News Highlight
The Insolvency and Bankruptcy Board of India (IBBI) has amended the regulations with the “objective to maximise value in resolution”.
Key Takeaway
- In a move that will provide better market-linked solutions for stressed companies, the IBBI has amended its regulations to allow the sale of one or more assets of an entity undergoing an insolvency resolution process.
- Also, the Committee of Creditors (CoC) can now examine whether a compromise or an arrangement can be explored for a corporate debtor during the liquidation period.
Insolvency and Bankruptcy Code.
- It is a 2016 reform that was put into effect.
- It establishes simplified and faster insolvency procedures to aid in the recovery of unpaid debts and the avoidance of bad loans, a significant drag on the economy for creditors like banks.
- A scenario known as insolvency occurs when people or businesses cannot pay their existing debts.
- Bankruptcy is a situation whereby a court of competent jurisdiction has declared a person or other entity insolvent.
Objectives of the Insolvency and Bankruptcy Code
- To consolidate and amend all existing insolvency laws in India.
- To simplify and expedite the insolvency and bankruptcy proceedings in India.
- To protect the interests of creditors, including stakeholders in a company.
- To revive the company in a time-bound manner.
- To promote entrepreneurship.
- To get the necessary relief to the creditors and consequently increase the credit supply in the economy.
- To work out a new and timely recovery procedure to be adopted by banks, financial institutions, or individuals.
- To set up an Insolvency and Bankruptcy Board of India.
- To maximisation the value of assets of corporate persons.
Salient features of the Insolvency and Bankruptcy Code, 2016.
- The Insolvency and Bankruptcy Board of India (IBBI):
- Establishment of an Insolvency and Bankruptcy Board of India to exercise regulatory oversight over insolvency professionals, professional insolvency agencies, and information utilities.
- Insolvency professionals handle the commercial aspects of the insolvency resolution process.
- Insolvency professional agencies develop professional standards and codes of ethics and are first-level regulators for insolvency professionals.
- Coverage:
- It covers all individuals, companies, Limited Liability Partnerships (LLPs) and partnership firms.
- Adjudicating authority:
- National Company Law Tribunal (NCLT) for companies and LLPs.
- Debt Recovery Tribunal (DRT) for individuals and partnership firms.
Pic Courtesy: Business Standard
Content Source: Economic Times