Services Provided by Chartered Accountant Firm for Insolvency & Bankruptcy
Insolvency and Bankruptcy in India is governed by the Insolvency and Bankruptcy Code (IBC), 2016, which provides a time-bound and structured process for resolution or liquidation of distressed entities. IBC revolutionized India’s approach to resolving financial distress in businesses. Chartered Accountant (CA) firms play a pivotal role in insolvency proceedings offering advisory, compliance, representation, and execution support to corporates, creditors, insolvency professionals, and other stakeholders. Below is a serially numbered and detailed list of services provided by a CA firm for Insolvency and Bankruptcy:
Pre-Insolvency Advisory Services
- Financial Distress Assessment :
- Assessment of financial distress
- Cash flow viability analysis
- Debt restructuring feasibility
- Going concern evaluation
- Alternative Resolution Options :
- Advice on resolution or liquidation options.
- One-time settlement negotiations
- Corporate debt restructuring (CDR)
- Scheme of arrangement advisory
- Early Warning System Implementation :
- Financial ratio monitoring
- Covenant compliance tracking
- Default risk assessment models
Advisory on Insolvency and Bankruptcy Matters
- Evaluation of eligibility for initiating insolvency under Sections 7, 9, or 10 of IBC.
- Evaluation of options like Corporate Insolvency Resolution Process (CIRP), pre-packaged insolvency, or voluntary liquidation.
- Strategic advisory for debt restructuring or out-of-court settlements.
Support for Filing Insolvency Applications
- Advisory and drafting support for filing applications with the National Company Law Tribunal (NCLT) under:
- Section 7 (by Financial Creditor)
- Section 9 (by Operational Creditor)
- Section 10 (by Corporate Debtor)
- Compilation of claim documentation, defaults, and evidence.
- Filing support using NCLT forms and affidavit formats.
Assistance to Insolvency Professionals (IPs)
- Accounting, taxation, and secretarial support to Resolution Professionals (RPs) and Liquidators.
- Maintenance of books of accounts during the CIRP period.
- Support in preparation of Information Memorandum (IM), Resolution Plans, and Asset Sale Reports.
- Assistance in claim verification, asset valuation, and stakeholder management.
Corporate Insolvency Resolution Process (CIRP) Support
- Initiating insolvency proceedings before the National Company Law Tribunal (NCLT)
- Preparation of financial statements, cash flow projections, and business viability reports.
- Assisting in forensic audits and transaction audits (if required).
- Coordination with Committee of Creditors (CoC) and facilitation of compliance reporting.
- Verifying creditor claims and preparing the list of creditors
- Managing the operations of the corporate debtor during the resolution process
- Drafting and vetting of Resolution Plans for submission.
Claim Filing and Verification Support
- Preparation and filing of claims for:
- Financial creditors (Form C)
- Operational creditors (Form B)
- Employees and workmen (Form D/E)
- Advisory on documentation, classification, and claim valuation.
- Representation and follow-up with RP or Liquidator for admission and reconciliation.
Forensic Audit & Transaction Review
- Conducting forensic audits to detect diversion of funds, fraudulent transactions, and related-party irregularities.
- Review of preferential, undervalued, extortionate, and fraudulent transactions under Sections 43 to 66 of IBC.
- Preparation of reports for submission to NCLT and RP.
Support in Liquidation Process
- Advisory and execution support for companies undergoing liquidation.
- Preparation of asset sale reports, statement of affairs, and final accounts.
- Assisting Liquidators in asset realization, stakeholder distributions, and ROC/IBBI filings.
- Tax computation, TDS compliance, and GST closure support during liquidation.
Valuation & Due Diligence Services
- Valuation of business, assets, or shares under IBC norms.
- Support in preparation of Information Memorandum and due diligence reports.
- Independent assessment of buyer’s or bidder’s proposals.
- Coordination with registered valuers and data room management.
Legal & Regulatory Compliance
- Filing of various forms and returns with:
- NCLT
- IBBI
- Registrar of Companies (ROC)
- Ensuring adherence to IBBI (Insolvency Resolution Process for Corporate Persons) Regulations.
- Drafting of notices, affidavits, and compliance reports required during CIRP or liquidation.
Representation Before Authorities
- Representation before:
- NCLT / NCLAT in insolvency proceedings
- IBBI in disciplinary or compliance matters
- Tax authorities regarding tax claims and dues
- Coordination with legal professionals and counsel, wherever necessary.
Support for Resolution Applicants
- Advisory and compliance support to potential Resolution Applicants.
- Financial modelling, viability analysis, and preparation of Resolution Plan.
- Due diligence support and assistance in negotiation with creditors and CoC.
- Tax impact analysis and advisory on acquisition structure.
Taxation Services During Insolvency
- Filing of pending tax returns and ensuring continuity of statutory compliance.
- Advisory on treatment of tax losses, MAT credit, and carry-forward benefits.
- Handling of tax notices and scrutiny assessments during CIRP/liquidation.
- GST input reconciliation and transition management.
Bankruptcy Proceedings for Individuals and Partnerships
- Advisory and filing of applications under Part III of IBC (individual insolvency).
- Preparation of repayment plans and negotiation with creditors.
- Compliance with adjudicating authority processes and regulations.
Support in Group Insolvency and Cross-Border Cases
- Strategic guidance on handling group company insolvency scenarios.
- Advisory on cross-border insolvency under UNCITRAL framework (as evolving under Indian law).
- Coordinating with international professionals for foreign asset tracing and compliance.
Training & Capacity Building
- Conducting seminars and workshops on IBC updates and compliance procedures.
- Internal training for staff, stakeholders, and clients on insolvency-related matters.
- Support in developing SOPs and governance systems during insolvency.
Acting as Insolvency Professionals (IPs)
- Qualified Chartered Accountants can register as Insolvency Professionals (IPs) with ‘IBBI’.
- IPs, are appointed to manage the insolvency resolution or liquidation process.