A Critical And Comparative Analysis Of The ‘Waterfall Mechanism’ Provided Under The Insolvency And Bankruptcy Code of 2016
Apoorva Katti & Neha Venkatesh, CHRIST (Deemed to be University)
ABSTRACT
The Indian insolvency regime underwent a complete overhaul as a result of the enactment of the Insolvency and Bankruptcy Code of 2016. The legislation is the result of meticulous efforts and conceptualisation of inputs from various existing insolvency legislations and global law regimes, it continues to have its innate shortcomings and ambiguities and is ever- evolving in nature. On this note, this paper seeks to examine the shortcomings in the legislation. Firstly, the paper seeks to analyse the ‘waterfall mechanism’ provided under Section 53 of the Code and its failure to recognise inter se prioritisation among secured creditors and subordinate agreements. Following this, the priority of claims between financial creditors over operational creditors shall be analysed. To conclude, a comprehensive and comparative analysis of various international laws and standards shall also be presented. The authors have adopted the qualitative method of research throughout. Primarily, the paper focuses on the ambiguities surrounding Section 53 of the Code.
