In India, Debt Recovery and the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI Act), 2002 are also major legal frameworks that provide a platform for businesses as well as financial institutions in recovering bad debts and Non-Performing Assets, NPAs. The SARFAESI Act aims to make the recovery of loan defaults by financial and secured creditors streamlined and quicker in process.

Our Support in Debt Recovery & SARFAESI Act Representation

AD DEALS Legal Services offers sophisticated legal consultancy services in terms of debt recovery and support the SARFAESI Act in helping businesses deal with intricate debt recovery procedures. The reason why a business needs to approach AD DEALS lies ahead:

Expert Legal Advice:
We have the SARFAESI Act with the team of legal experts at AD DEALS for strategic advice and solutions, guiding businesses through financial recovery from distress and quick issue resolution.

Proactive Debt Management:
Our legal team guides you through preventive measures avoiding debt recovery actions such as creditor negotiation, loan restructuring, and asset protection.

DRT and DRAT Representation:
AD DEALS Legal Services provides comprehensive legal representation in Debt Recovery Tribunals (DRTs) and Debt Recovery Appellate Tribunals (DRATs), ensuring your interests are protected throughout the process.

Protection of Business Assets:
If your business is facing asset seizure or liquidation under the SARFAESI Act, our lawyers will work to protect your assets and explore alternatives like debt restructuring or asset reconstruction.

Legal Expertise in Debt Settlement:
We can help your business negotiate favorable terms for debt settlement to reduce the burden of unpaid loans and help avoid asset liquidation.

Efficient and Timely Resolution:
We understand that resolving issues related to debt recovery needs to be urgent, so we work diligently to provide you with timely legal solutions and help you avoid lengthy disputes and financial losses.

Comprehensive Legal Support:
AD DEALS deals with all aspects of debt recovery, from dealing with the SARFAESI notices to taking your case before the courts and tribunals. We are determined to provide effective, cost-efficient solutions for the sound health of your business’s finance.

Time Period to Resolve Issues Under Debt Recovery & SARFAESI Act

At such times, when the question of debt recovery arises against any business firm or the provisions of SARFAESI Act are invoked, it calls for the support of expert law professionals to handle the procedural intricacies of this enactment. The following are some issues for which legal aid a business firm requires:

Advising on Debt Recovery Procedure:
An experienced lawyer helps the business understand the debt recovery process under the SARFAESI Act and advises on the course of action most appropriate for dealing with the situation, either by negotiating with the creditor, restructuring the debt, or fighting the recovery process.

Representation in Debt Recovery Tribunals (DRT):
If the creditor takes the recovery process to DRTs, then the business will require legal counsel for its defense. The lawyer can assist in making a counterclaim, challenging the seizure of assets, or disputing the legitimacy of the recovery process.

Negotiation of Settlement with Creditors:
A good lawyer can assist the business in negotiating with creditors or financial institutions to restructure the loan, settle, or reach an agreement to prevent the initiation of SARFAESI proceedings.

Legal Challenges to SARFAESI Actions:
If the creditor has acted under SARFAESI provisions incorrectly, businesses can resort to court proceedings. Advocacy is crucial in respect of ensuring that the procedures followed by the creditor are properly within the law, be it in giving notice in a proper manner or adopting the prescribed procedure.

Recovery Wrongful Asset Seizure:
If a business feels that its assets have been wrongly seized or if the lender is acting beyond its authority under the SARFAESI Act, then legal aid needs to be sought to lodge the complaint and recover business’s property. Filing appeals in DRAT
If a business is not satisfied with the decision of a DRT, it can appeal to the Debt Recovery Appellate Tribunal or DRAT. It will definitely require legal counsel for that appeal and for a case presentation to protect the business’s interests.

Preventive Measure: Avoiding Liquidation of Assets
This also provides an avenue, through the lawyer, in the event of facing the prospects of asset liquidation under SARFAESI to take action through asset reconstruction or debt restructuring or even under the new code, obtain insolvency protection.

Important Features of the SARFAESI Act

Securitization of Financial Assets:
The SARFAESI Act gives the financial institutions the liberty to sell their NPAs to ARCs or other similar entities. This way, bad debts are recovered and lessened.

Enforcement of Security Interest:
One of the key provisions of the SARFAESI Act is that in case of a default, the banks and other financial institutions are allowed to seize the collateral or assets of the borrower, without approaching the civil court for this purpose.

Asset Reconstruction Companies (ARCs):
The SARFAESI Act further empowers the setting up and working of ARCs, which deal exclusively in the administration and settlement of NPAs. They aim to recover outstanding loans through either debt restructuring or sale of assets.

DRTs:
The Act also establishes Debt Recovery Tribunals (DRTs) and Debt Recovery Appellate Tribunals (DRATs), which address recovery issues with a priority on quick resolution, and disputes are handled without delay, which is typical in normal courts.

How Debt Recovery & SARFAESI Act Affects Business Firms

Debt recovery and the SARFAESI Act significantly affect business firms in India in the following ways:
Loan Defaults and Recovery:
If a business takes money from banks or financial institutions and fails to pay back, the SARFAESI Act allows the creditor to recover the debt by enforcing the security interest. This can include taking possession of business assets, such as property, machinery, or inventory.

Financial Stress on Businesses:
Defaulting on loans can put businesses in a stressful financial position, as creditors can take legal action under the SARFAESI Act to recover dues. This could lead to the liquidation of assets, which affects the firm’s operations and financial stability.

Impact on Credit Ratings:
If a firm defaults on loans and the bank or financial institution initiates recovery proceedings under the SARFAESI Act, this may affect the business’s credit rating. Subsequently, this could impact the ability of the firm to get future loans or investments.

Legal Risk to Business Assets:
The SARFAESI Act ensures that creditors can take possession of the business secured assets or sell them. With the seizure of such important assets of the business, the firm faces difficulties in continuing its businesses. Thus, a business should keep a close watch on the right available and the protection provided with the SARFAESI Act.

Probability of Insolvency:
If the debt recovery measures initiated under the SARFAESI Act fail, business houses may be sent for insolvency proceedings under the IBC. The SARFAESI Act intersects with the IBC in the cases of business defaults where there can be liquidation of assets and dissolution of the company.