Reforms Brought In The Insolvency Regime: The Insolvency And Bankruptcy Code, 2016

Dr. Vivek Kumar, Associate Professor of Law, Institute of Legal Studies, Ch. Charan Singh University, Campus Meerut

ABSTRACT

Insolvency and Bankruptcy Code (IBC), which went into effect in India in 2016, has been hailed as a major economic game-changer. Insolvency is a situation where individuals or companies are unable to repay their outstanding debt. Bankruptcy is a legal proceeding involving a person or business that is unable to repay outstanding debts. The bankruptcy process begins with a petition filed by the debtor, or by the creditors. All of the debtor's assets are measured and evaluated, and the assets may be used to repay a portion of outstanding debt. The Government implemented the Insolvency and Bankruptcy Code (IBC) to consolidate all laws related to insolvency and bankruptcy and to tackle Non-Performing Assets (NPA), a problem that has been pulling the Indian economy down for years.

The Code was passed with the intention of lowering the nation's banks' rising NPAs and also of offering a better framework for resolving distressed businesses. The historical significance of the insolvency systems starts in the British era, but ancient Indian manuscripts point toward the existence of the debt recovery mechanisms from 200 BC involving religious aspects. A successful insolvency framework protects failed business owners, favours restructuring over liquidation, distinguishes between legitimate and fraudulent debtors, allows for time-bound resolution, minimizes value erosion, and maximizes value for all stakeholders.

A comparison of the efficiency of IBC 2016 with these elements reveals that while the law has some advantages, it is hindered by insufficient infrastructure requirements, overworked insolvency practitioners, and excessive judicial delays that lower asset values.The Insolvency and Bankruptcy Code, 2016 is considered to be one of the biggest economic reforms introduced in India and is assumed to play a significant role in limiting the risks of credit. Insolvency and Bankruptcy Code, 2016, is a reformist piece of legislation designed to increase the effectiveness of insolvency and bankruptcy proceedings in India. National Companies Law Tribunal (NCLT), which existed as a forum for adjudication of disputes for companies, became the adjudicating authorities for corporate insolvency resolution and liquidation.

Keywords: Insolvency Bankruptcy Code, NCLT, Liquidation, IRP- Insolvency Resolution Process, BRP- Bankruptcy Resolution Process, CIRP- Corporate Insolvency Resolution Process , IBBI- Insolvency and Bankruptcy Board of India, NPA- Non Performing Assets, Provincial Insolvency Act, SARFAESI Reforms, Indian Scenario.