Insolvency and Bankruptcy Code : Amendment in relation to Home Buyers

The Insolvency and Bankruptcy Code (IBC) is a significant legislation enacted by the Indian government in 2016. It aims to consolidate and amend the laws relating to reorganization and insolvency resolution of corporate persons, partnership firms, and individuals in a time-bound manner.

Here are some key features and objectives of the Insolvency and Bankruptcy Code (IBC) 2016:

Consolidation: The IBC consolidates the existing framework for insolvency and bankruptcy proceedings in India, providing a unified legal framework for resolving insolvency and bankruptcy matters.

Time-bound resolution: One of the primary objectives of the IBC is to facilitate the timely resolution of insolvency cases. The code specifies strict timelines for various processes involved in the resolution, such as the admission or rejection of insolvency applications, appointment of resolution professionals, submission of resolution plans, and the conclusion of the resolution process.

Institutional framework: The IBC establishes dedicated institutions and mechanisms to facilitate the insolvency resolution process. This includes the Insolvency and Bankruptcy Board of India (IBBI), which regulates insolvency professionals, insolvency professional agencies, and information utilities.

Corporate Insolvency Resolution Process (CIRP): The IBC outlines the process for initiating and conducting the Corporate Insolvency Resolution Process (CIRP) for corporate debtors. This entails the submission of resolution plans by potential resolution applicants, the approval of a resolution plan by the creditors' committee, and the appointment of an insolvency professional to oversee the debtor's affairs during the resolution process.

Liquidation: In cases where the resolution of a corporate debtor is not feasible or where no viable resolution plan is received during the CIRP, the IBC provides for the initiation of liquidation proceedings. Liquidation involves the sale of the debtor's assets to repay creditors in a prescribed order of priority.

Cross-border insolvency: The IBC includes provisions for dealing with cross-border insolvency, enabling cooperation and coordination with foreign jurisdictions in insolvency matters.

Overall, the Insolvency and Bankruptcy Code (IBC) 2016 represents a significant reform aimed at promoting a robust and efficient insolvency resolution framework in India, thereby enhancing creditor confidence, facilitating the revival of distressed businesses, and promoting the orderly resolution of insolvency cases.

What is the purpose of IBC Code?

The purpose of the Insolvency and Bankruptcy Code (IBC) is multifaceted and encompasses several objectives aimed at addressing various challenges in the insolvency and bankruptcy resolution process. Some of the key purposes of the IBC are as follows:

Timely Resolution: The primary purpose of the IBC is to facilitate the timely resolution of insolvency cases. By setting strict timelines for different stages of the resolution process, the IBC aims to prevent delays and ensure that the resolution process is completed efficiently.

Maximization of Value: The IBC seeks to maximize the value of assets of insolvent entities by facilitating their timely resolution or liquidation. By providing a transparent and predictable framework for insolvency resolution, the IBC aims to attract potential investors and maximize the recovery for creditors.

Promotion of Entrepreneurship: The IBC aims to promote entrepreneurship by providing a mechanism for the efficient resolution of financial distress faced by businesses. By facilitating the revival of viable businesses and providing a fresh start to honest entrepreneurs, the IBC seeks to promote a dynamic and competitive business environment.

Creditor Protection: The IBC aims to protect the interests of creditors by providing them with a clear and predictable mechanism for recovering their dues from insolvent entities. By establishing a creditors' committee to oversee the insolvency resolution process and ensuring equitable treatment of creditors, the IBC seeks to enhance creditor confidence and promote lending activity.

Promotion of Economic Growth: By facilitating the efficient allocation of resources and promoting the resolution of distressed assets, the IBC aims to contribute to overall economic growth. A robust insolvency resolution framework can help reduce the burden of non-performing assets on the banking sector, improve the availability of credit, and stimulate investment and entrepreneurship.

Overall, the Insolvency and Bankruptcy Code (IBC) serves as a comprehensive legal framework for addressing insolvency and bankruptcy issues, with the overarching goal of promoting economic efficiency, creditor protection, and entrepreneurship while ensuring timely resolution of insolvency cases.