Insolvency and Bankruptcy Code, 2016

Insolvency and Bankruptcy Code, 2016
  • It was brought to reduce the delay in resolution of insolvency and bankruptcy due to multiplicity of laws – Companies Act, SARFAESI Act, Sick Industrial Companies Act, and so on.
Salient Features of the law
  • A unified code for greater legal clarity.
  • Fixed a timeline of 180 days, extendable by another 90 days, to resolve cases of insolvency or bankruptcy.
  • A new regulator — The Insolvency and Bankruptcy Board of India (IBBI) to regulate professionals/agencies dealing with insolvency and informational utilities.
  • National Company Law Tribunal (NCLT) to adjudicate bankruptcy cases over companies, limited liability entities while Debt Recovery Tribunal (DRT) to adjudicate cases over individuals and unlimited liability partnership firms.
  • It allows the debtor itself to initiate the insolvency-resolution process once it has defaulted on a debt.
  • Prioritization of claims by different classes of creditors and enabling provisions for solving cross border insolvency.

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