Section 235 of The Insolvency and Bankruptcy Code, 2016.
- (1)Notwithstanding anything contained in this Code or any law for the time being in force if, in the course of insolvency resolution process, or liquidation or bankruptcy proceedings, as the case may be, under this Code, the resolution professional, liquidator or bankruptcy trustee, as the case may be, is of the opinion that assets of the corporate debtor or debtor, including a personal guarantor of a corporate debtor, are situated in a country outside India with which reciprocal arrangements have been made under section 234, he may make an application to the Adjudicating Authority that evidence or action relating to such assets is required in connection with such process or proceeding.
- (2)The Adjudicating Authority on receipt of an application under sub-section (1) and, on being satisfied that evidence or action relating to assets under sub-section (1) is required in connection with insolvency resolution process or liquidation or bankruptcy proceeding, may issue a letter of request to a court or an authority of such country competent to deal with such request.
Summary
- If a bankruptcy officer needs evidence or action regarding assets located abroad, they can apply to the Adjudicating Authority, which is the official court or tribunal that decides insolvency cases.
- The bankruptcy officer can be a resolution professional, who is a licensed expert appointed to manage the process, a liquidator, who is an officer appointed to sell off assets, or a bankruptcy trustee, who is a professional appointed to manage a bankrupt person's estate.
- The assets must be in a country with which India has a reciprocal agreement, meaning a mutual arrangement between two nations, as described in Section 234.
- If the Indian tribunal is satisfied, it will issue a formal letter of request to the court or authority of that foreign country.
Practical examples
FAQ
1. Who can apply to the tribunal for a letter of request under Section 235 of the Insolvency and Bankruptcy Code, 2016?
An insolvency resolution professional, a liquidator, or a bankruptcy trustee can apply for a letter of request under Section 235 of the Insolvency and Bankruptcy Code, 2016.
2. Can a letter of request be issued under Section 235 of the Insolvency and Bankruptcy Code, 2016 if there is no reciprocal agreement?
No, under Section 235 of the Insolvency and Bankruptcy Code, 2016, a letter of request can only be sent to countries with which India has reciprocal arrangements made under Section 234.
3. What must the tribunal be satisfied of before issuing a letter of request under Section 235 of the Insolvency and Bankruptcy Code, 2016?
The tribunal must be satisfied that evidence or action relating to the overseas assets of the debtor is genuinely required for the ongoing insolvency, liquidation, or bankruptcy process under Section 235 of the Insolvency and Bankruptcy Code, 2016.
Test yourself
Q1.Under Section 235 of the Insolvency and Bankruptcy Code, 2016, who is authorized to make an application to the Adjudicating Authority for seeking evidence or action regarding overseas assets?
Q2.Under Section 235 of the Insolvency and Bankruptcy Code, 2016, which legal document is issued by the Adjudicating Authority to a foreign court for actions on overseas assets?
Q3.To issue a letter of request under Section 235 of the Insolvency and Bankruptcy Code, 2016, what relation must exist between Section 235 and Section 234?
Q4.Under Section 235 of the Insolvency and Bankruptcy Code, 2016, what kind of proceedings must be ongoing for a letter of request to be applied for?
Q5.Under Section 235 of the Insolvency and Bankruptcy Code, 2016, if an insolvency professional believes assets are located in a foreign country with a reciprocal treaty, what action must they take to obtain evidence or action?