There are many laws and forums dealing with financial failure and insolvency in India. The current legal and institutional framework does not help in the recovery of defaulted assets and causes strain on the Indian credit system.

Corporate insolvency is the inability of a company to pay its debts. There are different  types of debts for a company. Banks, financial institutions, and NBFCs are some of the creditors. Suppliers of raw materials and capital goods are also included. Corporate insolvency is the process where the assets are categorized, collected and realized. Corporate insolvency or winding up of a company is a term used in India. The definition of insolvency has been included in two laws, the Companies Act, 2013, and the Insolvency and Bankruptcy Code, 2016 (IBC 2016).

 There are 4 types of Corporate Insolvency services

• Administration

The company is unable to pay its suppliers. In the process of administration The company does not have any assets. The company’s directors have to appoint insolvency practitioners to run the business. The authority to run the business is given to insolvency experts.

• Company voluntary arrangement

Voluntary liquidation is when the shareholders give their consent. The company’s operation is no longer required in order for the shareholders’ decision to be taken. The shareholders vote to not run the company at the general meeting.The company ends up shutting down once the shareholders make a decision.The decision is usually not taken by the court.

• Creditors voluntary liquidations

CVL is also known as Creditors’ Voluntary Liquidation. The directors will make a decision in a CVL. A notice is given to shareholders and the company’s debts after this decision is made.

• Compulsory liquidations

The company’s assets are realized and distributed to the company’s creditor in a Compulsory Liquidation process. The consent of the creditor or shareholders is not considered in this form of order, as a petition is put forth to the court to carry out the process. The court has a reason for the company being insolvent.