Insolvency is a state of financial distress where an individual or business can no longer pay its debts on time. A company that has taken large loans may face insolvency when it is unable to pay those loans as business slows down or profits dwindle. Insolvency is of two kinds, cash-flow and balance-sheet insolvency, and can happen in either of the two ways or both at once:
The factors that cause insolvency often include poor cash management, an increase in expenses, miscalculated revenue projections, unexpected costs like lawsuits, or an inability to adapt to a dynamic marketplace. Legal action, including the liquidation of assets, can be taken against the insolvent entity, with bankruptcy being the last resort to pay off the debts.
Stable businesses can reach the brink of insolvency in an alarmingly short time. It is, therefore, crucial to keep an eye out for warning signs, adopt business structures that leave you less exposed, and opt for professional help like insolvency services that can help you prevent it, and even lift your business out of insolvency.
Expert guidance and assistance as soon as you identify the threat of insolvency can help you keep your business afloat and avoid further loss or lawsuits. Insolvency services provide the needed counsel, and in reasonable cases can also help turn the tides for your company.
Insolvency services can help you assemble a plan to reduce company overheads, assist in garnering financial support, create a revival plan, and aid you in insolvency proceedings. They offer advice on the procedure for corporate insolvency services, regulatory advice on the Insolvency and Bankruptcy Code, 2016 (IBC 2016), Restructuring Advice for your business, and advice on the different types of insolvency.
Insolvency services from reputable organisations include the following in their package:
Creditors (financial or operational) can apply to the National Company Law Tribunal for insolvency proceedings in case a company fails to pay its debts to suppliers and creditors. The creditor can then issue a demand notice, after which the Committee of Creditors is formed. A resolution professional must be appointed within seven days of the formation of CoC, who will also help the company devise a resolution plan.
A company can face liquidation if the corporate insolvency resolution plan is not decided upon, or the resolution plan is rejected by the Committee of Creditors or the NCLT.
The debts are then paid in a set order of priority, and lastly, the order for the corporate debtor's dissolution is carried out.
Reaching the verge of insolvency, however, does not have to translate into the end of your venture. Hiring a reliable insolvency service provider can help you trudge these rough waters successfully.
An Insolvency Service provider can help execute complex debt and equity transactions involving investors, special situation funds, NBFCs, etc. for the financially distressed entity, and can advise stakeholders on interim finance, acquisition finance, and navigating bankruptcy.
Acting on behalf of the debtor, it can offer competent leadership in a difficult situation to resolve the outcome. It can undertake restructuring assignments for the business, and provide a detailed rundown on risk analysis and associated financial viability. It also provides Process Advisory services under IBC 2016:
One of the most reputed Insolvency Services in India is Resurgent Resolution Professionals LLP (RRPL), an Insolvency Professional Entity (IPE), duly recognized by IBBI [recognition number (IBBI/IPE/0084)].
Along with the support of Senior Ex-Bankers, RRPL brings with it a team of 100+ professionals comprising CA, CS, ICWA, MBA, advocates, engineers, and sector experts with vast experience and knowledge.
Services Offered by Resurgent Resolution Professionals LLP, an IPE, include:
With its strong network of investors and funds and multifaceted teams of dedicated professionals, RRPL is one of the most preferred choices for Insolvency Services in India.
