Section 13 of IBC : Section 13: Declaration Of Moratorium And Public Announcement

Explanation using Example

Imagine a company, XYZ Pvt. Ltd., is unable to repay its debts. One of its creditors, ABC Bank, decides to initiate an insolvency resolution process under the Insolvency and Bankruptcy Code, 2016. ABC Bank files an application under Section 7 of the Code to the National Company Law Tribunal (NCLT), which is the Adjudicating Authority for corporate persons.

After examining the application, the NCLT finds that XYZ Pvt. Ltd. is indeed unable to pay its debts. Therefore, the NCLT admits the application and immediately takes the following actions in accordance with Section 13 of the Code:

1. The NCLT declares a moratorium, which means that XYZ Pvt. Ltd. is temporarily prohibited fr...

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