Section 11A of IBC : Section 11A: Disposal Of Applications Under Section 54C And Under Section 7 Or Section 9 Or Section 10

Explanation using Example

Imagine a company, XYZ Pvt. Ltd., is facing financial difficulties and a creditor, ABC Bank, files an application under section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate an insolvency process against XYZ Pvt. Ltd. due to non-payment of dues. The application is pending before the Adjudicating Authority (National Company Law Tribunal).

During this period, XYZ Pvt. Ltd. decides to attempt a resolution through pre-packaged insolvency and files an application under section 54C within 10 days of ABC Bank's application. According to Section 11A of the Insolvency and Bankruptcy Code, the Adjudicating Authority is required to first consider the application under section 54C filed by XYZ Pvt. Ltd. before proceeding with the application under section 7 filed by ABC Bank.

This provision ensures that the possibility of a quicker, more consensual resolution through pre-packaged insolvency is explored before the more traditional insolvency process is initiated.