Insolvency Process under the Insolvency and Bankruptcy Code, 2016.
This article is written by Alok Raj, pursuing B.A.LL.B (Hons.) from Amity Law School, Amity University Lucknow.
The enactment of the Insolvency and Bankruptcy Code, 2016, marked a significant transformation in the Indian corporate insolvency framework by consolidating and amending the laws relating to insolvency resolution and bankruptcy. Before the introduction of the Code, India suffered from a fragmented and inefficient insolvency regime governed by multiple legislations, such as the Sick Industrial Companies Act, 1985, and the Recovery of Debts Due to Banks. The absence of a unified mechanism resulted in prolonged litigation, mounting nonperforming assets, and deterioration of asset value, thereby adversely affecting creditors, investors, and the overall economy. The Insolvency and Bankruptcy Code, 2016, was introduced to ensure time-bound insolvency resolution, maximization of asset value, promotion of entrepreneurship, and balancing the interests of all stakeholders.
This research paper critically examines the insolvency process under the Insolvency and Bankruptcy Code, 2016, with special reference to corporate insolvency resolution. The paper analyses the institutional structure established under the Code, including the role of the National Company Law Tribunal, Insolvency Professionals, Insolvency and Bankruptcy Board of India, and the Committee of Creditors. It further explores the stages involved in the Corporate Insolvency Resolution Process, beginning from the initiation of proceedings to the approval of the resolution plan and liquidation in cases where resolution fails.
The study also evaluates the practical implementation of the Code through landmark judicial pronouncements delivered by the Supreme Court and the National Company Law Appellate Tribunal. Particular emphasis has been laid upon the evolving jurisprudence concerning moratorium, treatment of operational creditors, commercial wisdom of the Committee of Creditors, and the role of resolution professionals. In addition, the paper highlights the challenges faced in the effective functioning of the insolvency regime, including delays in resolution, procedural complexities, inadequate infrastructure, and issues relating to cross-border insolvency.
The research adopts an analytical and doctrinal approach by examining statutory provisions, case laws, committee reports, and recent amendments introduced under the Code. The paper concludes that although the Insolvency and Bankruptcy Code, 2016 has significantly strengthened India’s insolvency framework and improved credit discipline within the corporate sector, certain practical and structural issues continue to hinder its full effectiveness.
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