India is increasingly becoming one of favoured business destinations on the international scale. This is attributable to a number of factors including the schemes and policies introduced by the Government from time to time. One of the major reasons for the improvement of the country’s position in the parameter of ‘Ease of Doing Business’ is the development of an efficient insolvency and bankruptcy resolution mechanism.
Insolvency and Bankruptcy Resolution
The Insolvency and Bankruptcy Code 2016 (‘Code’) aims for resolution of insolvency as opposed to liquidation. The law was framed with the intention to expedite and simplify the process of insolvency and bankruptcy proceedings in India ensuring fair negotiations between opposite parties and encouraging revival of the company by formulation of a resolution plan.
Introduction:
The President of India promulgated the Insolvency and Bankruptcy Code (Amendment) Ordinance 2018 on 6 June 2018 (Ordinance) to amend the Insolvency and Bankruptcy Code 2016 (IBC). In the short history of around one and half years since the provisions relating to corporate insolvency resolution process under IBC came into force in December 2016, the Ordinance marks the second amendment to IBC. |
The efficacious implementation of the comprehensive and systematic Insolvency and Bankruptcy Code, 2016, (hereinafter referred to as “IBC”) has instilled confidence in the creditors being a comprehensive, systemic and speedy reform thereby paving way for development and progress. The latest revision in the IBC by the Insolvency and Bankruptcy Board of India (hereinafter referred to as “IBBI”) has further tightened the reins over the dishonest and fraudulent debtors by implementation of stricter policies controlling their conduct.
Background
The partly liberalized Indian economy has been aptly referred to in the Economic Survey of India 2015-16 as one that had transitioned from ‘socialism with limited entry to “marketism” without exit.
Given the vexed ‘twin balance sheet’ problem chafing both banks and corporates in India, the Insolvency and Bankruptcy Code, 2016 (IBC/Code) was a critical structural reform. Many issues have surfaced since the Code was operationalised and the courts and the Central Government have stepped in to iron out such issues in the last one year.
Debt recovery in India has been a challenge with creditors and debtors disputing rights and obligations in legal wrangles under various provisions under applicable laws making the process time consuming and costly.
Background
Preamble
The Insolvency and Bankruptcy Board of India (‘IBBI’) was established under Insolvency and Bankruptcy Code, 2016 (‘Code’). On 31st March 2017, IBBI in exercise of its powers under the said Code notified the Insolvency and Bankruptcy Board of India (Voluntary Liquidation) Regulations, 2017 (‘Regulation’). It came into force with effect from 1st April 2017. The Regulation provides for a complete framework for the voluntary liquidation of any corporate person.