• Description

Description

This is very preferred mode of debt recovery when it comes to companies recovering debts from debtors who are unable to repay and fulfil their obligations due to factors like insolvency which render them incapable to do the same. When it comes to process that involves the company claiming a certain amount of debt from a debtor who has gone insolvent or bankrupt, the company becomes the financial creditor, and the debtor is known as the corporate debtor. Insolvency basically means a financial situation whereby an individual or an entity is unable to fulfil his/her financial responsibilities owing to an excess of liabilities in comparison to assets. A person may be insolvent, but not bankrupt. Bankruptcy means a legal procedure where the Court passes orders with respect to the insolvency position of an entity or an individual, and eventually passes orders for its resolution. In regard to the rules of evidence which may be applicable in such a case, the rules of the Indian Evidence Act 1872 are applicable whereby the evidences and documentary proof of the debt should be direct.