What Is The Format Of Section 8 Demand Notice Under IBC 2016

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What Is The Format Of Section 8 Demand Notice Under IBC 2016

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,

1. This letter is a demand notice/invoice demanding payment of an unpaid operational debt due from [name of the corporate debtor] /*name of the company*/
2. Please find the particular of the unpaid operational debt below.

3. If you dispute the existence or amount of unpaid operational debt (in default), please provide the undersigned, within ten days of the receipt of this letter, of the pendency of the suit or arbitration proceedings in relation to such dispute filed before the receipt of this letter/notice.

/*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*/

4. If you believe that the debt has been repaid before the receipt of this letter, please demonstrate such repayment by sending to us, within ten days of receipt of this letter, the following:

1. An attested copy of the record of electronic transfer of the unpaid amount from the bank account of the corporate debtor or

2. An attested copy of any record that [name of the operational creditor]; has received in payment

/*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*/

5. The undersigned, hereby, attaches a certificate from an information utility confirming that no record of a dispute in relation to the relevant operational debt has been filed by any person at any information utility (if applicable)
6. The undersigned request you to unconditionally repay the unpaid operational debt (in default) in full within ten days from the receipt of this letter failing which we shall initiate corporate insolvency resolution process in respect of [name of corporate debtor].

Yours Sincerely

Instructions

1. Please serve a copy of this form on the corporate debtor, ten days in advance of filing an application under section 9 of the code

/*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.*/

2. Please append a copy of such served notice to the application made by the operational creditor to the adjudicating authority.

/*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.

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