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

In as much as the Government has been in the consistent process of encouraging business operations in the nation, it also has the objective to create more transparent and systematic mechanism ensuring time bound manner and for maximization of the value assets. One of the major challenges faced by the modern commercial sector is the reposition of faith of the creditors who put their hard-earned investments at the fate of the success of the business transactions undertaken.

Resolution Procedure

In order to tackle the problem of unscrupulous debtors escaping and delaying the repayment of debts, the Government of India brought forth the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the 'IBC'). Not only does it seek to promote the availability of credit in a more transparent and systematic manner, but, it also balances the interests of all stakeholders by making the legal framework stronger in terms of reorganization and insolvency resolution of corporate persons, insolvent entity in a time bound manner and for maximization of the value assets.

The enforcement of the Insolvency and Bankruptcy Code (hereinafter referred to as “IBC”) has reinforced the resolution of insolvency in a time bound manner and for maximization of the value assets. In furtherance of a more organized resolution process, the Insolvency and Bankruptcy Board (hereinafter referred to as “IBBI”) brought forth the Insolvency Resolution Process for Corporate Persons Regulations, 2016 (hereinafter referred to as the “Regulations”).

Committee of Creditors

The company being an independent legal entity is recognized for distinguished identity. The specialized corporate structure is monitored under the provisions of the Companies Act, 2013 (hereinafter referred to as the “Act”).

National Company Law Tribunal

Background:

In the market of changing scenarios, the companies are faced by numerous challenges on the business front. At times they may be confronted with such financial crisis that it is no longer practical to continue the business operations and deal with the mounting losses. In such situations, the companies may be referred for insolvency resolution.

Guiding light

In the age of growing competition in the market and ever changing fast paced technologies, the business houses face different challenges some of which may question their very existence. With changing times and circumstances, the corporates are required to undergo a structural modification in order to continue their working and to save their decaying and old outlook. The old standards need modifications rejuvenating with latest thoughts and new fashionable products. It is seen often, recourses to mergers and acquisitions are taken.

The Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “the Code”) undergoes yet another amendment to ensure enforcement of the provisions of the Code aiming towards the fulfilment of its objective of time-bound resolution process. These amendments will facilitate effective implementation and obtain desired results. The highlights of a few provisions in the said regard are:

Introduction: