chhatramani/Nepal-Legal-Text-Corpus-44laws huggingface dataset:
Insolvency Act 2063

Chapter-5 Liquidation of Company

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Insolvency Act 2063

Chapter-5 Liquidation of Company

Section 42: Report to be submitted by liquidator
1) The liquidator shall prepare a progress report on the proceedings carried out in relation to the company and submit it to the Court and the Office no later than three months after the date of his or her appointment.
2) The report submitted pursuant to Sub-section (1) shall state the following matters, in addition to other matters,
(a) The amount of issued capital of the company, capital that the shareholders have undertaken to subscribe and paid-up capital,
(b) Estimated value of the assets and liabilities of the company,
(c) Opinion of the liquidator in relation to the reason for financial failure of the company
(d) Opinion of the liquidator on the need to further examine or inquire into the promotion, incorporation of the company or the affairs of the company and its directors and shareholders,
(e) Such other necessary matters as the liquidator considers appropriate.

Insolvency Act 2063

Chapter-5 Liquidation of Company

Section 43: To call meeting of creditors
1) The liquidator shall, prior to preparing his or her report pursuant to Section 42 and thereafter from time to time as per necessity, call a meeting of creditors of the company.
2) A meeting of creditors shall be called pursuant to sub-section (1) by fulfilling the requirements set forth in sub-sections (2) and (3) of Section 21.
3) The liquidator shall chair the meeting of creditors.
4) The provisions of Section 24 shall apply mutatis mutandis to the other matters relating to the meeting of creditors.

Insolvency Act 2063

Chapter-5 Liquidation of Company

Section 44: Power to form committee of creditors
1) A meeting of creditors held pursuant to Section 43 may form a committee consisting of a maximum of five creditors in order to assist the liquidator in relation to the liquidator of the company.
2) The scope of work of the committee formed pursuant to sub-section (1), rules of procedures relating to its meeting or other necessary matters shall be as specified by the meeting of creditors at the time of its formation.

Insolvency Act 2063

Chapter-5 Liquidation of Company

Section 45: To give time limit for submission of debt claim
1) The liquidator shall give notice with a time limit of fifteen days to all creditors of the company which has become insolvent to submit their respective debt claims in the prescribed format.
2) The notice given pursuant to sub-section (1) shall be published at least twice in a newspaper of national circulation.
3) The liquidator may reject any claims of the creditors who have not made a claim within the time limit referred to in sub-section (1).
Provided that where any creditor makes an application, accompanied by the reason for failure to submit his or her claim within that time limit, the liquidator may accept such claim if the contents of such application are found reasonable.
Insolvency Act 2063

Chapter-5 Liquidation of Company

Section 46: Power of the Court to make order in relation to liquidator of Company
Notwithstanding anything contained elsewhere in this Chapter, the Court may at any time issue the following order in respect of any company which is undergoing liquidation proceedings:
(a) To suspend or terminate the liquidation of the company,
(b) To require to hand over the assets of the company to the liquidator,
(c) To pay any call mage for payment of instalment,
(d) Where there is a doubt that any person is possessing or using any property of the company, to stop such possession or use or
(e) To arrest any person who causes any hindrance in or obstruction to the performance of functions or duties or the exercise of powers by the liquidators.

Insolvency Act 2063

Chapter-5 Liquidation of Company

Section 47: Cancellation of registration of Company
Any liquidator appointed to liquidate any company pursuant to this Chapter shall, while liquidating the company, cancel the registration of the company by following the procedures determined by this Act or by other laws in force.

Insolvency Act 2063

Chapter-6 Claims of Creditors and Mode of Payment

Section 48: Creditors to submit claims
1) A creditor of the company which has become insolvent shall submit a claim for the loan due and outstanding or payable by the suck company to him or her, in the prescribed format, within the time limit specified by the restructuring manager or liquidator.
2) While submitting a claim pursuant to sub-section (1), the creditor shall also submit the proof and evidence substantiating such claim, if any, where the restructuring manager or liquidator demands such proof and evidence.
3) The restructuring manager or liquidator shall examine the submitted pursuant to sub-section (2) and may accept or reject such claim wholly or partly.
4) Where the restructuring manager or liquidator accepts or rejects the claim wholly or partly pursuant to sub-section (3), the manager or liquidator shall give written information thereof, accompanied by the reasons for such acceptance or rejection, to the creditor submitting the claim no later than seven days.
5) The creditor who is not satisfied with the information received pursuant to sub-section (4) may make an application to the Appellate Court for review no later than fifteen days.
6) Even a foreign creditor who has lent money to the company pursuant to the laws in force may, if he or she has any debt claim against the company, submit a claim pursuant to this Section.

Insolvency Act 2063

Chapter-6 Claims of Creditors and Mode of Payment

Section 49: Claim for interest
Where any company which has become insolvent has borrowed a loan on the condition of paying interest on it according to the agreement entered into at the time of borrowing, such interest may also be included in the claim made pursuant to sub-section (1) of Section 48.
Provided that no interest may be claimed for the period after the date of issue by the Court of an order to liquidate the company or implement the restructuring program of the company.
Insolvency Act 2063

Chapter-6 Claims of Creditors and Mode of Payment

Section 50: Claims on undetermined or contingent liability
1)  Except as set forth in Section 48, any claim on any liability of an undetermined value which has resulted from any loss caused by the company or from any compensation to be paid by the company to anyone as a result of its failure to comply with any contract or for having violated any contract, or from any other action which creates a civil obligation, or any claim on any contingent obligation of the company whose value is yet to be determined but which has resulted from the failure of a debtor to fulfil any obligation for which the company has provided guarantee under any guarantee agreement may be presented pursuant to sub-section (1) of Section 48.
2) Where a claim is received pursuant to sub-section (1), the restructuring manager or liquidator shall either accept or reject such claim pursuant to sub-section (3) of Section 48 and give notice thereof pursuant to sub-section (4) of the said Section.
3) Where such claim is accepted pursuant to sub-section (2), the restructuring manager or liquidator shall also determine the estimated value of such claim.
4) Notwithstanding anything contained in sub-section (3), the restructuring manager or liquidator may make an application to the Court to have the value of such claim determined, and where a petition is so made, the Court shall determine the estimated value of such claim.
5) Any person who is not satisfied with the decision to reject the claim pursuant to sub-section (2) or with the value of such claim determined pursuant to sub-section (3) may make a complaint to the Court within fifteen days from the date of receipt of the notice thereof.

Insolvency Act 2063

Chapter-6 Claims of Creditors and Mode of Payment

Section 51: Immature claims
The restructuring manager or liquidator may make prescribed exemptions from the debt claims relating to immature debts made against the company.

Insolvency Act 2063

Chapter-6 Claims of Creditors and Mode of Payment

Section 52: Claims involving foreign exchange
Any claims made in relation to any debt or other liability in a foreign currency under this Act shall be settled by calculating the value in the Nepali currency according to the according to the exchange rate fixed by the Nepal Rastra Bank for the day on which an application is made to the Court for the liquidation, insolvency of the company on its restructuring.
Insolvency Act 2063

Chapter-6 Claims of Creditors and Mode of Payment

Section 53: Adjustment of debts
1) Where there has been any other transaction between a company which has become insolvent and any creditor who makes a debt claim against the company, the debt or such debt claim or transaction shall be adjusted as follows:
(a) To determine the amount due to be paid by one party to the other party;
(b) To deduct the amount payable by one party to the other party from the amount determined pursuant to Clause (a);
(c) To fix only the amount that remains after making a deduction pursuant to Clause (b) as the claim of debt payable by the company.
2) Notwithstanding anything contained in sub-section (1), any person who has supplied to or obtained a debt from the company when that person has knowledge or had a reasonable reason to have knowledge that the company has become insolvent shall not be entitled to make a claim to have the amount due to be paid to that person by the company deducted from the amount payable by that person to the company.
Explanation:
For the purposes of this Section, the expression “company which has become insolvent” shall mean a company in relation to which an application has been filed in the Court for the restructuring or liquidation of that company.

Insolvency Act 2063

Chapter-6 Claims of Creditors and Mode of Payment

Section 54: Right of secured creditor to make claim
1) A secured creditor may make a debt claim against the company at any time, and the restructuring manager or liquidator may accept or reject that claim pursuant to sub-section (3) of Section 48.
2) The amount to be claimed pursuant to sub-section (1) shall be limited to the difference between the amount received from the property according to its market value and the amount payable by the company to the secured creditor.
3) Where there arises a dispute between the secured creditor and the company which has become insolvent in relation to the difference between the value of the secured property and the amount outstanding and payable pursuant to sub-section (2), a party who is not satisfied with that matter may make an application to the Court may examine the application so made and determine the difference.

Insolvency Act 2063

Chapter-6 Claims of Creditors and Mode of Payment

Section 55: Shareholder’s claim
Where any creditor who is also a shareholder of a company which has become insolvent makes a claim against the company, and where that creditor has not paid any amount due on his or hre share and where the time has already matured to pay such amount or there may arise a situation requiring him or her to pay the same, his or her claim up to the extent of the amount likely to be so paid shall not be accepted.
Insolvency Act 2063

Chapter-6 Claims of Creditors and Mode of Payment

Section 56: Deemed to be creditor if debt is accepted
1) Where a debt claim made by a person making a claim against the company which has become insolvent is accepted pursuant to this Chapter, that person shall acquire the status of creditor.
2) A person who acquires the status of creditor pursuant to sub-section (1) shall acquire the right to participate in a meeting of creditors,  exercise the voting right to the extent of the accepted debt claim and receive payment of the amount of debt under this Act.
Insolvency Act 2063

Chapter-6 Claims of Creditors and Mode of Payment

Section 57: Order of settlement of liabilities
1) While settling the liabilities of a company which is being liquidated under this Act, the liquidator shall make payment of liabilities from the available funds according to the following order of priority:
(a) All expenses associated with the functions discharged by the interim administrator appointed pursuant to sub-section (4) of Section 11 and remuneration,
(b) Other amounts to be settled pursuant to Chapter 2,
(c) All expenses associated with the functions discharged by the inquiry officer appointed pursuant to sub-sections (3) and (4) of Section 10 and remuneration,
(d) All expenses associated with the functions discharged by the restructuring manager appointed pursuant to sub-section (2) of Section 22 and remuneration,
(e) All debts of the company borrowed during the period of investigation of the insolvency proceedings,
(f) All debts of the company borrowed during the period of the restructuring program of the company,
(g) All expenses associated with the functions discharged by the liquidator appointed pursuant to sub-section (1) of Section 37 and remuneration,
(h) Wages and remuneration due and payable to the workers or employees of the company at the time of the issue of the order under this Act to liquidate or restructure the company,
Provided that no director of the company shall be entitled to such amount.
(i) Amounts payable to the workers or employees of the company in consideration of home leave, sick leave, gratuity and employee provident fund, if any, at the time of the issue of the order under this Act to liquidate or restructure the company,
Provided that no director of the company shall be entitled to such amount.
(j) All other amounts in consideration of debt claims accepted by the liquidator.
2) Every liability falling in the order of priority referred to in sub-section (1) shall be treated equally, and all liabilities falling in such order shall be settled fully.
Provided that if such liabilities cannot be settled fully, they shall be settled proportionately.
3) Where any liability of the company is insured, the amount receivable under such insurance contract shall be paid to that person who is entitled to it.
4) Where the liabilities mentioned in sub-section (1), (2), or (3) are settled fully, the surplus shall be used by the liquidator to pay interest payable on debts from the date of the order issued to liquidate or restructure the company to the date of acceptance of the debt claim. The amount remaining after such payment shall be distributed among the preference shareholders, and the remaining amount shall be distributed among the other shareholders proportionately.

Insolvency Act 2063

Chapter-6 Claims of Creditors and Mode of Payment

Section 58: Mode of settling liabilities
While settling the liabilities of the creditors pursuant to this Chapter, the liquidator may do so at one time or at different times.
Insolvency Act 2063

Chapter-7 Voidable Transactions

Section 59: Voidable transaction
1) Where any company has become insolvent, the following transactions shall be void:
(a) Preferential transactions carried on in advance of six months immediately preceding the commencement of the insolvency proceedings or within the period of six months after the commencement of the proceedings,
(b) Preferential transactions carried on with the associated persons of the company in advance of one year immediately preceding the commencement of the insolvency proceedings or within the period of one year after the commencement of the proceedings,
Explanation: For the purposes of Clause s (a) and (b), the expression  “preferential transactions” shall mean any transactions done or entered into with a provision for payment of an amount that exceeds the payment which any creditor of the company other than a secured creditor would have been entitled to get if the creditor had made a claim against the company at the time of its liquidation.
(c) Any under-valued transactions have been carried on in advance of one year immediately preceding the commencement of the insolvency proceedings or within the period of one year after the commencement of the proceedings, and the company has become insolvent as a consequence of such transaction or other under-valued transactions carried on after the commencement of the insolvency proceedings,
Explanation: For the purposes of this Clause, the expression “under-valued transactions” shall mean any transactions in relation to which the company has received a value that is lower than the prevailing market value or has not received any value at all for any consideration given by the company to the other party to the transactions.
(d) All fraudulent transactions carried on in advance of two years immediately preceding the commencement of the insolvency proceedings or within the period of two years after the commencement of the proceedings,
Explanation: For the purposes of this Clause, the expression “fraudulent transactions” shall mean any transactions carried on, in relation to any assets of the company, with an ulterior motive to cheat the creditors of the company or delay making payments to them or prejudice the rights of the creditors.
2) The liquidator shall make an application to the Court to have the transactions referred to in sub-section (1) declared void.
3) While making an application pursuant to Sub-section (2), the liquidator shall prove that the company was insolvent when such transactions were carried on, or the company has become insolvent by reason of such transactions.
4) Where any associated person of the company is found involved in the proceeding carried out in relation to void any voidable transactions, it shall be presumed that the company was insolvent when such transactions were carried on or the company has become insolvent by reason of such transactions.
Insolvency Act 2063

Chapter-7 Voidable Transactions

Section 60: To defend voidable transactions
The associated person may prove the following matters in his or her defence:
(a) That the company was not insolvent when the transactions were carried on,
(b) That he or she has not derived any benefit from the transactions,
(c) That the company was insolvent when any benefit was no reasonable reason to suspect that the company might become insolvent by reason of the transactions.

Insolvency Act 2063

Chapter-7 Voidable Transactions

Section 61: Powers of the Court in relation to voidable transactions
1) Where the Court is satisfied that any transaction is voidable, the Court may issue orders as follows:
(a) To order the concerned person to pay to the liquidator some or all of the amounts paid by the company in connection with such transaction,
(b) To order the concerned person to hand over to the liquidator the asset so transacted or an amount equivalent thereto,
(c) To order that the debt obtained by the company through such transaction or the collateral or guarantee furnished by the company for that debt be fully or partly remitted or released,
(d) To order that any remission or agreement entered into between the company and any other person in consequence of the voidable transaction be void, operative or unenforceable.
2) The Court may also issue any such other additional order any may be required to enforce the order issued pursuant to sub-section (1).

Insolvency Act 2063

Chapter-7 Voidable Transactions

Section 62: Right to claim amount paid in consideration of preferential transaction
Any creditor who pays any amount to the liquidator in relation to any preferential transaction made with the company, according to the order of the Court or for any other reason, may make a claim for that amount as a debt claim against the company in liquidation.

Insolvency Act 2063

Chapter-8 Insolvency Practice, and Regulation and Administration Thereof

Section 63: Prohibition on carrying on insolvency practice without license
1) No person shall operate insolvency practice without obtaining a license from the Office pursuant to this Act.
2) Any person who has not obtained the license pursuant to sub-section (1) shall not be appointed as the inquiry officer, restructuring manager or liquidator in the course of carrying out insolvency proceedings under this Act. Where any person other than a licensee is appointed as the inquiry officer, restructuring manager or liquidator, such appointment shall
ipso facto
be void.
Insolvency Act 2063

Chapter-8 Insolvency Practice, and Regulation and Administration Thereof

Section 64: Application to be made for license
1) A person who is desirous of obtaining a license pursuant to Sub-section (1) of Section 63 shall make an application, along with the prescribed fee, to the Office in the prescribed format.
2) A person who makes an application pursuant to Sub-section (1) shall meet the following conditions:
(a) Have completed the age of thirty-five years;
(b) Being a member of the prescribed professional association;
(c) Having acquired at least a bachelor’s degree in commercial law, commerce, management, accounts or any other prescribed subject from a recognized university;
(d) Having an abode in the State of Nepal;
(e) Being competent to carry on insolvency practice under this Act.
3) On receipt of an application under Sub-section (1), the Office shall, if it considers appropriate to issue a license to carry on the insolvency practice, issue the license in the prescribed format.
4) The license issued pursuant to Sub-section (3) shall be renewed as prescribed.

Insolvency Act 2063

Chapter-8 Insolvency Practice, and Regulation and Administration Thereof

Section 65: Establishment of Insolvency Administration Office
1) After the commencement of this Act, the Government of Nepal shall establish an Insolvency Administration Office by notification in the Nepal Gazette. Pending the establishment of such an Office, the Government of Nepal may designate any of its offices to perform the functions of the Insolvency Administration Office.
2) The Office established pursuant to sub-section (1) shall perform the following functions:
(a) To administer insolvency practice;
(b) To register insolvency practitioners, issue licenses to them, and renew such licenses;
(c) To carry out general supervision of the management of companies which have become insolvent;
(d) To conduct investigations of the code of office required to be observed by insolvency practitioners;
(e) To maintain records of each company which has become insolvent; and
(f) To perform such other functions as prescribed.