Chapter – 1 Preliminary

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  1. Short title and commencement: (1) This Act may be called “Insolvency Act, 2063 (2006).”
    (2) It shall come into force immediately.
  2. Definitions: Unless the subject or the context otherwise requires, in this Act,-
    (a) “company” means a company incorporated under the companies law in force, and this expression also includes such other body corporate with limited liability as specified by the Government of Nepal by notification in the Nepal Gazette;
    (b) “being insolvent” means a state of being unable, or appearing to be unable, to pay any or all of the debts due and payable to or payable in the future to creditors or a situation where the amount of liabilities of a company exceeds the value of the assets;
    (c) “financial difficulty” means a situation where company becomes or may become insolvent immediately or in the near future if the company is not restructured made pursuant to this Act;
    (d) “liquidation of company” means a situation where the registration of a company is canceled by fulfilling the procedures referred to in this Act;
    (e) “restructuring” means a process to be adopted under this Act in order to a company which may become insolvent because of financial difficulty;
    (f) “restructuring program” means a restructuring program as referred to in Chapter-4;
    (g) “Court” means the commercial bench of such court as designated by the Government of Nepal, in consultation with the Supreme Court, by notification in the Nepal Gazette;
    (h) “debt” means a certain amount due and payable immediately or as claimed due and payable;
    (i) “creditor” means a person who is entitled to receive payment from a company which has become insolvent or may become insolvent; and this expression also includes a secured creditor;
    (j) “security” means any or all property furnished as pledge, mortgage or any other kind of security of a debt;
    (k) “secured creditor” means a creditor that lends money to a company against a security;
    (l) “company which has become insolvent” means a situation where an order has been issued under this Act for the liquidation of the company;
    (m) “Office” means the Insolvency Administration Office established pursuant to Section 65;
    (n) “insolvency practitioner” means a person licensed under Section 64 to carry on business relating to insolvency;
    (o) “inquiry officer” means an inquiry officer appointed pursuant to Section 10;
    (p) “restructuring manager” means a person who is appointed by order of the Court pursuant to Sub-section (2) of Section 22 to operate and manage the restructuring scheme of a company;
    (q) “liquidator” means a person who is appointed by an order of the Court or a resolution adopted by a meeting of creditors to liquidate the affairs of a company, and this expression also includes the Office;
    (r) “associated person” means any director, officer, shareholder of a company which has become insolvent or any director, officer or shareholder of a company that is holding or subsidiary company of such company; and this expression also includes the husband, wife, son, daughter, adopted son, adopted daughter, father, mother, step mother, elder brother, younger brother, elder sister, younger sister of any director, officer, shareholder of that company or of a company that is holding or a subsidiary of such company;
    (s) “prescribed” or “as prescribed” means prescribed or as prescribed by the Rules framed under this Company.

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Chapter – 1 Preliminary

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