GUIDE TO THE INSOLVENCY & BANKRUPTCY CODE, 2016 (FOR CORPORATE) (IN FAIR CONDITION)

Insolvency and Bankruptcy Code, 2016 (Code) provides for a specialised forum to oversee all insolvency and liquidation proceedings for individuals, SMEs and corporates.

It empowers all classes of creditors (secured and unsecured lenders, employees, trade creditors, regulatory authorities) to trigger a resolution process in case of non payment of a valid claim.

Provides for immediate suspension of the Board of Directors and promoters’ powers.

Provides for an insolvency professional to take control of the Corporate debtor.

Enables a ‘stand-still period’ which provides stakeholders time to facilitate discussions and arrive at a common resolution rather than running independent processes.

Offers a finite time limit within which the debtor’s viability can be assessed and a resolution process agreed. The power of commercial decision to revive or liquidate the Company is on the creditors rather than the courts.

Provides for a balanced approach between rehabilitation and recovery and provides for compulsory liquidation of corporate debtors in the event the resolution has not been agreed within 180 days of the resolution process.

Aims to develop a detailed and accessible information system to reduce information asymmetry between the various participants of the insolvency process.

Provides for a clearly-defined waterfall mechanism for payment of debt in the event of a liquidation.