We often get to hear about companies going ‘bankrupt.’ This word creates a lot of noise in the financial markets. Moreover, this word has negative connotations of failure or doom, which are not always true. Let us understand the dynamics of the Bankruptcy Software.
What Is Bankruptcy?
For this, we will look at the parent of ‘Bankruptcy’ – called Insolvency.
Insolvency is a situation when someone (an individual or a company) cannot pay what they owe on time. The declaration of such a state is called Bankruptcy.
Theoretically, the ability to file for bankruptcy can benefit an economy by providing creditors with a measure of debt repayment and by giving businesses a second chance to access consumer credit.
What is The Bankruptcy Process In India ?
There is a framework in place, created by the GoI, called The Insolvency and Bankruptcy Act, 2016. This law lays down the provisions for creditors to initiate the filing. The bankruptcy process can be visualized in the figure below. Key takeaways are –
The Appointment Of IP
Insolvency Professionals is Appointed by regulator and Approved by the creditor committee. IP Will take over the functioning of the company IP may also act as the liquidator.
Adjudication authority will declare suspension period during which no action can be taken against the company or its assets. A resolution plan would be prepared and approved by the committee or creditors.
Each creditor shall vote per the voting share assigned. If 75% of creditors approve the resolution plan, then the same needs to be implemented.
Failure to approve a resolution plan within specified days will cause initiation of Liquidation. The debtor can opt for voluntary liquidation via a special resolution
Bankruptcy In India
With the enactment of the bankruptcy act, the lenders are desperate to clean up soured debts from their books. Following this, they started pushing firms into insolvency and seizing their assets. As a result, Indian banks wrote off a record of $39bn of loans in just 18 months through September 2019. This is the world’s worst bad debt pile.
Moreover, a shadow banking crisis led to a funding squeeze, further crushing debt-laden businesses that were critically dependent on rollover financing. According to the latest data by Insolvency and Bankruptcy Board of India (IBBI), the number of new cases admitted to courts has increased by 30.29 percent to 3,312 in the three months until December 2019.
Some Of The Prominent Cases Of Bankrupt Companies In India Are :-
- Cafe Coffee Day – Before jumping off a bridge in an apparent suicide, the founder of India’s biggest coffee chain, Cafe Coffee Day, V.G. Siddhartha, had penned a letter that spoke of pressure from lenders and harassment by tax officials.
- Reliance Communications – The telecom carrier slipped into insolvency this year, while Reliance Naval & Engineering Ltd. faced a cash crunch. The chairman, Anil Ambani, had a close shave with jail time before his elder brother, Mr. Mukesh Ambani, bailed him out.
- Essar Steel India Ltd – After a hard-fought battle, Shashikant & Ravikant Ruia, had to pass on the company to ArcelorMittal. The $5.9 billion takeovers were almost two years long with multiple legal wrangles.
- Jet Airways India Ltd.- Cut-throat price wars and surging costs pushed Jet deeper into the loss. The airline stopped in April and went into bankruptcy two months later as lenders failed to find a buyer.
What Is Bankruptcy Software ?
Bankruptcy software helps law firms and lawyers by providing required legal forms, allowing electronic filing of court forms, maintaining court compliance, and providing bankruptcy case management functionality.
When practicing the bankruptcy act, lawyers have to interact with clients who are at their most vulnerable, and every case is critical. In these types of situations, automation solutions cannot drop the ball on what matters most: making work and life easy for legal professionals. This is when bankruptcy software comes in use.
Some Of The Salient Features Are –
Diligent Notifications – A bankruptcy attorney’s schedule is varied. Being on-the-go is a reality of a lawyer’s daily professional life. For this reason, the best bankruptcy software brings pressing matters to the palm of its users’ hands. An optimized software should deliver reminders to follow up with clients, to attend important meetings and events, and to submit documents before their respective deadlines.
Efficient Client Intake – Those in need of bankruptcy services are likely facing a dire time in their lives, meaning that a lawyer’s efficiency in following up is a defining factor in whether a prospect becomes a client. Because of this, an optimized software should make the client intake process as smooth as possible. Once a prospect fills out the custom intake form, a new contact will be created in the software, and the relevant lawyer should receive a text notification to follow up. By offering this feature, the software optimizes the firm’s first impression on its clients with minimal effort.
Optimal Integrations – The best bankruptcy software should connect to platforms providing bankruptcy-specific automation services to their users. While looking for practice management software, look for options that integrate with platforms, which offer filing and case management functionalities.
Though various software are geared towards making the lives of firms and lawyers easier, only a few possess the key features which truly set them apart. To find the best bankruptcy software, legal professionals should examine the options for the aforementioned features. It guarantees to invest in a platform that provides an optimal mix of comprehensiveness and specificity in automation.
Solvemint provides an Online Software for Corporate Insolvency Resolution Process (CIRP) Management for Insolvency Professionals & Resolution Professionals in India and manages insolvency issues through – Stakeholder Management, Claims and EOI Management, and Status Page, Reporting & Analytics. It comprises a complete suite of software to ease out the process of CIRP.
You can start with a FREE 7-days trial version.
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