Insolvency Proceedings in Telangana: NCLT Hyderabad and MSME Options

Insolvency applications against companies registered in Telangana are heard by the NCLT's Hyderabad Bench, with appeals to the NCLAT. This guide covers the local picture and alternatives available to MSMEs in the state.

The NCLT Hyderabad Bench

The Hyderabad Bench hears IBC applications and company law matters for companies registered in Telangana and Andhra Pradesh. Filing is electronic, with hearings in person or by video conference. Complete, well-documented applications reduce adjournments.

MSME Pre-pack

Telangana MSME companies facing stress can consider the pre-packaged insolvency process, which lets the promoter stay in control and propose a base resolution plan with financial creditors' support. It has a lower default threshold than the regular process.

MSME Suppliers: The MSEFC Route

Before turning to IBC, MSME suppliers owed money by buyers can apply to the Telangana Micro and Small Enterprises Facilitation Council (MSEFC) under the MSMED Act. The Council conciliates and, failing that, arbitrates, and buyers must pay compound interest on delayed payments. It's often quicker and cheaper for smaller amounts.

Alternatives to Insolvency

• Negotiated restructuring or OTS with lenders.
• MSME restructuring under RBI frameworks.
• Support from state institutions for sick MSMEs, such as the Telangana Industrial Health Clinic.
• Sale of non-core assets or bringing in an investor.

For Directors

Directors of stressed companies should take advice early. Continuing to trade when there's no reasonable prospect of avoiding insolvency can create personal liability.

Getting Help

Think Filing advises Telangana companies and creditors on IBC and alternatives.