Early warning alerts from NeSL Information Utility

NeSL serves as a central repository for debt obligations and defaults across all entities within the country. Acting as an Information Utility (IU), it collects data on corporate insolvency proceedings filed at National Company Law Tribunals (NCLTs). This information includes whether a public announcement has been made regarding the admission of a Corporate Insolvency Resolution Process (CIRP).

The occurrence of a default, the filing of a CIRP application, or a public announcement of CIRP initiation has significant implications for creditors holding receivables from the affected corporate debtor. Under the IBBI IU Regulations, NeSL is mandated to notify all impacted creditors of such events.

NeSL IU provides various alerts at different stages:

• Default Alerts: When a creditor reports a default, NeSL notifies other creditors with financial or operational debt exposure to the defaulting debtor. This serves as an early warning system. Before sending notifications, NeSL provides the defaulting debtor with an opportunity to authenticate the default.
• CIRP Application Alerts: If a creditor files a CIRP application at an NCLT, NeSL alerts other creditors about the potential insolvency proceedings and the moratorium that may be imposed on the debtor under the Insolvency and Bankruptcy Code (IBC).
• Public Announcement Alerts: Upon admission of a CIRP application, the resolution professional makes a public announcement to notify creditors and request them to submit claims within a specified timeframe. NeSL sends PA alerts to creditors with exposure to the defaulting debtor, ensuring they don’t miss the opportunity to stake their claims. PA alerts are also sent for voluntary liquidation and pre-pack insolvency processes.

NeSL’s unique identifier mechanism allows it to identify all creditors with exposure to a defaulting debtor and send targeted notifications. These notifications are delivered via email and dashboard alerts on the IU portal. Creditors can also download alerts for any specific period.

NeSL’s alerts are particularly valuable due to its unique position in holding information on both financial and operational debt obligations. Many CIRP cases at NCLTs are initiated by operational creditors, suppliers of goods or services who haven’t received timely payments. This can inadvertently drag financial creditors into insolvency proceedings, even if they have no recorded defaults.

This article has been written based on the information available at NeSL

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