Priority Of Stakeholders In Liquidation Under Insolvency And Bankruptcy Code
- IJLLR Journal
- Jun 27
- 1 min read
Divyam Kumar, BBA LLB, University of Mumbai Law Academy
ABSTRACT
The Insolvency and Bankruptcy Code, 2016 (IBC) has significantly reformed India’s insolvency framework, ensuring a time-bound resolution process while balancing the interests of various stakeholders. This paper delves into the evolution of insolvency laws in India, tracing the shift from fragmented legislations to a unified code. It examines the key stakeholders in corporate insolvency and their hierarchy during the liquidation process, with a specific focus on Section 53 of the IBC, which lays down the distribution waterfall for asset realization.
A comparative analysis of financial and operational creditors is conducted to highlight their distinct roles, rights, and priorities under the Code. This paper critically examines the status of operational creditors and workmen, addressing concerns regarding their treatment in the liquidation process. It further discusses key judicial pronouncements that have provided clarity on the interpretation and application of Section 53. Additionally, the study contrasts India’s liquidation framework with that of developed economies, shedding light on best practices and potential areas for reform.
Finally, the paper proposes a way forward, suggesting policy and legislative improvements to enhance fairness and efficiency in asset distribution under IBC. By dissecting Section 53 in detail, this research aims to contribute to the ongoing discourse on strengthening India’s insolvency regime.
