2925 26-Apr-2018, Thu
Chairman, IBBI : Dr. M. S. Sahoo
• The Insolvency and Bankruptcy Code, 2016 (IBC) is the bankruptcy law of India. It came into force in 2016.
• It is considered as most important economic reform after GST in recent times. Aimed at creating single law for insolvency and bankruptcy.
• In India, the legal and institutional machinery for dealing with debt default has not been in line with global standards. IBC 2016 aims to change this.
• Resolving insolvency was a long process before IBC and did not offer an economically viable arrangement. IBC is a major step towards ease of doing business in India.
• IBC will boost lengthy winding up process and reduce the time and good exit option in case business could not get success.
• The insolvency resolution process should be completed within 180 days which may be extended up to 270 days in some special cases.
• Under Fast Track Corporate Insolvency resolution process, completion time is 90 days. The corporate under Fast Track are covered whose asset and income are below a prescribed level that may be prescribed by the Central Government.
• Insolvency and Bankruptcy Code (Amendment) Bill 2017 : The bill replaces an ordinance that was brought seeking to bar wilful defaulters, defaulters whose dues had been classified as non-performing assets (NPAs) for more than a year, and all related entities of these firms from participating in the resolution process.
• Set up on 1st October 2016 under the Insolvency and Bankruptcy Code, 2016 (Code).
• It is a unique regulator. It regulates the professions under IBC 2016 Act and the proceedings involved.
• It has regulatory oversight over the Insolvency Professionals, Insolvency Professional Agencies and Information Utilities.
• It writes and enforces rules for transactions, namely, corporate insolvency resolution, corporate liquidation, individual insolvency resolution and individual bankruptcy under the Code.
• 2018 major amendment to be finalized : The IBC amendments proposed by the panel, led by corporate affairs secretary Injeti Srinivas, make a strong case for treating homebuyers as financial creditors, enabling them to take builders defaulting on their obligations to a bankruptcy court and decide their future along with lenders.
• Proposed by a 14-member insolvency law committee headed by corporate affairs secretary Injeti Srinivas
- For resolution of individuals, two distinct processes namely- “Fresh Start” and “Insolvency Resolution”.
- For resolution of insolvency, liquidating and bankruptcy, it provides for the establishment of National Companies Law Tribunal (NCLT) and Debt Recovery Tribunal (DRT) as a nodal adjudicating authority.
- It also strengthened the rights of workers and the creditor.
- The code gives a push for ease of doing business in the country.
- It gives a clear and speedy process for identifying financial distress and resolution of companies and limited liability entities.
- It also enables the provision to deal with cross-border insolvency.