.e.underaforeignlaworbeforeaforeigncourt).IndiancourtsindeedtendtorespectforeignjurisdictionclausesprovidedthatthereisnocontradictionwithIndianregulationsorpublicpolicy,andthataforeignlawdoesnotaimatescapingIndiantaxlaw.Ifaforeignlawistobeapplied,IndiancourtswouldnonethelessapplyIndianproceduralrulesaswellasIndianrulesofevidence.Itishoweveressentialthattheagreementbecharacterizedbyaninternationalconnection(forexample,onepartyhaselecteddomicileinanothercountry,ortheplaceofexecutionislocatedabroad),and

thatajurisdictionclauseisdraftedtothiseffectbyaspecialist.Asfarasarbitration,isconcerned,domesticproceedingsconductedundertheArbitrationandConciliationActwouldpreventthepartiesfromapplyingaforeignlawtothedispute.Foreignlawswouldhoweverbeapplicableininternationalarbitrationproceedings.

Enforcing foreign awardsIndiaisapartytotheHagueConventiononForeignJudgmentsinCivilandCommercialMatterssince2006butenforcingforeignawardsinthecountrymaybealengthy,costlyandhaphazardprocess.WhentheforeigndecisionwasissuedinacountrysignatorytoareciprocalenforcementagreementwithIndia,thedecisionisdeemedenforceablebyDistrictCourtsasifithadbeenissuedbyanIndiancourt(Section44AoftheCodeofCivilProceduresof1908).Thecourtwouldnonethelessverify,amongstotherdetails,whethertheissuingcourthadjurisdictiontodecidewiththeclaiminthefirstplaceandwhetherthedecisioniscompatiblewithIndianandinternationallaw.Whennoreciprocityagreementapplies,enforcementrequirescommencinganewlegalactionbeforetheDistrictCourtofthedefendant’slocation(Section13CPC),whichwouldalsoverifythesepoints.IndiaisasignatorytotheNewYorkConventionontheRecognitionandEnforcementofForeignArbitralAwardsof1958,thereforeitsdomesticcourtsoughttorecognizeandenforceawardsrenderedthroughinternationalarbitrationproceedings.

Litigation @ Euler HermesShouldlegalactionbenecessaryEulerHermescanprovidesupportthroughoutthelegalprocessfromjudgmenttoenforcementviaourWorldCollectionNetworkofEulerHermesofficesandExternalProviders.Legalactioncanbeoftenbecomplicatedandexpensive,youwillbeinformedofallcostspriortoanyactionandadvisedonwhichrouteisbesttotake.

6

Handling insolvent debtors

Adebtorisdeemedinsolventifitisunlikelytomakeitsnetworthexceedtheaccumulatedlosseswhilstmeetingitsfinancialobligationswithinareasonableperiodoftime.Inaddition,acompanyisdeemed‘sick’whenlossesoverseveralyearshavereducedsignificantlyitsaveragenetvalueorwhenithasfailedtorepaydebtsonaregularbasis.UpuntilMay2015,theinsolvencyframeworkinIndiawasmadeupofseveralbodiesoflawswhoseoverlappingprovisionswereappliedbyconflictingpublicauthorities.Thus,itwasextremelydifficulttoseethroughthesystem.Havingsaidthis,itshouldbeemphasizedthatvariouseffortshavebeenmadetodevelopacompanyrescuecultureinsofarastheCompaniesActof1956andtheSickIndustrialCompaniesActof1985(SICA)bothprovideforsharecapitalandfinancialreorganizationmechanisms.TheCompaniesActof2013wasrecentlyenactedandoughttoreplacetheCompaniesActof1956.Inafurtherprogression,veryrecentlythenewbankruptcyandinsolvencybillwaspassedandwillbetheonlycodeforthebankruptcyandinsolvencyproceedings,andwillsimplifythepreviousoverlappingprovisioninvariousbodies.Thiswillleadtoinsolvenciesandbankruptcyproceedingsbeingconcludedin6months(butcanbeextendedfor3months).However,itisnotimplementedyet.Forthis,therequiredauthoritybodies,mechanismandprofessionalexpertiseareyettobeputinplace,soitseffectsshallberelfectedinthecoming2-3years.Inaddition,theSecuritisationandReconstructionofFinancialAssetsandEnforcementofSecurityInterestActof2002(SARFAESI)dealswithassetsheldbybanksandfinancialinstitutions.CompaniesmayfinallyrestructuretheirdebtundertheCorporateDebtRestructuringSchemeundertheauspicesoftheReserveBankofIndia(RBI).Thelawimposesnodebtwrite-offlimitation.

Insolvency proceedingsOut-of-Court proceedingsOut-of-courtsettlementmaybeconsideredastheCodeofCivilProcedureandallowspartiestosettlethematterprovidedthatajudgepassesaconsentdecree.

Restructuring the debtReorganizationmaybeconductedthroughtwodistinctmechanismswhichmaybedescribedasfollows.First,theCompaniesActof1956entitlesbothadebtoranditscreditorstosubmitareorganizationschemetotheHighCourt,whichthenorganizesameetingofcreditors.Ifthedebtor’sproposalisvalidatedby50%ofthepresentcreditorsowingthree-quartersoftheclaim,thecourtmaydecidetoapproveit.Inthiscase,thedebtortogetherwiththeabsentanddissentingcreditorsareboundbytheapprovedschemebutaCommitteeofCreditorsmaybesetuptoassisttheliquidatorinensuringthattheschemeisrespected.TheHighCourtmayalternativelyorderthewindingupofthedebtorcompany.Second,SICAhascreatedanobligationforthedirectorsofaninsolventcompanytofileforinsolvencywiththeBoardforIndustrialandFinancial

Reconstruction(BIFR),withinsixtydaysofthecompanybeingunabletopayitsdebts.ThecompanydirectorsmaycontinuebusinesswhilsttheBIFRassessesthesituationwiththevariousstakeholders(whichcannotactasaCommittee).Theboardisthenresponsiblefordecidingwhetherthedebtorcompanyisviable(andshouldberestructured)orwhetheritshouldbeconsideredinsolvent(andbewoundup).BoththeHighCourtandtheBIFRmayorderamoratoriumtoprotectdebtorsfromcreditorsduringthereorganizationphase.

Winding up proceedingsLiquidation(windingup)proceedingsmayotherwisebeinitiatedupondemandofeitherthedebtororthecreditor,onthegroundthatthedebtorisunabletopayitsdebts.Priortoinitiatingwindingupproceedings,awindingupnoticemustfirstbeissuedtogivethedebtoramoratoriumperiodtomakethepayment.Furtherproceedingswouldotherwisebeinitiatedbefore

7

Insolvency @ Euler HermesEulerHermesworkcloselywithdebtors,creditorsandlawyerstoprovidesupportduringinsolvencyandrestructuringprocesses.Withmanyoptionsavailablewhenitcomestoinsolvencyactionwecanofferadviceonwhichoptionissuitable.

theHighCourtofthestatewheretheregisteredofficeaddressofthedebtorislocated.WiththenewbankruptcyandinsolvencybilltheseproceedingswouldtakeplacebeforeanAdjucatingAuthority(CompanylawboardorDebtrecoverytribunal).Aliquidatorisappointedandimposesaspecifictimeperiodduringwhichthecreditorsmustfiletheirclaims,andestablishesalistofprioritydebts.Theliquidatorisresponsibleforsellingthedebtor’sassetanddistributestheproceedstothevariouscreditors.Amoratoriumdurationforvariousstepsisputinplaceduringtheproceedingsinordertoprotectthecompanyfromparallelenforcementactions.Arestructuring/paymentresolutionproposal(ifany)hastobeagreedby75%ofthecreditors.Itshouldbenotedthat,inpractice,windingupproceedingsareconsideredtobemoreeffectivethandebtrestructurationmechanismsintermsofrecoverybecausethedebtorsgenerallyseekanOut-of-Courtsettlementofthedebtinordertoavoidliquidation.

Priority rulesPriorityrulesnormallyapplywhilstdistributingtheproceedstothecreditors.Thesearecomplexandvarydependingonthelegalframeworkconsidered.UndertheCompaniesActof1956,freshcashprovidedtothedebtorduringinsolvencyproceedingsisnotgivenparticularpriorityoverotherdebts,howevertheclaimsofsecuredcreditorsandemployeesaswellasstatutoryliabilitiessuchastaxauthoritiesdohavepriority.SICASanctionedSchemesarealternativelypreparedbyeitherthesickcompanyorthroughanoperatingagencyappointedbyBIFR(BoardforIndustrialandFinancialReconstructions).DistributionwouldthenbemadeinaccordancewiththeprovisionsoftheBIFR-sanctionedagreement.Inthenewbankruptcyandinsolvencycode,higherpriorityisgiventotheduestowardsworkmen’scompensatinandsecuredcreditors,followedbyunsecuredandgovernmentdues.

Cancellation of suspect transactions (clawback)Receiversinreorganizationandliquidationproceedingsarebothentitledtoreviewandapplyforcancellationofanysuspecttransactionconductedbythedebtorduringasuspectperiodrangingfromthreemonthstofiveyearspriortothebeginningoftheinsolvencyproceedings.Typically,transactionsfavoringonecreditorovertheothersorreducingtheestate’svalue(etc.)couldthusbevoid.

How long could insolvency proceedings take?Theinsolvencyproceedingsvarydependingontheapplicableprovisionsandchoceoflegalrecourse.Generally,insolvenciesareconcludedin3-5years,butitmaytakeevenlongerdependingonthecasetocasecomplexitites.Withtheenactmentofthenewbankruptcyandinsolvencycode,thetotaldurationfortheconcludinginsolvencyproceedingswillbe180day,whichmaybeextendedfor90moredays.

Necessary documentsInvoices,salescontract,purchaseorder,billoflading/airwaybill,anyemail/letterwhereindebtorhasacknowledgedthedebtorpromisedpayment.Furtherthecopyofsaiddocumentsareacceptable,butoriginalmayberequiredinsomecases.

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