Ms. Shraddha Oberoi, Assistant Professor of Law at Shree Guru Gobind Singh Tricentenary University, Gurguram
“Bankruptcy is a legal proceeding in which you put your money in your pants pocket and give your coat to your Creditors.”
-Joey Adams
Introduction
In order to maximize the value of assets, promote entrepreneurship, to avail the credit and balance the interests of all stakeholders, the Insolvency and Bankruptcy Code, 2016 (IBC) came into force on 28th May, 2016.
The code was enforced to amend and consolidate the laws related to reorganisation and insolvency resolution of corporate persons, partnership firms and individuals.
The Code has also changed the priority related to payment of dues. The payment to workers was given an edge as compared to the Government dues which are paid after the payment to the unsecured creditors.
The Insolvency and Bankruptcy Code, 2016 (IBC) aims to ensure the settlement of insolvency cases smoothly; it also assures to faster the business transactions and providing a database of creditors.
Various laws are there which deal with the insolvency and bankruptcy of companies, limited liability partnerships, individuals and other legal entities such as Recovery of Debt Due to Banks and Financial Institutions Act, 1993, the Companies Act, 2013, Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI) and Sick Industrial Companies (Special Provisions) Act, 1985 (SICA).
