Invitation of comments from the public on proposed changes to the Corporate Insolvency Resolution and Liquidation Framework under Insolvency and Bankruptcy Code, 2016
The Insolvency and Bankruptcy Code (“IBC/Code”) was enacted in 2016 to consolidate the laws related to reorganisation and insolvency resolution in India and to ensure a time-bound resolution of insolvency, resulting in maximisation of value of the assets of concerned stakeholders, promotion of entrepreneurship, and ensuring greater availability of credit and balancing the interests of all stakeholders concerned. While the provisions relating to
insolvency and liquidation of corporate persons were brought into force in December 2016, those relating to insolvency resolution and bankruptcy of personal guarantors to corporate debtors came into effect in December 2019.
The IBC is one of the deepest financial sector reforms that has been introduced in India in the last decade. It is a modern economic legislation that seeks to rectify the issues in the erstwhile insolvency regime which was plagued by delays, low recoveries, and high costs. The Code provides a market-based mechanism for timely stress resolution of financial distress and a value-maximising exit that is facilitated by qualified professionals.
The provisions of the Code and its subordinate legislation have been periodically reviewed to keep pace with dynamic developments in the market. In November 2017, within just a year of the implementation of provisions relating to corporate insolvency, the Central Government constituted the Insolvency Law Committee (“ILC”) to take stock of the functioning of the newly enacted Code and to make suitable recommendations to ensure its effective implementation. The ILC has released four reports since then wherein it has made various recommendations for strengthening the Code and its subordinate legislation (March 2018, October 2018, February 2020, and July 2021). The Central Government and the Insolvency and Bankruptcy Board of India (“IBBI”) have taken swift action on many such recommendations that have now been translated into amendments in the law.
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