Section 128 in The Insolvency and Bankruptcy Code, 2016

Title: Effect of bankruptcy order.

Description: (1) On the passing of the bankruptcy order under section 126,— (a) the estate of the bankrupt shall vest in the bankruptcy trustee as provided in section 154; (b) the estate of the bankrupt shall be divided among his creditors; (c) subject to provisions of sub-section (2), a creditor of the bankrupt indebted in respect of any debt claimed as a bankruptcy debt shall not— (i) initiate any action against the property of the bankrupt in respect of such debt; or (ii) commence any suit or other legal proceedings except with the leave of the Adjudicating Authority and on such terms as the Adjudicating Authority may impose. (2) Subject to the provisions of section 123, the bankruptcy order shall not affect the right of any secured creditor to realise or otherwise deal with his security interest in the same manner as he would have been entitled if the bankruptcy order had not been passed: Provided that no secured creditor shall be entitled to any interest in respect of his debt after the bankruptcy commencement date if he does not take any action to realise his security within thirty days from the said date. (3) Where a bankruptcy order under section 126 has been passed against a firm, the order shall operate as if it were a bankruptcy order made against each of the individuals who, on the date of the order, is a partner in the firm. (4) The provisions of sub-section (1) shall not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator.

Title: Statement of financial position.

Description: (1) Where a bankruptcy order is passed on the application for bankruptcy by a creditor under section 123, the bankrupt shall submit his statement of financial position to the bankruptcy trustee within seven days from the bankruptcy commencement date. (2) The statement of financial position shall be submitted in such form and manner as may be prescribed. (3) Where the bankrupt is a firm, its partners on the date of the order shall submit a joint statement of financial position of the firm, and each partner of the firm shall submit a statement of his financial position. (4) The bankruptcy trustee may require the bankrupt or any other person to submit in writing further information explaining or modifying any matter contained in the statement of financial position.

Title: Public notice inviting claims from creditors.

Description: (1) The Adjudicating Authority shall— (a) send notices within ten days of the bankruptcy commencement date, to the creditors mentioned in— (i) the statement of affairs submitted by the bankrupt under section 129; or (ii) the application for bankruptcy submitted by the bankrupt under section 122. (b) issue a public notice inviting claims from creditors. (2) The public notice under clause (b) of sub-section (1) shall include the last date up to which the claims shall be submitted and such other matters and details as may be prescribed and shall be— (a) published in leading newspapers, one in English and another in vernacular having sufficient circulation where the bankrupt resides; (b) affixed on the premises of the Adjudicating Authority; and (c) placed on the website of the Adjudicating Authority. (3) The notice to the creditors referred to under clause (a) of sub-section (1) shall include such matters and details as may be prescribed.

Title: Registration of claims.

Description: (1) The creditors shall register claims with the bankruptcy trustee within seven days of the publication of the public notice, by sending details of the claims to the bankruptcy trustee in such manner as may be prescribed. (2) The creditor, in addition to the details of his claims, shall provide such other information and in such manner as may be prescribed.

Title: Preparation of list of creditors.

Description: The bankruptcy trustee shall, within fourteen days from the bankruptcy commencement date, prepare a list of creditors of the bankrupt on the basis of— (a) the information disclosed by the bankrupt in the application for bankruptcy filed by the bankrupt under section 118 and the statement of affairs filed under section 125; and (b) claims received by the bankruptcy trustee under sub-section (2) of section 130.

PART 3 INSOLVENCY RESOLUTION AND BANKRUPTCY FOR INDIVIDUALS AND PARTNERSHIP FIRMS CHAPTER 4 BANKRUPTCY ORDER FOR INDIVIDUALS AND PARTNERSHIP FIRMS