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Before the process of insolvency can even be considered, there is a section 8 demand notice that the operational/financial creditor forwards to the corporate debtor. This demand notice is presented using the FORM 3. Throughout this blog, we are going to answer the question-”What is the format of section 8 demand notice under IBC 2016?”
Format of Form 3
While we are discussing the format, we are also going to provide you some explanation associated with them. Therefore, whatever comes within the symbols “/*” “*/” are actually explanation of the sections of the forms that are only meant to tell you about the certain sections, they are not present within the form.
Let us discuss this structure properly now:
/*beginning of format*/
Form 3
(See clause (a) of sub rule (1) of rule 5)
FORM OF DEMAND NOTICE/INVOICE OF DEMANDING PAYMENT UNDER THE
INSOLVENCY AND BANKRUPTCY CODE, 2016
(Under rule 5 of the insolvency and Bankruptcy (Application to the adjudicating authority) Rules,)
/*the adjudicating Authority in the above section refers to the National Common law tribunal or NCLT*/
/*Date of filing the demand notice*/ [Date]
To,
[Name and address of the registered office of the corporate debtor] From,
[Name and address of the registered office of the operational creditor]
/*above, the “corporate debtor” refers to a business entity*/
Madam/Sir,
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PARTICULARS OF THE OPERATIONAL DEBT |
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TOTAL AMOUNT OF DEBT,DETAILS OF TRANSACTIONS ON ACCOUNT OF WHICH THE DEBT FELL DUE, AND THE DATE FROM WHICH SUCH DEBT FELL DUE /*here, you have to specify the total amount of operational debt */ |
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AMOUNT CLAIMED TO BE IN DEFAULT AND THE DATE ON WHICH THE DEFAULT OCCURED (ATTACH THE WORKINGS FOR COMPUTATION DEFAULT IN TABULAR FORM) /*here, you have to put the amount of debt that fell under default, it can either be the same as the point 1 or can be less than that. You can use an excel sheet to show the computation in a tabular form*/ |
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PARTICULARS OF SECURITY HELD, IF ANY, THE DATE OF ITS CREATION, ITS ESTIMATED VALUE AS PER THE CREDITOR, ATTACH A COPY OF A CERTIFICATE OF REGISTRATION OF CHARGE ISSUED BY THE REGISTRAROF COMPANIES (IF THE CORPORATE DEBTOS IS A COMPANY) |
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DETAILS OF RETENTION OF TITLE ARRANGEMENTS (IF ANY) IN RESPECT OF GOODS TO WHICH THE OPERATIONAL DEBT REFERS /*this is the part of the title retention clause that states that the title of goods remains vested in the seller, or in this case, the operational creditor, until the buyer, in this case, the corporate debtor, pays the complete purchase price*/ |
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RECORD OF DEFAULT WITH THE INFORMATION UTILITY (IF ANY) /*information utility refers to a centralized digital hub that stores, maintains and manages financial information, you can know more about it here*/ |
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PROVISIONS OF LAW, CONTRACT OR OTHER DOCUMENT UNDER WHICH THE DEBT HAS BECOME DUE. /*time might not be the only factor under which the debt has become due, there might be something in the contract that you have with the corporate debtor, or there might be some provisions of law. Whatever those are, you are going to write them in the given section*/ |
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LIST OF THE DOCUMETNS ATTACHED TO THIS APPLICATION IN ORDER TO PROVE THE EXISTENSE OF OPERATIONAL DEBT AND THE AMOUNT OF DEFAULT /*specify the list of documents that you have attached to this application*/ |
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/*the above point is meant for the receiver of this demand notice i.e. the corporate debtor. It states that if there is a discrepancy with the operational debt, then the documents pertaining to the same should be provided*/
/*The above says that if the corporate debtor has already paid off the operational debt to the operational creditor before the receipt of this demand notice, then they need to provide the proof of the payment*/
Yours Sincerely
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Signature of the person authorized to act on behalf of the operational creditor |
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Name in Block letters |
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Position with or in relation to the operational creditor |
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Address of person signing |
Instructions
/*this form is basically a way provide a way out for the corporate debtor to prevent the insolvency resolution process. Therefore, before filing the section 9 petition, this form filing is mandatory.*/
/*there should two versions of this application (one, a Xerox of the other). One is to be sent to the corporate debtor and the other is to be sent to the NCLT*/
/*end of format*/
This is the format of the section 8 demand notice. However, there is a high probability of the repayment to not be present. In such case, insolvency resolution is the only way for the operational/financial creditor to get repaid. Therefore, we are going to discuss the section 9 petition format in our next blog.
Hey there, I'm Dushyant Sharma. With the extensive knowledge I've gained in past 8 years, I have been creating content on various subjects such as banking, insurance, telecom, and all the important registration and licensing processes for various companies. I'm here to help everyone with my expertise in these areas through my articles.
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