Information Brochure: Insolvency Professional – A Key To Resolution
Disclaimer: This brochure is designed for the sole purpose of creating awareness on the subject and must not be used as a guide for taking or recommending any action or decision, commercial or otherwise. A reader must do his own research and / or seek professional advice if he intends to take any action or decision in the matters covered in this brochure. The content of this brochure is updated on March 31, 2021. The Code, Rules, and Regulations relevant to the matter are available at http://www.ibbi.gov.in.
Background
Prior to the enactment of the Insolvency and Bankruptcy Code, 2016 (IBC/Code), the legal and institutional machinery for dealing with financial stress and default had not kept pace with changes in the Indian economy. The recovery action by creditors, either through the Indian Contract Act, 1872 or through special laws such as the Recovery of Debts and Bankruptcy Act, 1993 and the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 did not yield desired outcomes. Similarly, action through the Sick Industrial Companies (Special Provisions) Act, 1985 and the winding-up provisions under the Companies Act, 1956 were not proving to be very helpful for either recovery by lenders or restructuring of firms. Further, the laws dealing with individual insolvency, namely, the Presidency Towns Insolvency Act, 1909 and the Provincial Insolvency Act, 1920, were not suitable to the changing needs of the time. This hampered confidence of entrepreneurs and lenders and consequently availability of credit in the market.
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