Gamification Of Mergers And Acquisitions With Insolvency And Bankruptcy Law
- IJLLR Journal
- May 12
- 1 min read
Shreya Litoria, NALSAR University of Law
ABSTRACT
The Insolvency and Bankruptcy Code (IBC), 2016, has fundamentally transformed India’s corporate insolvency framework, notably through the implementation of the “clean slate” principle. Reinforced by the Supreme Court in the Essar Steel Case, this principle ensures that upon approval of a resolution plan, the corporate debtor is absolved of prior liabilities, thus affording the new management a fresh start. Section 31 of the IBC stipulates that the approved resolution plan is binding on all stakeholders, thereby protecting the debtor from claims related to previous obligations. Additionally, Section 32A, introduced by the 2019 amendment, grants immunity from prosecution for offences committed by the former management.
This paper scrutinizes the legal, regulatory, and judicial framework supporting this principle, emphasizing its impact on corporate resolution process and its interplay with other legislations, such as Securities and Exchange Board of India Act (SEBI), and the Prevention of Money Laundering Act (PMLA). Through an analysis of key cases, the document highlights the effectiveness of the clean slate principle in facilitating corporate rescues and ensuring a stable post-resolution environment, while also identifying potential challenges, particularly concerning regulatory actions and corporate criminal liability.
Keywords: Mergers, Acquisitions, Insolvency, Bankruptcy, Laws, etc.
