Insolvency and Bankruptcy Code (IBC)
Context: IBC has transformed India’s credit culture and become a dominant recovery route, but its effectiveness is hindered by judicial delays and resolution uncertainties.
Important Pointers:
Objective: Aims to consolidate and amend laws related to insolvency and bankruptcy, providing a time-bound framework for resolution.
Applicability: Covers companies, limited liability partnerships, partnership firms, and individuals, excluding financial service providers.
Resolution Timeline: Corporate Insolvency Resolution Process (CIRP) must be completed within 180 days, extendable by 90 days; for smaller companies, within 90 days, extendable by 45 days.
Regulatory Authority: The Insolvency and Bankruptcy Board of India (IBBI) oversees the implementation and regulation of insolvency proceedings.
Adjudicating Authorities: The National Company Law Tribunal (NCLT) handles corporate insolvency, while the Debt Recovery Tribunal (DRT) deals with individual insolvency cases.
Insolvency Professionals: Licensed professionals manage the resolution process, ensuring compliance and facilitating negotiations between debtors and creditors.
Committee of Creditors (CoC): Comprised of financial creditors, the CoC evaluates and approves resolution plans, influencing the outcome of the insolvency process.
Liquidation Process: If the resolution fails, assets are liquidated in a prescribed order: insolvency resolution costs, secured creditors, workers and employees, and unsecured creditors.