What is the IBC?

What Is The IBC?
IBC was implemented and entered into force on 28 May 2016, but some of the sections were implemented in a systematic way on different dates. Any of the sections have not yet been told to date, i.e. 01/01/2019, e.g. the dissolution process between companies and persons.

IBC was implemented and entered into force on 28 May 2016, but some of the sections were implemented in a systematic way on different dates. Any of the sections have not yet been told to date, i.e. 01/01/2019, e.g. the dissolution process between companies and persons.

History Of The IBC
The period before IBC, saw numerous rules on insolvency and bankruptcy, which resulted in poor and unsuccessful outcomes and unnecessary delays. For instance,

• SARFAESI – (Securitization and reconstruction of financial assets and enforcement of security interest) Act for security enforcement.
• RDDBFI (Recovery of debt due to banks and financial institutions) for debt recovery by banks and financial institutions.
• Companies Act (for liquidation and winding up of the company.
• Presidency Towns Insolvency Act and Provincial Insolvency Act for sick-ness and insolvency of partnership firm, HUF & individual

Unsuccessful execution, disagreement in one of the other laws and time-consuming methodology from the above-mentioned laws, the Bankruptcy Law Reform Committee has drawn up and introduced the Insolvency and Bankruptcy Law Bill.

IBC OBJECTIVE

• Streamline and facilitate insolvency and bankruptcy procedures in India.
• Incorporate and revise all existing insolvency law in India
• To consider the rights of creditors, including corporate stakeholders.
• Restore the corporation in a time-bound manner.
• Encourage entrepreneurship
• To obtain the necessary relief from the creditors who’ve been waiting for payouts for a long time.
• Reduction of fraudulent corporate persons who have defaulted to make outstanding dues.
• Develop a new and timely recovery procedure to be adopted by banks, financial institutions or individuals.
• Establish the Insolvency and Bankruptcy Board of India.
• Maximization of value of company assets.

IBC KEY FEATURES

• One set of insolvency and bankruptcy laws
• Prompt agreed process for payment to creditors and insolvency proceedings.
• The most prevalent law dealing with insolvency and resolution proceedings in India.
• It has an overriding effect on other laws.
• Provides equal representation to all creditors for the appropriate solution of the stressed assets.
• Appointment of Insolvency Resolution Professional to the business of financially distressed companies.
• Providing relief to all creditors (Financial or Operational) who owed a certain amount to a corporation.
• Require investors to make important decisions through insolvency proceedings.
• Feature providing home owners as identified as financial creditors.
• Financial as well as operating creditors can initiate corporate insolvency resolution proceedings against corporate persons.
• Open invite to submit resolution plans to take over distressed companies.

In the light of the above, it is clear how this existing legislation will serve as superior law in the sense of successful economic reforms. IBC will help in removing defaulters, fraudulent and non serious traders from the market.