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Insolvency and Bankruptcy Code of India: The Past, The Present and The Future

Author: Krati RAJORIA

Type: Article

ref: 1201861-69

N0:1 of 2018

Pages: 61-69

Doing business in the form of company has always been the best option as it gives an opportunity to the members to limit their liabilities. The corporate personality doctrine grants the company certain rights and liabilities. But if the liabilities on the assests of the company exceed its income then the company may at times even collapse. In order to give such companies an option to revive themselves there were several laws in force in India. The Indian insolvency resolution regime underwent a complete overhaul consolidating several pre-existing laws and providing a single law for insolvency and bankruptcy related matters. In May 2016 the Indian parliament enacted the Insolvency and Bankruptcy Code, 2016 (hereinafter IB Code) that became effective in December 2016. The IB Code, 2016 covers the insolvency resolution process as well as liquidation process for individuals and corporate debtors. This paper seeks to critically analyse the new law and its applicability in the last one year of its enforcement, in light of past lessons and series of reforms, to ascertain the effectiveness and future prospects of the reformed insolvency law in India.
The paper is compartmentalised into six parts. Part I focuses on Introduction. Part II details the history of the evolution of insolvency and bankruptcy reforms in India analysing its impact. Part III gives a birds eye view of the IB Code stating reasons for its enactment and highlighting its main features and challenges in its proper implementation. Part IV discusses the moratorium period given under section 14, IB Code, its relevance and a detail account of the nature of this ‘calm period’ (directory or mandatory in nature). Part V discusses the ramifications of IB Code, future of sick companies after disolution of BIFR and the effectiveness of the insolvency resolution process. Part VI is the conclusion.