IBC Implication and other factors

Hi all, 
A curious case came for the study and scenario being real any suggestion would be helpful - 

If a company X does not pay the employees salary for X reasons and assurances are given to employees for clearing the arrears , and if that is defaulted , and the employee one more files the application under IBC complaints as a debt , what are the remidies avilable for the employees to get the arrears back with interest and damages . 

As per the IBC 2016 - can any one elaborate on that - 
Other legal remidies are also helpful -

Due to recent layoff in multiple companies -

Replies (2)
Quick Summary
This discussion explores the remedies available to employees when a company defaults on salary payments and assurances are broken. It clarifies that employees are considered operational creditors under the Insolvency and Bankruptcy Code (IBC) 2016 and can initiate insolvency proceedings if dues remain unpaid. The post outlines the process of filing claims, the priority of employee dues during liquidation, and the potential for recovering interest and damages, while also suggesting other legal avenues like Labour Courts and the Payment of Wages Act.

Employee as Operational Creditor: Employees are considered operational creditors under IBC. They can initate insolvency proceedings against the company if their dues remain unpaid for more than 21 days after a demand notice. 

Filing a claim: Employees can file their claims with the Insolvency Professional (IP) during the corporate insolvency resolution proces (CIRP). Claims include unpaid salaries, wages, and other dues. 

Recovery of Dues: Employee' dues are treated as operational debts. In the distribution of proeeds during liquidation, operational creditors (including employees) are paid after secured creditors but before distribution to unsecured creditors in some cases. However, under Section 53 of IBC , employee dues for a certain period are given priority in liquidation.

Intrest and damages: The recovery of interest and damages would depend on the specific provisions of employment contracts or applicable labor laws. IBC priarily focusses on debt recovery, and interest of damages might be part of the claim if supported by contractual or statutory provisions. 

Other Legal Remedies: Labour Courts approach for recovery of dues.. Payment of Wages Act. Employees can seek remedies under the payment of wages act, 1936, for delayed or non-payment of wages. 

Context of Recent Layoffs:

Given recent layoffs in multiple companies, employees should be aware of their rights under IBC and other labour laws to recovery dues effectively. 

sir, 

can you elaborate on the procedure of steps if employee is filling on it own 
few doubts- 
1)recovery and others - pfa




Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
22 September 2026
Account Assistant

Chirag P Shah & Co. Chartered Accountant

Pune

B.Com

View Details
Company
12 October 2026
AUDIT , ACCOUNTS AND TAXATION

KDSS

New Delhi

B.Com

View Details
Company
Featured 03 October 2026
Accountant

A P Lodha and Associates

Jalna

B.Com

View Details
Company
06 October 2026
Assistant Manager - Audit and Compliance

Ravi K Jain & Co

Noida

Others

View Details
Company
08 October 2026
SALES TELECALLER

HIRE NOVA

Lucknow

Graduate (Any)

View Details
Company
14 October 2026
Asst. Manager/Dy Manager (Costing)

manufacturing

Pune

CMA

View Details
Company
ARTICLESHIP 30 September 2026
CA Article Assistant

CA Suraj Garg & Associates

New Delhi

CA Final

View Details
Company
ARTICLESHIP 07 October 2026
Article Trainee/ CMA Trainee

RMA And Associates LLP

New Delhi

CA Inter

View Details