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Chapter-4

Chapter-4
Restructuring Scheme of Company

23. Restructuring program to be prepared:

(1) Where the Court makes an order to restructure any company pursuant to Sub-section (2) of Section 22, the restructuring manager shall prepare a restructuring scheme of the company in writing.
(2) The scheme prepared pursuant to Sub-section (1) shall contain the following programs:
(a) To capitalize the debt of the company and alter the capital structure ;
(b) To pay the claims of creditors by selling any portion of the assets of the company;
(c) To change the nature of claims of creditors of the company and issue securities for the same;
(d) To get the creditors of the company to participate in capital investment by issuing shares in consideration for their claims;
(e) To amalgamate the company with any other company;
(f) To change the management of the company; or
(g) To do any such other act which the Court considers appropriate to restructure the company.

24. To call meeting of creditors:

(1) The restructuring manager appointed by order of the Court to make restructuring of the company pursuant to Subsection (2) of Section 22 shall give a notice, meeting the requirements set forth in sub-sections (2) and (3) of Section 21, to all creditors to submit their respective claims, along with their respective proofs and evidences, no later than 15 days after the manager has commenced the business, and such notice shall be published in a daily newspaper of national circulation for at least two times; and such notice may also be put on the website.
(2) All creditors who have any kinds of credit claims against the company shall submit to the restructuring manager statements of credit claims with or without security, along with evidence substantiating such claims no later than fifteen days after the issuance of the notice as referred to in Sub-section (1).
(3) No later than fifteen days after the receipt of statements of claims pursuant to Sub-section (2), the restructuring manager shall call a meeting of creditors, by fulfilling the requirements set forth in sub-sections (2) and (3) of Section 21. In calling such meeting, a copy of the restructuring program shall be sent along with that notice.
(4) The restructuring manager shall chair the meeting called pursuant to Sub-section (3).
(5) The meeting of creditors may be conducted and adjourned as per necessity. Provided that such meeting shall not be adjourned in a manner that it exceeds the period of restructuring.
(6) The directors of the company may attend the meeting of creditors and answer the questions raised by the creditors in relation to the business and financial situation of the company.
(7) The meeting of creditors called pursuant to Sub-section (3) shall discuss the details of restructuring program presented by the restructuring manager and adopt a resolution on any of the following matters, subject to Sub-section (7) of Section 21:
(a) To adopt, with or without amendment, the proposal on restructuring submitted by the restructuring manager, or
(b) To immediately liquate the company without accepting the resolution referred to in Clause (a).
(8) Notwithstanding anything contained in Sub-section (7), the secured creditor shall not be entitled to vote.
(9) The restructuring program adopted and approved pursuant to Sub-section (7) or the resolution adopted to reject the program and liquidate the company shall be submitted to the Court for approval; and if the Court issues order approving that resolution, it shall be implemented.

25. Report to be submitted by restructuring manager:

(1) The restructuring manager shall, within the period of restructuring, submit to the Court a report, accompanied by the transactions, assets and financial situation of the company and its restructuring program, if any proposed.
(2) The report referred to in Sub-section (1) shall, where a restructuring program is proposed, state the following matters in relation to such program.
(a) summary and analysis of the proposed program;
(b) Details of effects likely to be caused to the creditors of the company from the implementation of the proposed program;
(c) A comparison between the consideration and effects that would have been available to the creditors if the company had been liquidated immediately and the consideration effects that may be available to the creditors on the implementation of the restructuring program; and
(d) Opinion and description, accompanied by the finding of the restructuring manager that the company would not be insolvent if the restructuring program was implemented.
(3) There shall be no formal form and structure of a restructuring program prepared pursuant to Sub-section (1), except the set forth below:
(a) All details of the program to be implemented by the company in the future and written details of the relevant proposal;
(b) Details of the matter that the creditors of company will get more benefits if the company is not liquidated immediately but restructured and if the program is implemented;
(c) Details of the matter that no portion of the proposed program is illegal or prohibited by the laws in force;
(d) Details that if the program is implemented, the company will be rescued from insolvency or will not become insolvent.
(4) The program prepared pursuant to this Section shall also contain details of payment of expenses incurred during the inquiry period of insolvency proceedings or the restructuring period and of the remuneration of the inquiry officer or the restructuring manager.

26. To make information in the event of failure to submit details of restructuring program:

(1) Where it is not possible to submit the detailsof the restructuring program of the company to the Court within the
restructuring period, the restructuring manager shall make an application, accompanied by the reasons, to the Court.
(2) Where an application is made pursuant to Sub-section (1), the Court may, if it considers to be reasonable, invalidate the order to make restructuring and issue an order to liquidate the company.

27. Claim and objection to approved restructuring program:

(1) A creditor who is not agreed with the proposal of restructuring program approved pursuant to Sub-section (7) of Section 24 may make an application of claim and objection within seven days, setting out the following grounds
and reasons:
(a) The restructuring program approved by a majority in the meeting of creditors is not in the interest of the creditors other than the secured creditors;
(b) A serious irregularity has been committed in calling or conducting the meeting of creditors, and the program approved by that meeting is not in the interest of the creditors other than the secured creditors;
(c) Any false or misleading information has been given or material information has been concealed in relation to the company or its restructuring program.
(2) Where an application referred to in Sub-section (1), the Court shall order the company and the restructuring manager to submit written statements in relation thereto within a period of seven days.
(3) On receipt of written statements referred to in Sub-section (2) or on the expiry ration of the period for the submission of such written statements, the Court shall hear the application referred to in Sub-section (1) and may, if the application is found to be based on grounds, invalidate to make ineffective the resolution on the restructuring program adopted in the meeting of creditors.
(4) If the Court invalidates to make ineffective the resolution adopted in the meeting of creditors and approved pursuant to Sub-section (3), the Court shall issue order to liquidate the company immediately.
(5) Information of the order issued pursuant to Sub-section (3) or (4) shall be given to the concerned company and the restructuring manager.

28. Consequence of approval of restructuring program by Court:

If the Court issues an order to approve the restructuring program adopted by the meeting of creditors pursuant to Sub-section (9) of Section 24, the program shall be binding on all creditors of the company, directors and  shareholders of the company, other than the secured creditors of the company; and the restructuring period shall end on that date.

29. Not to affect secured creditors:

(1) No restructuring program adopted by a meeting of creditors and approved by the Court pursuant to this Chapter
shall, except on the following condition, prevent the secured creditors from executing or otherwise dealing the security:
(a) Where the secured creditor votes in favor of the restructuring program or other wise gives his or her consent that such program will be acceptable to him or her; or
(b) Where the Court orders that that program shall be binding to the secured creditor.
(2) The Court may, if it is satisfied with the following matters, issue order referred to in Clause (b) of Sub-section (1):
(a) Where the secured creditor executes the security that he or she has taken, it may substantially prejudice the achievements to be made from the implementation of the restructuring program;
(b) Where such program adequately protects the right of the secured creditor to the security, and the security.

30. Not to affect the right of owner of any property or of any lessor:

(1) No restructuring program adopted by a meeting of creditors and approved by the Court pursuant to this Chapter shall, except on the following condition, prevent the owner of any property used or possessed or owned by the company or the lessor of such property if it has been leased from executing the right to such property or returning the same:
(a) Where the owner or lessor of such property votes in favor of such program or otherwise gives his or her consent in writing that such program will be acceptable to him or her; or
(b) Where the Court orders that the program shall be binding to the owner or lessor of such property.
(2) The Court may, if it is satisfied with the following matters, issue order referred to in Clause (b) of Sub-section (1):
(a) Where the owner or lessor of such property gets back that property, it may substantially prejudice the achievements to be made from the implementation of the restructuring program;
(b) Where such restructuring program adequately protects that property and the right of the owner or lessor of such property.

31. Restructuring manager is to operate company:

(1) The restructuring manager shall operate the company during the currency of the restructuring period.
(2) In operating the company pursuant to Sub-section (1), the manager may exercise the following powers:
(a) Management and control of the business, properties and transactions of the company;
(b) Termination, sale and disposal of any business or property of the company;
(c) Doing or exercising any such act or power that the company or its officer may do or exercise.
(3) In exercising the powers referred to in Sub-section (2), the restructuring manager shall have power to inspect all books of account, ledgers, records, accounts and documents of the company.
(4) In doing or exercising any act or power set forth in this Section, the restructuring manager shall act in capacity of an agent of the company.
(5) If so sought by the restructuring manager, the director and other officer of the company shall provide any kind of such assistance as may be necessary for the management and control of the company.
(6) No director and officer of the company shall, except with written direction of the restructuring manager, exercise any power or do any act of the company in capacity of the director or officer of the company.
(7) The director of the company shall provide such information about the company and its business, property and transaction to the restructuring manager as sought by the restructuring manager.

32. Power of restructuring manager to borrow loan:

(1)Where, in acting as the manager of the company, the restructuring manager considers any  amount to be necessary to keep on running the company or operate the business and transaction of the company, he or she may borrow loan with or without furnishing the company’s property as security.
(2) The amount of loan borrowed pursuant to Sub-section (1) and terms thereof shall be as set forth in Section 17.

33. Ceiling of remittance of loan of company:

Where as per the agreement of creditors, the restructuring program provides for the remission or alteration in the terms of any loan or any portion of the loan not secured, such remission or alteration may be made in accordance
with that program.

34. Implementation of restructuring program:

(1) The company shall be responsible for implementing the restructuring program adopted by the meeting of creditors and approved by the Court pursuant to this Chapter.
(2) The Court shall designate the restructuring manager for the supervision and management of the implementation of the program referred to in Sub-section (1).

35. Alteration in and amendment to restructuring program:

(1) Where it appears that the restructuring program cannot be implemented wholly or partly at the time of implementation of that program but that program can be implemented if it is altered or amended, the restructuring manager shall call a meeting of creditors in order to alter or amend that program.
(2) Where the meeting called pursuant to Sub-section (1) adopts a resolution altering or amending the program, it shall be submitted to the Court for approval.
(3) Where it is reasonable to approve the program submitted pursuant to Sub-section (2) for the interest of creditors, the Court may order to that effect.
(4) The program approved pursuant to Sub-section (3) shall be implemented as per such alteration or amendment.

36. Termination of restructuring program:

(1) Where the company has already implemented the restructuring program or the Court, on application by the restructuring manager, makes an order to terminate the program because of the company’s failure to implement it, such program shall terminate.
(2) Where the Court issues an order to terminate the restructuring program because of the company’s failure to implement it pursuant to Subsection (1), it shall also issue an order to liquidate such company.

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