Insolvency and Bankruptcy Code

Insolvency and Bankruptcy Code
Bankruptcy
Enacted by Parliament of India
Introduced by Arun Jaitley
Status: In force


The Insolvency and Bankruptcy Code, 2016 is the bankruptcy law of India which seeks to consolidate the existing framework by creating a single law for insolvency and bankruptcy. The Insolvency and Bankruptcy Code, 2015 was introduced in Lok Sabha in December 2015. It was passed by Lok Sabha on 5 May 2016.[1] The Code received the assent of the President of India on 28 May 2016.[2] Certain provisions of the Act has come into force from 5th August and 19 August 2016.[3]

Details

The Code seeks to repeal the Presidency Towns Insolvency Act, 19 Act, 1993 and Sick Industrial Companies (Special Provisions) Repeal Act, 2003, among others.[4]

Key Features

Insolvency Resolution : The Code outlines separate insolvency resolution processes for individuals, companies and partnership firms.The process may be initiated by either the debtor or the creditors. A maximum time limit, for completion of the insolvency resolution process,has been set for corporates and individuals. For companies, the process will have to be completed in 180 days, which may be extended by 90 days, if a majority of the creditors agree.[5]

Insolvency regulator: The Code establishes the Insolvency and Bankruptcy Board of India, to oversee the insolvency proceedings in the country and regulate the entities registered under it. The Board will have 10 members, including representatives from the Ministries of Finance and Law, and the Reserve Bank of India.[4]

Insolvency professionals: The insolvency process will be managed by licensed professionals. These professionals will also control the assets of the debtor during the insolvency process.[4]

Bankruptcy and Insolvency Adjudicator: The Code proposes two separate tribunals to oversee the process of insolvency resolution, for individuals and companies: (i) the National Company Law Tribunal for Companies and Limited Liability Partnership firms; and (ii) the Debt Recovery Tribunal for individuals and partnerships.[4]

References

  1. ↑ "Lok Sabha passes bill to fast track debt recovery", The Economic Times, 2 August 2016
  2. ↑ "Insolvency and Bankruptcy Code" (PDF). Gazette of India. Retrieved 31 May 2016.
  3. ↑ "Notification" (PDF). E-Gazette. Gazette of India. Retrieved 22 August 2016.
  4. 1 2 3 4 "Legislative Brief of the Code" (PDF). PRS India. Retrieved 18 August 2016.
  5. ↑ "India Overhauls Century-Old Bankruptcy Laws in Win for Modi", Bloomberg, 11 May 2016


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