Section 81 in The Insolvency and Bankruptcy Code, 2016

Title: Application for fresh start order.

Description: (1) When an application is filed under section 80 by a debtor, an interim-moratorium shall commence on the date of filing of said application in relation to all the debts and shall cease to have effect on the date of admission or rejection of such application, as the case may be. (2) During the interim-moratorium period,— (i) any legal action or legal proceeding pending in respect of any of his debts shall be deemed to have been stayed; and (ii) no creditor shall initiate any legal action or proceedings in respect of such debt. (3) The application under section 80 shall be in such form and manner and accompanied by such fee, as may be prescribed. (4) The application under sub-section (3) shall contain the following information supported by an affidavit, namely:— (a) a list of all debts owed by the debtor as on the date of the said application along with details relating to the amount of each debt, interest payable thereon and the names of the creditors to whom each debt is owed; (b) the interest payable on the debts and the rate thereof stipulated in the contract; (c) a list of security held in respect of any of the debts; (d) the financial information of the debtor and his immediate family up to two years prior to the date of the application; (e) the particulars of the debtor's personal details, as may be prescribed; (f) the reasons for making the application; (g) the particulars of any legal proceedings which, to the debtor's knowledge has been commenced against him; (h) the confirmation that no previous fresh start order under this Chapter has been made in respect of the qualifying debts of the debtor in the preceding twelve months of the date of the application.

Title: Appointment of resolution professional.

Description: (1) Where an application under section 80 is filed by the debtor through a resolution professional, the Adjudicating Authority shall direct the Board within seven days of the date of receipt of the application and shall seek confirmation from the Board that there are no disciplinary proceedings against the resolution professional who has submitted such application. (2) The Board shall communicate to the Adjudicating Authority in writing either— (a) confirmation of the appointment of the resolution professional who filed an application under sub-section (1); or (b) rejection of the appointment of the resolution professional who filed an application under sub-section (1) and nominate a resolution professional suitable for the fresh start process. (3) Where an application under section 80 is filed by the debtor himself and not through the resolution professional, the Adjudicating Authority shall direct the Board within seven days of the date of the receipt of an application to nominate a resolution professional for the fresh start process. (4) The Board shall nominate a resolution professional within ten days of receiving the direction issued by the Adjudicating Authority under sub-section (3). (5) The Adjudicating Authority shall by order appoint the resolution professional recommended or nominated by the Board under sub-section (2) or sub-section (4), as the case may be. (6) A resolution professional appointed by the Adjudicating Authority under sub-section (5) shall be provided a copy of the application for fresh start.

Title: Examination of application by resolution professional.

Description: (1) The resolution professional shall examine the application made under section 80 within ten days of his appointment, and submit a report to the Adjudicating Authority, either recommending acceptance or rejection of the application. (2) The report referred to in sub-section (1) shall contain the details of the amounts mentioned in the application which in the opinion of the resolution professional are— (a) qualifying debts; and (b) liabilities eligible for discharge under sub-section (3) of section 92. (3) The resolution professional may call for such further information or explanation in connection with the application as may be required from the debtor or any other person who, in the opinion of the resolution professional, may provide such information. (4) The debtor or any other person, as the case may be, shall furnish such information or explanation within seven days of receipt of the request under sub-section (3). (5) The resolution professional shall presume that the debtor is unable to pay his debts at the date of the application if— (a) in his opinion the information supplied in the application indicates that the debtor is unable to pay his debts and he has no reason to believe that the information supplied is incorrect or incomplete; and (b) he has reason to believe that there is no change in the financial circumstances of the debtor since the date of the application enabling the debtor to pay his debts. (6) The resolution professional shall reject the application, if in his opinion— (a) the debtor does not satisfy the conditions specified under section 80; or (b) the debts disclosed in the application by the debtor are not qualifying debts; or (c) the debtor has deliberately made a false representation or omission in the application or with respect to the documents or information submitted. (7) The resolution professional shall record the reasons for recommending the acceptance or rejection of the application in the report to the Adjudicating Authority under sub-section (1) and shall give a copy of the report to the debtor.

Title: Admission or rejection of application by Adjudicating Authority.

Description: (1) The Adjudicating Authority may within fourteen days from the date of submission of the report by the resolution professional, pass an order either admitting or rejecting the application made under sub-section (1) of section 81. (2) The order passed under sub-section (1) accepting the application shall state the amount which has been accepted as qualifying debts by the resolution professional and other amounts eligible for discharge under section 92 for the purposes of the fresh start order. (3) A copy of the order passed by the Adjudicating Authority under sub-section (1) along with a copy of the application shall be provided to the creditors mentioned in the application within seven days of the passing of the order.

Title: Effect of admission of application.

Description: (1) On the date of admission of the application, the moratorium period shall commence in respect of all the debts. (2) During the moratorium period— (a) any pending legal action or legal proceeding in respect of any debt shall be deemed to have been stayed; and (b) subject to the provisions of section 86, the creditors shall not initiate any legal action or proceedings in respect of any debt. (3) During the moratorium period, the debtor shall— (a) not act as a director of any company, or directly or indirectly take part in or be concerned in the promotion, formation or management of a company; (b) not dispose of or alienate any of his assets; (c) inform his business partners that he is undergoing a fresh start process; (d) be required to inform prior to entering into any financial or commercial transaction of such value as may be notified by the Central Government, either individually or jointly, that he is undergoing a fresh start process; (e) disclose the name under which he enters into business transactions, if it is different from the name in the application admitted under section 84; (f) not travel outside India except with the permission of the Adjudicating Authority. (4) The moratorium ceases to have effect at the end of the period of one hundred and eighty days beginning with the date of admission unless the order admitting the application is revoked under sub-section (2) of section 91.

PART 3 INSOLVENCY RESOLUTION AND BANKRUPTCY FOR INDIVIDUALS AND PARTNERSHIP FIRMS CHAPTER 2 FRESH START PROCESS