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

Chapter-3 Inquiry into Insolvency Proceedings

Section 20A: Breach of contract
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Notwithstanding anything contained in the prevailing law, where a court orders the initiation of a civil action in respect of a company pursuant to sub-section (2) of section 10, the company or the liquidator may, with the permission of the court, dissolve such contract if it is found that the liability of the company may be unduly increased in continuation of any contract relating to the supply of goods or services entered into by the company in the past from the date of such order.
1 Amendment to the Prevention of Money Laundering and Promotion of Business Environment Act, 2080.

Insolvency Act 2063

Chapter-3 Inquiry into Insolvency Proceedings

Section 21:  Meeting of creditors to be convened
1) The inquiry officer shall, before submitting his or her report to the Court, convene a meeting of the creditors of the Company to discuss his or her report in order to know the views of the creditors on the future plan of the Company which has become insolvent, and every person who is identified as a creditor of the Company from the accounts and other records of the Company shall also be invited to attend such meeting.
2) A notice indicating the venue, date, time and agenda of the meeting shall be given to every person identified as a creditor under sub-section (1) in advance of at least seven days, and the notice shall also be published at least two times in a daily newspaper of national circulation.
3) While giving a notice pursuant to sub-section (2), it may be given by a letter, telex, telefax, e-mail or any other means of electronic communication which can be recorded.
4) Where any person other than a person mentioned in sub-section (1) makes any claim against the Company as a creditor, the inquiry official may ask that person to submit evidence thereof and a detailed description of the claim against the Company.
5) The inquiry official may dismiss the claim of a person who fails to submit the evidence or description referred to in sub-section (4), and where the claim is so dismissed, such person shall not be entitled to attend the meeting of creditors. Provided that a person shall not be considered to be a creditor of the Company by the reason only that the person has taken part in the meeting of creditors.
6) The inquiry official shall chair the meeting of creditors.
7) The meeting of creditors shall make a decision by majority. In the event of a tie, a decision shall be made by lot. The inquiry official may ascertain the voting right of creditors in proportion to the claim made on the debts due to be paid immediately by or payable by the Company and specify the mode of voting.
8) The directors of the Company or the officers invited by the inquiry official may participate in the meeting of creditors. Provided that they are not entitled to take part in voting.
9) Except where any concerned person makes an application to the Court showing the reasons and grounds that injustice has been done to that person, no question may be raised in any court about the meeting of creditors and the business executed by it.
Insolvency Act 2063

Chapter-3 Inquiry into Insolvency Proceedings

Section 22:  Power to Court to make order
1) The Court may, if it considers appropriate, make any of the following orders within seven days after the receipt of the report submitted by the inquiry officer pursuant to sub-section (1) of Section 18, the resolution adopted by the meeting of creditors or the restructuring scheme submitted by the Company or any other resolution adopted:
(a) To immediately liquidate the Company;
(b) To implement the restructuring program of the Company;
(c) In the event of the possibility of improvement without liquidating the Company immediately, to stay until the period specified by the Court;
(d) To extend the period of insolvency proceedings as specified by the Court for the submission of report by making further inquiry; or
(e) To quash the order issued pursuant to sub-section (2) of Section 10.
2) Where an order is made under Sub-section (1) to liquidate the Company or implement the restructuring scheme, the Court shall make an order to appoint an insolvency practitioner as the liquidator of the Company or to operate the restructuring scheme of the Company and implement the liquidation or restructuring scheme of the Company. The person so appointed shall perform such act within such period as specified by the Court at the time of his or her appointment.
3) Notwithstanding anything contained elsewhere in this Section, where the inquiry officer makes an application for any of the following orders as per the understanding reached between any company which has become insolvent or of which situation requires its immediate liquidation or showing the reason that even though a company has become insolvent, there is a situation that the proposal on the restructuring scheme prepared for the improvement of the Company can be considered in a meeting of creditors to be convened pursuant to Chapter-4, the Court may, if it considers so appropriate, make such order:
(a) To end the inquiry into insolvency proceedings before the expiry of that period;
(b) To waive the requirement to convene the meeting of creditors by the inquiry official; or
(c) To liquidate the Company or carry out the restructuring of the Company.
4) Where the Court considers it reasonable to make any order other than that mentioned in sub-section (1) or (3), it may also make such order.
Insolvency Act 2063

Chapter-4 Restructuring Scheme of Company

Section 23: Restructuring program to be prepared
1) Where the Court makes an order to restructure any company pursuant to sub-section (2) of Section 22, the restructuring manager shall prepare a restructuring scheme of the company in writing.
2) The scheme prepared pursuant to sub-section (1) shall contain the following programs:
(a) To capitalize the debt of the company and alter the capital structure,
(b) To pay the claims of creditors by selling any portion of the assets of the company,
(c) To change the nature of claims of creditors of the company and issue securities for the same,
(d) To get the creditors of the company to participate in capital investment by issuing shares in consideration for their claims,
(e) To amalgamate the company with any other company,
(f) To change the management of the company, or
(g) To do any such other act which the Court considers appropriate to restructure the company.
Insolvency Act 2063

Chapter-4 Restructuring Scheme of Company

Section 24: To call meeting of creditors
1) The restructuring manager appointed by order of the Court to make restructuring of the company pursuant to sub-section (2) of Section 22 shall give notice, meeting the requirements set forth in sub-sections (2) and (3) of Section 21, to all creditors to submit their respective claims, along with their respective proofs and evidence, no later than 15 days after the manager has commenced the business, and such notice shall be published in a daily newspaper of national circulation for at least two times, and such notice may also be put on the website.
2) All creditors who have any kinds of credit claims against the company shall submit to the restructuring manager statements of credit claims with or without security, along with evidence substantiating such claims no later than fifteen days after the issuance of the notice as referred to in sub-section (1).
3) No later than fifteen days after the receipt of statements of claims pursuant to sub-section (2), the restructuring manager shall call a meeting of creditors by fulfilling the requirements set forth in sub-sections (2) and (3) of Section 21. In calling such a meeting, a copy of the restructuring program shall be sent along with that notice.
4) The restructuring manager shall chair the meeting called pursuant to sub-section (3).
5) The meeting of creditors may be conducted and adjourned as per necessity. Provided that such a meeting shall not be adjourned in a manner that exceeds the period of restructuring.
6) The directors of the company may attend the meeting of creditors and answer the questions raised by the creditors in relation to the business and financial situation of the company.
7) The meeting of creditors called pursuant to sub-section (3) shall discuss the details of the restructuring program presented by the restructuring manager and adopt a resolution on any of the following matters, subject to sub-section (7) of Section 21:
(a) To adopt, with or without amendment, the proposal on restructuring submitted by the restructuring manager or
(b) To immediately liquate the company without accepting the resolution referred to in Clause (a).
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8) In voting on the proposal pursuant to sub-section (7), the unsecured moneylenders who gave loans to the company without taking a mortgage will be given a separate vote on the basis of the ratio of the loans given by them to the liabilities of the company.
9) The restructuring program adopted and approved pursuant to sub-section (7) or the resolution adopted to reject the program and liquidate the company shall be submitted to the Court for approval, and if the Court issues an order approving that resolution, it shall be implemented.
1 Amendments to the Prevention of Money Laundering and Promotion of Business Environment Act, 2080.
Insolvency Act 2063

Chapter-4 Restructuring Scheme of Company

Section 25: Report to be submitted by restructuring manager
1) The restructuring manager shall, within the period of restructuring, submit to the Court a report accompanied by the transactions, assets, and financial situation of the company and its restructuring program, if any are proposed.
2) The report referred to in sub-section (1) shall, where a restructuring program is proposed, state the following matters in relation to such program.
(a) summary and analysis of the proposed program;
(b) Details of effects likely to be caused to the creditors of the company from the implementation of the proposed program;
(c) A comparison between the consideration and effects that would have been available to the creditors if the company had been liquidated immediately and the consideration effects that may be available to the creditors on the implementation of the restructuring program; and
(d) Opinion and description, accompanied by the finding of the restructuring manager that the company would not be insolvent if the restructuring program were implemented.
3) There shall be no formal form and structure of a restructuring program prepared pursuant to sub-section (1) except the set forth below:
(a) All details of the program to be implemented by the company in the future and written details of the relevant proposal;
(b) Details of the matter that the creditors of the company will get more benefits if the company is not liquidated immediately but restructured and if the program is implemented;
(c) Details of the matter that no portion of the proposed program is illegal or prohibited by the laws in force;
(d) Details that if the program is implemented, the company will be rescued from insolvency or will not become insolvent.
4) The program prepared pursuant to this Section shall also contain details of payment of expenses incurred during the inquiry period of insolvency proceedings or the restructuring period and of the remuneration of the inquiry officer or the restructuring manager.

Insolvency Act 2063

Chapter-4 Restructuring Scheme of Company

Section 26: To make information in the event of failure to submit details of restructuring program
1) Where it is not possible to submit the details of the restructuring program of the company to the Court within the restructuring period, the restructuring manager shall make an application, accompanied by the reasons, to the Court.
2) Where an application is made pursuant to sub-section (1), the Court may, if it considers it to be reasonable, invalidate the order to make restructuring and issue an order to liquidate the company.
Insolvency Act 2063

Chapter-4 Restructuring Scheme of Company

Section 27: Claim and objection to approved restructuring program
(1) A creditor who does not agree with the proposal of the restructuring program approved pursuant to sub-section (7) of Section 24 may make an application of claim and objection within seven days, setting out the following grounds and reasons:
(a) The restructuring program approved by a majority in the meeting of creditors is not in the interest of the creditors other than the secured creditors
(b) A serious irregularity has been committed in calling or conducting the meeting of creditors, and the program approved by that meeting is not in the interest of the creditors other than the secured creditors,
(c) Any false or misleading information has been given, or material information has been concealed in relation to the company or its restructuring program.
2) Where an application is referred to in sub-section (1), the Court shall order the company and the restructuring manager to submit written statements in relation thereto within a period of seven days.
3) On receipt of written statements referred to in sub-section (2) or on the expiry ratio of the period for the submission of such written statements, the Court shall hear the application referred to in sub-section (1) and may, if the application is found to be based on grounds, invalidate to make ineffective the resolution on the restructuring program adopted in the meeting of creditors.
4) If the Court invalidates to make ineffective the resolution adopted in the meeting of creditors and approved pursuant to sub-section (3), the Court shall issue an order to liquidate the company immediately.
5) Information of the order issued pursuant to sub-section (3) or (4) shall be given to the concerned company and the restructuring manager.

Insolvency Act 2063

Chapter-4 Restructuring Scheme of Company

Section 28: Consequence of approval of restructuring program by Court
If the Court issues an order to approve the restructuring program adopted by the meeting of creditors pursuant to sub-section (9) of Section 24, the program shall be binding on all creditors of the company, directors and shareholders of the company, other than the secured creditors of the company and the restructuring period shall end on that date.
Insolvency Act 2063

Chapter-4 Restructuring Scheme of Company

Section 29: Not to affect secured creditors
1) No restructuring program adopted by a meeting of creditors and approved by the Court pursuant to this Chapter shall, except on the following condition, prevent the secured creditors from executing or otherwise dealing with the security:
(a) Where the secured creditor votes in favour of the restructuring program or otherwise gives his or her consent that such program will be acceptable to him or her, or
(b) Where the Court orders that that program shall be binding to the secured creditor.
2) The Court may, if it is satisfied with the following matters, issue the order referred to in Clause (b) of sub-section (1):
(a) Where the secured creditor executes the security that he or she has taken, it may substantially prejudice the achievements to be made from the implementation of the restructuring program;
(b) Where such a program adequately protects the right of the secured creditor to the security and the security.

Insolvency Act 2063

Chapter-4 Restructuring Scheme of Company

Section 30: Not to affect the right of owner of any property or of any lessor
1) No restructuring program adopted by a meeting of creditors and approved by the Court pursuant to this Chapter shall, except on the following condition, prevent the owner of any property used or possessed or owned by the company or the lessor of such property if it has been leased from executing the right to such property or returning the same:
(a) Where the owner or lessor of such property votes in favour of such program or otherwise gives his or her consent in writing that such program will be acceptable to him or her, or
(b) Where the Court orders that the program shall be binding to the owner or lessor of such property.
2) The Court may, if it is satisfied with the following matters, issue the order referred to in Clause (b) of sub-section (1):
(a) Where the owner or lessor of such property gets back that property, it may substantially prejudice the achievements to be made from the implementation of the restructuring program,
(b) Where such restructuring program adequately protects that property and the right of the owner or lessor of such property.
Insolvency Act 2063

Chapter-4 Restructuring Scheme of Company

Section 31: Restructuring manager is to operate company
1) The restructuring manager shall operate the company during the currency of the restructuring period.
2) In operating the company pursuant to sub-section (1), the manager may exercise the following powers:
(a) Management and control of the business, properties and transactions of the company,
(b) Termination, sale and disposal of any business or property of the company,
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Provided that if fifty percent or more of the property is to be liquidated or sold, then the decision will have to be taken by the assembly or group of moneylenders.
(c) Doing or exercising any such act or power that the company or its officer may do or exercise.
3) In exercising the powers referred to in sub-section (2), the restructuring manager shall have the power to inspect all books of account, ledgers, records, accounts and documents of the company.
4) In doing or exercising any act or power set forth in this Section, the restructuring manager shall act in the capacity of an agent of the company.
5) If so sought by the restructuring manager, the director and other officer of the company shall provide any kind of such assistance as may be necessary for the management and control of the company.
6) No director and officer of the company shall, except with written direction of the restructuring manager, exercise any power or do any act of the company in the capacity of the director or officer of the company.
7) The director of the company shall provide information about the company and its business, property, and transactions to the restructuring manager as requested by the restructuring manager.
1 Amendment to the Prevention of Money Laundering and Promotion of Business Environment Act, 2080.

Insolvency Act 2063

Chapter-4 Restructuring Scheme of Company

Section 32:  Power of restructuring manager to borrow loan
1)Where, in acting as the manager of the company, the restructuring manager considers any amount to be necessary to keep on running the company or operate the business and transaction of the company, he or she may borrow a loan with or without furnishing the company’s property as security.
2) The amount of loan borrowed pursuant to sub-section (1) and terms thereof shall be as set forth in Section 17.

Insolvency Act 2063

Chapter-4 Restructuring Scheme of Company

Section 33: Ceiling of remittance of loan of company
Whereas per the agreement of creditors, the restructuring program provides for the remission or alteration in terms of any loan or any portion of the loan not secured, such remission or alteration may be made in accordance with that program.
Insolvency Act 2063

Chapter-4 Restructuring Scheme of Company

Section 34: Implementation of restructuring program
1) The company shall be responsible for implementing the restructuring program adopted by the meeting of creditors and approved by the Court pursuant to this Chapter.
2) The Court shall designate the restructuring manager for the supervision and management of the implementation of the program referred to in sub-section (1).
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3) All unsecured creditors shall be treated equally when implementing the restructuring program pursuant to this section.
1 Amendment to the Prevention of Money Laundering and Promotion of Business Environment Act, 2080.

Insolvency Act 2063

Chapter-4 Restructuring Scheme of Company

Section 35:  Alteration in and amendment to restructuring program
1) Where it appears that the restructuring program cannot be implemented wholly or partly at the time of implementation of that program, but that program can be implemented if it is altered or amended, the restructuring manager shall call a meeting of creditors in order to alter or amend that program.
2) Where the meeting called pursuant to sub-section (1) adopts a resolution altering or amending the program, it shall be submitted to the Court for approval.
3) Where it is reasonable to approve the program submitted pursuant to sub-section (2) for the interest of creditors, the Court may order to that effect.
4) The program approved pursuant to sub-section (3) shall be implemented as per such alteration or amendment.

Insolvency Act 2063

Chapter-4 Restructuring Scheme of Company

Section 36: Termination of restructuring program
1) Where the company has already implemented the restructuring program or the Court, on application by the restructuring manager, makes an order to terminate the program because of the company’s failure to implement it, such program shall terminate.
2) Where the Court issues an order to terminate the restructuring program because of the company’s failure to implement it pursuant to sub-section (1), it shall also issue an order to liquidate such company.

Insolvency Act 2063

Chapter-5 Liquidation of Company

Section 37: Liquidation of company on issuance of order for liquidation
1) Where the Court makes an order to liquidate a company pursuant to this Act, the Court shall make an order to appoint one person as the liquidator from amongst the persons who are entitled to carry on insolvency business at the time of making of such order.
2) Following the making of an order pursuant to sub-section (1), the liquidator proceedings of the company shall be deemed to have commenced.
Insolvency Act 2063

Chapter-5 Liquidation of Company

Section 38: Consequences on the commencement of liquidation proceedings
1) On the commencement of the liquidation proceedings of any company, the following provisions shall govern the following matters in relation to such Company:
(a) Where the director and officer of the Company are relieved of office of the Company are relieved of office, the liquidator shall exercise all such powers as may be exercisable by the director and officer of the Company in relation to the management of that Company,
(b) The liquidator shall take in his or her custody and control all assets, accounts and books of account of the Company, except the properties in possession of secured creditors,
(c) Except as ordered otherwise by the liquidator, the service of all employees appointed by the Company shall terminate.
2) The provision’s relation to
ipso facto
suspension set forth in Section shall, except for the following matter, apply during the period of currency of liquidation proceedings:
(a) Implementation of the right of secured creditors to execute pursuant to this Act, or
(b) Implementation of the right of the lessor of any property leased to the Company to redeem the property pursuant to this Act.

Insolvency Act 2063

Chapter-5 Liquidation of Company

Section 39: Conversion of liquidation of company into restructuring program
1) Where, based on the study and examination of the business and assets of the company, the nature of the goods or services to be produced by the company and the market potentiality thereof, the liquidator thinks that the restructuring program of the company can be adopted by a meeting of creditors and approved, the liquidator may make an application, accompanied by the reasons, to the Court for an order to keep pending the order on liquidation of company issued by the Court pursuant to this Act for a certain period of time and to implement the restructuring program pursuant to this Act.
2) Where the Court is satisfied with the contents of the application received pursuant to sub-section (1), it may issued previously for any certain period of time and implemented the restructuring program.
3) Where an order is issued pursuant to sub-section(2), the order shall be implemented to this Act.