WHAT IS IBC?
Insolvency and Bankruptcy Code, 2016 (referred as IBC) which is considered as the biggest insolvency reform, is a central Act 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.
IBC was enacted and came into force w.e.f. 28th May 2016, however, some of the sections were made effective on various dates to implement in a systematic manner. Some of the parts have not even been notified till date i.e. 01/01/2019 e.g. bankruptcy process for partnership firms and individuals.
The era before IBC were having various scattered laws relating to insolvency and bankruptcy which caused inadequate and ineffective results with undue delays. For example
- SARFAESI – (Securitization and reconstruction of financial assets and enforcement of security interest) Act for security enforcement,
- RDDBFI (Recovery of debt due to banks and financial institutions) for debt recovery by banks and financial institutions,
- Companies Act for liquidation and winding up of the company,
- Presidency Towns Insolvency Act and Provincial Insolvency Act for sick-ness and insolvency of partnership firm, HUF & individual
Ineffective implementation, conflict in one of these laws and the time-consuming procedure in the aforementioned laws, made the Bankruptcy Law Reform Committee to draft and introduce Insolvency and Bankruptcy Law bill.
- To simplify and expedite the Insolvency and Bankruptcy Proceedings in India.
- Consolidate and amend all existing insolvency laws in India.
- To protect the interest of creditors including stakeholders in a company.
- To revive the company in a time-bound manner.
- To promote entrepreneurship
- To get the necessary relief to the creditors who have been waiting for the payments since a long time
- To curb down the fraudulent corporate persons who have been defaulting in making due payments.
- 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 value of assets of corporate persons.
KEY FEATURES OF IBC
- One set of laws for insolvency and bankruptcy
- Timely bound process for payment to creditors and insolvency process.
- It is the most prevalent law dealing with Insolvency and Resolution proceedings in India.
- It has an overriding effect on other laws.
- Gives equal representation to all the creditors for effective resolution of the stressed assets.
- Appointment of Insolvency Resolution Professional to take care of the business of financially distressed companies.
- Provide relief to all the creditors (Financial or Operational) who are owed some amount from the corporate persons.
- Empower the creditors to make key decisions during the insolvency proceedings.
- Includes homebuyers under the definition of financial creditors.
- Financial as well as operational creditors cab, initiate Corporate Insolvency Resolution Proceedings against corporate persons.
- Invitation to submit resolution plans to take over the distressed companies.
In the light of above features, we can clearly make out how this new legislation will act as superior law in effective industrial development. IBC will help in removing the defaulting and fraudulent businessmen from the market.
Why Centrik for IBC Consultancy?
We have a team of experts who specialize in Insolvency and Bankruptcy laws with versatile experience in the Insolvency sector. With a team of Insolvency Professionals associated, we provide complete and comprehensive result-oriented services with full dedication. For more details, please reach us at firstname.lastname@example.org