DRTs- Debt Recovery Tribunal

What exactly is DRT?

The struggle to collect debts and enforce securities from defaulters has long plagued Indian banks and financial organisations. The Narasimham Committee of 1991 suggested the creation of Special Tribunals such as DRTs- Debt Recovery Tribunals and DRATs (Debt Recovery Appellate Tribunals) in order to streamline such processes due to the irregular and exceedingly time-consuming nature of the process surrounding such recovery. The collection of Debts Due to Banks and Financial Institutions Act ("RDDBFI") 1993 was passed as a result of the Committee's proposal, and it is from this law that DRTs and DRATs draw their jurisdiction to make decisions about debt collection. 39 DRTs and 5 DRATs have been in operation since the program's beginning.

Understanding Chapter 11 Bankruptcy: Why Creditors Need Legal Counsel

A set of intricate processes known as Chapter 11 bankruptcy must be handled with the highest care and attention to detail. To represent your claim correctly and help you through the entire process, from the first step of filing a Proof of Claim to the final step of approving the Debtor's Plan and receiving compensation, it is strongly advised that creditors seek legal counsel from an experienced bankruptcy attorney.

Many creditors find filing a Proof of Claim to be time-consuming and complex. Making a mistake that misrepresents your bankruptcy claim and voids your right to compensation is simple to do.

Although it may sound absurd, you would be astonished at how many Proof of Claim forms are rejected as being false or, worse, invalid because of simple errors. Since fraudulent claims can result in a $500,000 fine, five years in prison, or both, you must take the appropriate precautions to make sure your claim is submitted accurately.

A quick reference guide is provided below so that you can be sure to follow the right procedures when submitting your Proof of Claim.

The five most common errors to avoid when submitting a Proof of Claim are outlined in more detail below.

1. Incorrectly filling out the form's debtor and creditor fields.

Before taking any action, it's crucial to have a firm grasp on both the Chapter 11 process and the relevant terms and vocabulary. By doing this, you'll be able to keep the Debtor and Creditor fields on your Proof of Claim form separate.

Creditors frequently flip between these two labels. Keep in mind that the company or other entity filing for Chapter 11 bankruptcy is the Debtor. The party holding a claim against the debtor's bankruptcy estate based on activities that occurred before the petition date is known as the creditor.

By combining the debtor and creditor categories, you risk having your Proof of Claim rejected outright.

2. Entering the wrong case number.

A unique case number is given to each Chapter 11 bankruptcy case. When submitting a Proof of Claim, creditors are required to enter the right case number and confirm their entry three times. Inputting the incorrect case number is a frequent blunder that may result in claims being denied or fraud being assumed if the case number corresponds to another Chapter 11 case.

Multiple case numbers may be given to cases that are more complicated. When a larger corporation with a parent business and several subsidiaries declares bankruptcy, this happens. In such case, the entire case will be given a major "lead case" number, and the cases of each of the co-Debtors will each be given a specific case number.

It is crucial to first identify how your claim is represented in the Debtor's Schedules of Liabilities so that you can include the relevant case number in your Proof of Claim, regardless of whether you are involved in a little case or a bigger, more complicated case.

3. Not affixing a signature to the Proof of Claim.

Failure to sign and date the Official Form 410 (also known as Official Form B 410) is another error that creditors frequently make. When mailing the forms physically, the person filling out the Proof of Claim must include an original signature.

The option of submitting an electronic Proof of Claim is available to creditors. In these cases, electronic signatures may be recognised by the bankruptcy court.

It is very crucial that you take the time to make sure you've filled out the form completely before signing because you are pledging under penalty of perjury that the information provided is truthful and accurate.

4. Inadvertently sending original copies of supporting files.

The amount of your claim value and any supporting paperwork you need to establish your bankruptcy claim should be included in your Proof of Claim forms. It is crucial, though, to send copies of these documents rather than the originals. Any supporting documentation you include with your Proof of Claim won’t likely be returned.

5. Being late for the pub date.

The Bar Date is the last day for creditors to file their Proof of Claim forms and any required supporting documents in order for the bankruptcy court to accept them. The court rejects late Proof of Claims without giving them a second chance. Claims brought after the Bar Date are only occasionally, in exceptional cases, allowed.

In order to protect your ability to assert your right to getting compensation, you should avoid making the common mistake creditors make of failing to file your bankruptcy claim by the Bar Date. It is advised that you submit your Proof of Claim well in advance of the due date.

Conclusion

If you've gotten a Notice of Bankruptcy, make sure to move forward carefully and thoughtfully to prevent any proof of claim errors. You must immediately take the appropriate action to protect your right to compensation.