What the New Bankruptcy Policy Means for business<\/h2>\n
Due to the COVID crisis, the IBBI had already eased rules on the Insolvency and Bankruptcy Code in May. The new amendments to the bankruptcy code<\/a><\/span> further focus on:<\/p>\n The new bankruptcy policy also seeks to prevent companies from being pushed into insolvency proceedings due to their inability to pay back debts.<\/p>\n The bankruptcy codes in India are governed by two acts:<\/p>\n The New Insolvency and Bankruptcy Code also aims to bring both acts under one roof and amend it.<\/p>\n The image below explains, in brief, the insolvency process for any business in India under the Provincial Insolvency Act.<\/p>\n To prevent insolvency proceedings, Finance Minister Nirmala Sitharaman also raised the default threshold from \u20b9 1 lakh to \u20b91 crore under section 4 of IBC.<\/a><\/p>\n<\/blockquote>\n Did you know that over 96% of businesses fail in the first year because they do not pay their creditors on time? If you feel your business is struggling to pay the debt, then you need to cut your losses and make a few tough decisions. Most importantly, do not panic.<\/p>\n You must be wondering why must you spend more money on a lawyer or a Chartered Accountant when your business is already suffering! However, this is the right choice. Know what you are up against, and do not cheat your way out.<\/p>\n A lawyer can help you with the legal process before your creditors file a case. Your chartered accountant can help you process your book of accounts to help you plan your next course of action.<\/p>\n Do not invest in too much \u2018physical assets\u2019 like real estate, gold and jewellery. These are the toughest to sell and suffer the most in an economic crisis.<\/p>\n Instead, we recommend you focus on your business cash flow. If there is money coming in and going out steadily, at least there is a balance, and you can continue the business.<\/p>\n If you are looking to know a little more about managing cash flow, this guide can help.<\/p>\n In a worst-case scenario, tough times call for tough decisions. Yes, a vulture capitalist sounds terrible, but they are venture capitalists who look for distressed businesses and revive it.<\/p>\n This way, you can sell your business instead of declaring bankruptcy. You can use the money to start afresh without having to go through an insolvency proceeding.<\/p>\n Tip: This is a high-risk decision too, and must be undertaken only with trusted sources.<\/strong><\/p>\n Most importantly, take care of your business finances. Look for small short term loans to revive your business quickly. On Instamojo, you can check out mojoCapital<\/span>.<\/a>\u00a0Taking a loan is not a scary affair when you are in debt, all you need to know is how to manage your business, in a crisis.<\/p>\n\n
Bankruptcy in India – an overview<\/h2>\n
\n
\n
![\"Insolvency](\"https:\/\/www.instamojo.com\/blog\/wp-content\/uploads\/2020\/07\/Insolvency-and-Bankruptcy-Code.png\")
\n
3 Things to Do If Your Business is Running Bankrupt<\/h3>\n
Get a lawyer and CA to help you<\/h4>\n
Know your assets<\/h4>\n
![\"ebook](\"https:\/\/www.instamojo.com\/blog\/wp-content\/uploads\/2019\/10\/ebook_banner2-1024x576.png\")
<\/a><\/p>\nSeek out a \u2018vulture capitalist<\/a>\u2019<\/h4>\n
\n