The IBC was mainly implemented to address the shortcomings in existing staggered insolvency laws in India. The Insolvency and Bankruptcy Code 2016, enacted to radically change the process of insolvency resolution in India, is keenly watched by economists and jurists as well as businessmen and investors, for the reason that each aspect of the implementation of law has the potential to critically impact the ease of doing business in India. For this reason, the Code is especially sensitive to interpretation and it is vital that the issues thrown up in its inaugural year of implementation be recognized and the judicial remark on the same be understood.
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Mistakes of the past were taken in view and The Insolvency and Bankruptcy code came into being with a wider scope and aiming to resolve the issues via more effective provisions and implementation. It is an act to consolidate and amend the laws having reorganization and insolvency resolution issues as the subject-matter. The provisions of the Act shall apply to the following in case of insolvency, liquidation, voluntary liquidation or bankruptcy;
> Company
> Limited Liability Partnership
> Partnership Firms
> Corporate Persons
> Individuals
The legislation holds the object as follow:
“An Act to consolidate and amend the laws relating to re organisation and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximization of value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interests of all the stakeholders including alteration in the order of priority of payment of Government dues and to establish an Insolvency and Bankruptcy Board of India, and for matters connected therewith or incidental thereto.”
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Process under the IBC,
- Who can file an application: Operational Creditor, Corporate Debtor, Financial
creditor - The adjudicating authorities: NCLT, NCLAT and DRT, DRAT (banks and financial institutions)
- What happens next? EMBARGO (all pending applications are stayed the corporate is left untouched), Insolvency professionals (the debtor ceases to have any control over the Corporate, the IP steps into the role of Board of directors)-> after which insolvency and liquidation will be decided upon by the Committee of creditors.
