Insolvency and bankruptcy code


The Central government introduced the Insolvency and Bankruptcy Code(IBC) in 2016 to resolve claims involving insolvent companies. This was intended to tackle the bad loan problems that were affecting the banking system. Two years on the IBC has succeeded in a large measure in preventing corporates from defaulting on their loans. The IBC process has changed the debtor-creditor relationship. A number of major cases have been resolved in two years, while some others are in advanced stages of resolution.
Insolvency and Bankruptcy Code, 2016 is considered as one of the biggest insolvent reforms in the economic history of India.

Insolvency and Bankruptcy Code, 2016 is considered as one of the biggest insolvency reforms in the economic history of India.

This was enacted for reorganization and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximization of the value of assets of such persons.
The era before IBC had various scattered laws relating to insolvency and bankruptcy which caused inadequate and ineffective results with undue delays. For example,
Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act SARFAESI -for security enforcement.

Companies have to complete the entire insolvency exercise within 180 days under IBC. The deadline may be extended if the creditors do not raise objections on the extension. For smaller companies, including startups with an annual turnover of Rs 1 crore, the whole exercise of insolvency must be completed in 90 days and the deadline can be extended by 45 days. If debt resolution doesn’t happen the company goes for liquidation.

The Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (RDDBFI) for debt recovery by banks and financial institutions.

Companies Act for liquidation and winding up of the company.

Ineffective implementation, conflict in one of these laws and the time-consuming procedure in the aforementioned laws, the Bankruptcy Law Reform Committee draft

Objectives of IBC

To Consolidate and amend all existing insolvency laws in India.

To simplify and expedite the Insolvency and Bankruptcy Proceedings in India.

To protect the interest of creditors incuding stakeholders in a company.

To revive the company in a time-bound manner.

To promote entrepreneurship.

To get the necessary relief to the creditors and consequently increase the credit supply in the economy.

To work out a new and timely recovery procedure to be adopted by the banks, financial institutions or individuals.

To set up an Insolvency and Bankruptcy Board of India.

Maximization of the value of assets of Board of India.

Maximization of the value of assets of
corporate persons.

The Insolvency and Bankruptcy Code ecosystem

National Company Law Tribunal (NCLT) – The adjudicating authority (AA), has jurisdiction over companies, other limited liability entities.

Debt Recovery Tribunal (DRT) has jurisdiction over individuals and partnership firms other than Limited Liability Partnerships.

The Insolvency and Bankruptcy Board of India

(IBBI) – apex body for promoting transparency & governance in the administration of the IBC; will be involved in setting up the infrastructure and accrediting IPS (Insolvency Professionals (IPS) & IUS (Information Utilities).

Aishwarya Says:

I have always been against Glorifying Over Work and therefore, in the year 2021, I have decided to launch this campaign “Balancing Life”and talk about this wrong practice, that we have been following since last few years. I will be talking to and interviewing around 1 lakh people in the coming 2021 and publish their interview regarding their opinion on glamourising Over Work.

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