Insolvency and Bankruptcy Code

Insolvency and Bankruptcy Code is a comprehensive legislation enacted by the Parliament of India to consolidate and amend the laws relating to reorganization and insolvency resolution of corporate persons, partnership firms, and individuals in a timely and efficient manner, as recommended by the Bankruptcy Law Reforms Committee and the Law Commission of India. The Code aims to promote economic growth, maximize value of assets, and balance the interests of all stakeholders, including creditors, debtors, and employees, as envisioned by Arun Jaitley, the then Minister of Finance (India). The Code has been hailed as a major reform by Narendra Modi, the Prime Minister of India, and has been compared to similar laws in United States, such as the Bankruptcy Abuse Prevention and Consumer Protection Act, and in United Kingdom, such as the Insolvency Act 1986. The Code has also been influenced by the United Nations Commission on International Trade Law and the World Bank.

● Introduction to

Insolvency and Bankruptcy Code The Insolvency and Bankruptcy Code is a significant piece of legislation that has transformed the insolvency landscape in India, as acknowledged by the International Monetary Fund and the World Trade Organization. The Code provides a framework for resolving insolvency in a timely and efficient manner, as recommended by the Institute of Chartered Accountants of India and the Institute of Company Secretaries of India. It applies to companies registered under the Companies Act, 2013, limited liability partnerships registered under the Limited Liability Partnership Act, 2008, and individuals, as defined by the Indian Contract Act, 1872 and the Code of Civil Procedure, 1908. The Code has been implemented by the Insolvency and Bankruptcy Board of India, which is responsible for regulating and overseeing the insolvency profession, as mandated by the Ministry of Corporate Affairs (India) and the Reserve Bank of India.

● History and Evolution of

the Code The Insolvency and Bankruptcy Code has its roots in the Report of the Bankruptcy Law Reforms Committee, which was constituted by the Ministry of Finance (India), as announced by Arun Jaitley, the then Minister of Finance (India). The Committee, headed by T.K. Viswanathan, submitted its report in November 2015, which formed the basis of the Code, as acknowledged by the Law Commission of India and the Institute of Chartered Accountants of India. The Code was introduced in the Lok Sabha on December 21, 2015, and was passed by the Parliament of India on May 11, 2016, as reported by the Hindustan Times and the The Economic Times. The Code received the assent of the President of India on May 28, 2016, and was notified on the same day, as announced by the Press Information Bureau (India).

● Key Provisions and Processes

The Insolvency and Bankruptcy Code provides a framework for insolvency resolution, which involves the appointment of an insolvency professional, the constitution of a committee of creditors, and the preparation of a resolution plan, as outlined by the Insolvency and Bankruptcy Board of India and the Institute of Chartered Accountants of India. The Code also provides for the moratorium period, during which the assets of the debtor are protected from recovery proceedings, as mandated by the Supreme Court of India and the National Company Law Tribunal. The Code has introduced the concept of insolvency resolution process costs, which are paid from the assets of the debtor, as recommended by the World Bank and the International Finance Corporation.

● Corporate Insolvency Resolution Process

The corporate insolvency resolution process is a key component of the Insolvency and Bankruptcy Code, as acknowledged by the Confederation of Indian Industry and the Federation of Indian Chambers of Commerce & Industry. The process involves the filing of an application by a creditor or the debtor itself, the appointment of an insolvency professional, and the constitution of a committee of creditors, as outlined by the National Company Law Tribunal and the National Company Law Appellate Tribunal. The committee of creditors is responsible for approving a resolution plan, which is then submitted to the National Company Law Tribunal for approval, as mandated by the Insolvency and Bankruptcy Board of India and the Ministry of Corporate Affairs (India).

● Personal

Insolvency and Bankruptcy The Insolvency and Bankruptcy Code also provides for personal insolvency and bankruptcy, which applies to individuals and partnership firms, as defined by the Indian Partnership Act, 1932 and the Code of Civil Procedure, 1908. The process involves the filing of an application by the debtor or a creditor, the appointment of a bankruptcy trustee, and the preparation of a bankruptcy plan, as outlined by the Debt Recovery Tribunal and the District Courts. The Code has introduced the concept of fresh start process, which allows individuals to make a fresh start by discharging their debts, as recommended by the World Bank and the International Monetary Fund.

● Impact and Implications of

the Code The Insolvency and Bankruptcy Code has had a significant impact on the insolvency landscape in India, as acknowledged by the Reserve Bank of India and the Securities and Exchange Board of India. The Code has led to a significant increase in the number of insolvency cases being filed, as reported by the National Company Law Tribunal and the Insolvency and Bankruptcy Board of India. The Code has also led to a significant reduction in the non-performing assets of banks, as announced by the State Bank of India and the ICICI Bank. The Code has been hailed as a major reform by Narendra Modi, the Prime Minister of India, and has been compared to similar laws in United States, such as the Bankruptcy Abuse Prevention and Consumer Protection Act, and in United Kingdom, such as the Insolvency Act 1986.

● Amendments and Reforms

The Insolvency and Bankruptcy Code has undergone several amendments and reforms since its enactment, as reported by the Hindustan Times and the The Economic Times. The Code was amended in 2017 to introduce the concept of cross-border insolvency, as recommended by the United Nations Commission on International Trade Law and the World Bank. The Code was further amended in 2018 to introduce the concept of group insolvency, as outlined by the Insolvency and Bankruptcy Board of India and the National Company Law Tribunal. The Code has also been amended to provide for the appointment of a resolution professional and the constitution of a committee of creditors, as mandated by the Ministry of Corporate Affairs (India) and the Reserve Bank of India. The Code is expected to undergo further reforms and amendments in the future, as announced by the Ministry of Finance (India) and the Insolvency and Bankruptcy Board of India. Category:Indian law