Insolvency and Bankruptcy Code (IBC)
- Context : The Insolvency and Bankruptcy Code (IBC) came into effect in the year 2016, and it has now successfully completed 10 years of implementation.
- The IBC is a critical institutional reform that has created a positive impact on credit markets, corporate behavior, investor confidence, and overall economic efficiency.
About the Insolvency and Bankruptcy Code (IBC)
- The Insolvency and Bankruptcy Code (IBC) was enacted in 2016 based on the recommendations of the T. K. Viswanathan Bankruptcy Law Reforms Committee (2015).
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- It provides a consolidated, time-bound, and creditor-driven framework for resolving insolvency in India.
- It was introduced to curb the rise of Non-Performing Assets (NPAs) and to improve previously weak debt recovery mechanisms like the SARFAESI Act and Lok Adalats.
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- It aims for a swift resolution to prevent the erosion of the value of stressed assets.
- Protecting asset value, ensuring timely resolution, fostering a healthy credit cycle, and promoting the ease of doing business.
- The Insolvency and Bankruptcy Board of India (IBBI) is the regulatory authority functioning under this Act.
- The IBBI frames the regulations, its board includes members from the Ministry of Finance, Ministry of Corporate Affairs, and the Reserve Bank of India (RBI).
- The National Company Law Tribunal (NCLT) has the authority to adjudicate corporate insolvency cases.
- The Debt Recovery Tribunal (DRT) handles insolvency cases related to individuals and partnership firms.
- In the event of a default, a financial creditor, an operational creditor, or the corporate debtor itself can initiate the insolvency resolution process.
- The Corporate Insolvency Resolution Process (CIRP) must generally be completed within a strict timeframe of 330 days.
