Insolvency Act, 2006

Chapter 1

Preliminary

1. Short Title and Commencement: (1) This Act shall be called the "Insolvency Act, 2006 (2063)."

(2) This Act shall commence immediately. 2. Definitions: Unless the subject or context otherwise requires, in this Act,-

(a) "Company" means a company established in accordance with the prevailing company law, and said term shall also include other organized institutions with limited liability specified by the Government of Nepal by publishing a notice in the Nepal Gazette.

(b) "Insolvent" means a situation where a company is unable or appears unable to pay any or all debts due or payable in the future to a creditor, or where the amount of the company's liabilities exceeds the value of its assets.

(c) "Financial Difficulty" means a situation where, without restructuring under this Act, a company is or is likely to become insolvent immediately or in the near future.

(d) "Dissolution of a Company" means the state where the registration of a company has been cancelled upon completing the process under this Act.

(e) "Restructuring" means the process adopted under this Act to restructure a company that is in financial difficulty and may become insolvent.

(f) "Restructuring Program" means a restructuring program as provided in Chapter 4.

(g) "Court" means the Commercial Bench of the Court specified by the Government of Nepal by publishing a notice in the Nepal Gazette, upon consultation with the Supreme Court.

(h) "Debt" means a definite sum of money remaining to be paid immediately or claimed as payable.

(i) "Creditor" means a person entitled to receive payment from a company that is or may become insolvent, and said term shall also include a secured creditor.

(j) "Security" means any or all assets kept as collateral, mortgage, or any other type of security for a debt.

(k) "Secured Creditor" means a creditor who lends money to a company upon taking security.

(l) "Company in Liquidation" means the state where an order for the dissolution of a company has been issued under this Act.

(m) "Office" means the Insolvency Administration Office established under section 65.

(n) "Insolvency Practitioner" means a person who has obtained a license under section 64 to practice insolvency-related business.

(o) "Investigating Officer" means an Investigating Officer appointed under section 10.

(p) "Restructuring Manager" means a person appointed by the order of the Court under subsection (2) of section 22 to conduct and manage the restructuring program of a company.

(q) "Liquidator" means a person appointed by the order of the Court or according to a resolution passed by a meeting of creditors to carry out the work of dissolving a company, and said term shall also include the Office.

(r) "Related Person" means a director, officer, or shareholder of an insolvent company, or a director, officer, or shareholder of the parent company or subsidiary company of such company, and said term shall also include the husband, wife, son, daughter, adopted son, adopted daughter, father, mother, stepmother, elder brother, younger brother, elder sister, and younger sister of the director, officer, or shareholder of such company or the parent company or subsidiary company of such company.

(s) "Prescribed" or "As Prescribed" means prescribed or as prescribed in the Rules made under this Act.