CCI approves acquisition of certain shareholding in Balaji Wafers by General Atlantic Singapore (See 'Corp Brief') CCI approves combination of Bagmane Prime Office REIT of Bagmane Developers and others (See 'Corp Brief') CCI okays acquisition of additional equity in Generali Central Insurance by Central Bank (See 'Corp Brief') India and Finland renew MoU on Environmental Cooperation (See 'Corp Brief') IPR - Proof of right refers to documents showing that applicant legally owns 'right to apply for patent', which can be established through assignment or employment agreement with inventor: HC (See 'Legal Desk') Crude and Petroleum procurement: 24×7 Control Room Monitoring Supply Position (See 'Corp Brief') On World Wildlife Day 2026, PM reaffirms Commitment to Wildlife Conservation (See 'Corp Brief') IBC - valuers must ensure a reasoned valuation report to guide stakeholders in economic decision-making during insolvency, including consideration of intangible assets where relevant: IBBI (See 'Legal Desk') GPS transforming fishing community lives in Car Nicobar (See 'Corp Brief') Competition Act - disputes concerning alteration of copyrighted content & associated rights, need not be entertained where no prima facie case of anti-competitive agreement or abuse of dominant position, is made out: CCI (See 'Legal Desk') Ministry of Steel holds Interactive Session with Global Diplomats Ahead of 'Bharat Steel 2026' (See 'Corp Brief') Khadse announces unique nationwide ASMITA League to mark International Women's Day (See 'Corp Brief') IPR – Anti-dissection rule, which requires trademarks to be compared as whole, does not apply where part of mark is proven to be dominant feature: HC (See 'Legal Desk') India Summit 2026: Major AI Investment Commitments made (See 'Corp Brief') Joshi commends CWC's Contribution to India's Food Security (See 'Corp Brief') SEBI - Termination of a major acquisition agreement constituted a material event requiring clear & conspicuous disclosure under Regulation 30 of the LODR Regulations: SAT (See 'Legal Desk') India invites the world to study, innovate and grow together (See 'Corp Brief') SEBI - Investor decisions & share prices are significantly influenced by disclosures relating to acquisitions & corporate developments, ergo, failure to transparently disclose termination undermines market integrity: SAT (See 'Legal Desk') Controller General of Communication Accounts inaugurates North Zone Review Meeting (See 'Corp Brief') National Arogya Fair 2026 concludes in Shegaon (See 'Corp Brief') IPR - For purpose of passing-off claim, prior use of composite trademark is sufficient to establish prior use of its essential and source-identifying component: HC (See 'Legal Desk') APEDA organises Sikkim Organic Conclave-cum-International Buyer Seller Meet in Gangtok (See 'Corp Brief') 'Double Engine' Momentum Can Fast-Track Kerala's Progress: MoS (See 'Corp Brief') IBC - Waiver of rights under contract such as debenture trust deed cannot be implied if agreement explicitly requires such waiver to be in writing: SC (See 'Legal Desk') IBC - Manner in which bank classifies loan as non-performing asset for accounting or provisioning purposes does not determine IBC, if debt was restructured and acknowledged in fresh agreements: SC (See 'Legal Desk') IBC - corporate restructuring under IBC must be prioritized over stalled and ineffective proceedings under Companies Act to protect public funds and larger economic interest: SC (See 'Legal Desk') IBC - NCLT can't Reject Sec 7 application citing corporate debtor's financial health, once twin requirements of debt & default are established: SC LB (See 'Legal Desk') IBC - Moratorium u/s 14 of IBC is intended to preserve debtor's estate from creditor actions aimed at debt recovery, but does not interdict sovereign proceedings in rem for attachment or confiscation under Benami Act: SC (See 'Legal Desk') Supreme Court Clears Path For Single Insolvency Proceedings Against Linked Group Companies (See CORP EINSICHT)

Print

The Insolvency and Bankruptcy Code, 2016 (IBC)

Published: Apr 20, 2017

FEATURES AND INSTITUTIONAL SETUP

The Insolvency and Bankruptcy Code, 2016 (IBC) was passed by the Parliament on 11 May 2016, received Presidential assent on 28 May 2016 and was notified in the official gazette on the same day. IBC 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 for maximization 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.

This act has an overriding effect on multiple laws for the recovery of debts and insolvency and liquidation process like Chapter XIX & Chapter XX of Companies Act, 2013, Chapter XIX & Chapter XX of Companies Act, 2013, RDDBFI Act, 1993, SARFAESI Act, 2002, SICA Act, 1985, The Presidency Towns Insolvency Act, 1909, The Provincial Insolvency Act, 1920, Chapter XIII of the LLP Act, 2008 .

All these laws were inadequate to provide a single clearance or single window resolution system and many a time authorities with different jurisdiction and agencies overlapped and resulted in delayed case solving process and further complexities.

This article covers the key features or requirement of Act and framework of Act.

Key features of the IBC are:

• The code would have an overriding effect on all other laws relating to Insolvency &Bankruptcy. This code includes all persons including corporate, individuals, partnership firms and LLPs as well, however it shall not be applicable to corporate persons who are regulated financial service providers like Banks, Financial Institution (FIs) and Insurance Companies .

• IBC aims at consolidating all existing insolvency related laws as well as amending multiple legislation including the Companies Act. The code has replaced multiple laws covering the recovery of debts and insolvency and liquidation process and provides single window clearance to all the matters pertaining to insolvency and bankruptcy and applicant gets the appropriate relief at the same authority unlike earlier position of law where laws and authorities overlapped each other.

• The code aims to resolve insolvencies in a strict time-bound manner - the evaluation and viability determination must be completed within 180 days. The code provides fixed time frame for insolvency matters for companies and individuals. The process is to be completed within 180 days (Moratorium period) and will be extended by 90 days more. So the matters have to be resolved in not more that 270 days. Also there is a fast-track resolution process for corporate insolvency in 90 days and if it cannot be resolved assets of borrower can be sold in order to repay the creditors.

• Insolvency professionals to take over the management of the Company. IBC proposes a paradigm shift from the existing ‘Debtor in possession' to a ‘Creditor in control' regime.

• There is a simple and clear Framework of authorities under the Act. The National Company Law Tribunal (NCLT) will adjudicate insolvency resolution for companies and Debt Recovery Tribunal (DRT) will adjudicate insolvency resolution for individual.

• Sets clearly order of priority at the time of liquidation i.e.

• Insolvency related costs

• Secured creditors and workmen dues up to 24 months

• Other employee's salaries/dues up to 12 months

• Financial debts (unsecured creditors)

• Government dues (up to 2 years)

• Any remaining debts and dues

• Equity

Institutional Setup under IEC

The Act provides a time bound process for speedy disposal of the matters and for maximization of value of assets, promotes entrepreneurship, improves ease of doing business and also protects the interest of workman and employees. It provides a base to create a good environment for business and benefit to all. The Implementation of any law not only depends on good framework of law but also on effective and efficient functioning of institutions involved in the administration and execution of the same. The IBC is based on five pillars and they are:

IBB - Insolvency and Bankruptcy Board of India- This is the apex body for regulating, promoting transparency & governance in the administration of the IBC; will be involved in setting up the infrastructure and accrediting IPs & IUs; also perform legislative, quasi-judicial function with respect to IPs & IUs and IPAs.

IUs - Information Utilities: This is the centralized depository of financial and credit information of borrowers; would collect, collate and disseminate financial data provided by creditors.

IPs - Insolvency professional - The persons enrolled with IPA and regulated by Board and IPA will conduct resolution process; to act as Liquidator/ bankruptcy trustee; appointed by creditors and override the powers of board of directors. The role of IP includes a wide range of function which includes adhering to procedure of law, accounting as well as finance related functions.

Adjudicating authority (AA) - This would be the NCLT for corporate insolvency; to entertain or dispose any insolvency application, approve/ reject resolution plans, decide in respect of claims or matters of law/ facts thereof.

IPA - Insolvency Professional Agencies - This is registered by the board and shall enroll IPs as its members in accordance with the Insolvency and Bankruptcy Code, 2016 read with its regulations.

Conclusion: The IBC is not only a well-drafted law but also has a strong institutional set up.

(Author is a Practicing Company Secretary)

TIOL CORP SEARCH

TIOL GROUP WEBSITES

taxindiaonline
taxindiainternational
tioltube
TKF
TIOLawards
A TIOL Website. Copyright © 2025 TIOLcorplaws.com All rights reserved.