It is smarter to have one systematized enactment than various to manage the parts of an organization which can have a solitary umbrella. The Insolvency and Bankruptcy Code in India  has been into effect since 2016. Before the Insolvency and Bankruptcy Code, 2016 (hereinafter called as IBC), India had no solitary law managing an organization in monetary pain. The IBC is an all-encompassing law that deals with the bankruptcy of not only corporations, but partnerships and individuals as well. With this impact, the IBC has also established the Insolvency and Bankruptcy Board of India (“IBBI”) as the nodal office to control all matters relating to insolvency and bankruptcy with an aim to finish insolvency resolution in a quick and straightforward way. IBC applies to Any Company incorporated under the Companies Act, 2013, Any Limited Liability Partnership (“LLP”) firm registered under the Limited Liabilities Partnership Act, 2008, Any partnership registered under the Partnership Act, 1932, Any other company incorporated by any special statute and Any individual person. The comprehensive performance of SICA (Sick Industrial Companies Act) did not live up to the expected results and thus, IBC was notified on 28th May, 2016 and the repeal of SICA came into full effect from December 1, 2016. The legislation holds the object as follow:

“An Act to consolidate and amend the laws relating to reorganisation and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximisation of value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interests of all the stakeholders including alteration in the order of priority of payment of Government dues and to establish an Insolvency and Bankruptcy Board of India, and for matters connected therewith or incidental thereto.”

The objective of the code itself specifies the establishment of Insolvency and Bankruptcy Board of India and it shall act as a Regulator. Only the companies registered under Section 8 of The Companies Act, 1956 can approach the IBBI for registration as an insolvency Professional Agency. The Insolvency Professional Agencies will foster proficient guidelines, code of morals and be the principal level controller for Insolvency experts individuals. To render services as an insolvency professional an individual must be enlisted with IBBI and a member of the Insolvency Professional Agency. An insolvency resolution under the IBC can be started by any creditor when there is a minimum default of INR 1,00,000 (Rupees One Lakh Only) of such creditor’s debt by the debtor. Such application can be either filed by an operational creditor or a financial creditor before the National Company Law Tribunal (“NCLT”) having relevant jurisdiction. Section 5(7) of the IBC states that financial creditor “means any person to whom a financial debt is owed and includes a person to whom such debt has been legally assigned or transferred to”. The definition of Operational Creditor is given under section 5(20) of the Act which states that in the event of late payment, operational creditors may send a request for notification to an unpaid debtor in the form of a copy of an invoice requesting the payment of the amount corresponding to the late payment to the debtor company in accordance with FORM 3 OF IBC. A financial creditor either by itself or jointly with other financial creditors may file an application for initiating corporate insolvency resolution process against a corporate debtor before the Adjudicating Authority when a default has occurred. The Adjudicating Authority shall, within fourteen days of the receipt of the application, ascertain the existence of a default from the records of an information utility or on the basis of other evidence furnished by the financial creditor. On the other hand, the debtor must send the notice to the mandatory creditor within ten days of receipt of the request or copy of the invoice. After expiry of the period of ten days from the date of delivery of the notice or invoice demanding payment if the operational creditors do not receive payment from the corporate debtor or notice of dispute the operational creditor may file an application to Adjudicating Authority in FORM 5 OF IBC for initiating the corporate insolvency resolution process. CIRP has to be concluded within 180 days. It can be extended by 90 days, but has to be compulsorily concluded within 330 days. This ensures timely resolution of disputes. The first successful case of a CIRP was that of Bhushan Steel wherein TATA Steel agreed to purchase Bhushan Steel for Rupees Thirty-Two Thousand Five Hundred Crores. An appeal from any order or judgment of the NCLT, within the time specified therein, will lie with the National Company Law Appellate Tribunal (“NCLAT”). In the same way, appeals from the NCLAT will lie with the Supreme Court. NCLT established under Section 408 of The Companies Act, 2013 is the adjudicating authority under the code and shall hear insolvency resolution cases for corporate persons. NCLT is a semi legal body set up by the Government of India to resolve disputes emerging between civil corporations. National Company Appellate Tribunal (NCLAT) is a higher council where appeals can be lodged in case the parties are not satisfied with the decision of NCLT. Not only these, the Act also recognises Debt Recovery Tribunal (DRT) constituted under Section 3 (1) of the Recovery of Debts Due to Banks and Financial Institutions as the adjudicating authority for the purpose of insolvency resolution and bankruptcy cases for partnership firms and individuals.

The IBC has found a way to regularize the indebtedness cycle in India. It has revised more than 11 enactments in India, achieving perhaps the main change to business laws in India lately. IBC aims to decrease the measure of terrible advances that has outfitted the economy in the course of the most recent couple of years.  Recognizing the challenges of completing IBC processes as a result of the COVID-19 outbreak, by way of a notification dated April 20, 2020, the IBBI amended the CIRP Regulations to insert regulation 40C, which states that subject to provisions of the IBC, the period of lockdown imposed by the Central Government in the wake of the COVID-19 outbreak shall not be counted in the timeline of any CIRP activity that could not be completed due to the lockdown. With many more insolvency resolution processes in the pipe line, only time will tell if the IBC will prove to be a successful tool with its objective of streamlining the insolvency process in India.

Aishwarya Says:

I have always been against Glorifying Over Work and therefore, in the year 2021, I have decided to launch this campaign “Balancing Life”and talk about this wrong practice, that we have been following since last few years. I will be talking to and interviewing around 1 lakh people in the coming 2021 and publish their interview regarding their opinion on glamourising Over Work.

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We are also running a series Inspirational Women from January 2021 to March 31,2021, featuring around 1000 stories about Indian Women, who changed the world. #choosetochallenge