Bankruptcy: A UK court has declared fugitive businessman Vijay Mallya bankrupt. This has paved the way for a consortium of Indian banks led by the State Bank of India (SBI) to initiate confiscation of assets of the defunct airline Kingfisher on a global scale to recover its outstanding debt. Know what is the law regarding bankruptcy in the country and what happens after the bankruptcy is declared.
Meaning of bankruptcy
A person is considered insolvent only when he is legally declared insolvent. Like in the case of Vijay Mallya. If a person is indebted to someone else and he is unable to repay the loan due to deteriorating financial condition, then he can apply for bankruptcy in the court. Vijay Mallya had applied to declare himself bankrupt.
declare oneself bankrupt
Bankruptcy is a financial condition. When a person or company is unable to repay or pay back its debts and liabilities, it can declare itself insolvent. According to the law of the land, if a person cannot repay the loan of even Rs 500, then you can file a bankruptcy case against him in the court. However, its process is very complicated.
What Happens After Declaring Bankruptcy
If the person declared insolvent has any property, then the officer appointed by the court will sell it. After this, the proceeds of the sale will be divided among the lenders. The great thing is that after being declared insolvent, the lending institution or person cannot compel the insolvent person to pay the dues.
If you still have money left?
If the bankrupt person has any previous income tax dues, then it will be paid only from the amount left after payment of the creditors. After all the payments, if the money is left, then it is distributed to the central government and the state government.
happened in 2016 Establishment of bankruptcy board
The Insolvency and Bankruptcy Board of India was established on 1 October 2016 to deal with bankruptcy cases in the country. It is a regulatory body, which is empowered to register and supervise insolvency cases.
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