Decoding the Insolvency Laws in India

Abstract

The Insolvency & Bankruptcy Code, 2016 which was passed by the Parliament on 11th May 2016 and received Presidential assent on 28th May 2016 brought a major push to the existing insolvency regime in India for individuals, corporations, partnership firms, and other entities. Majorly, the insolvency proceedings in India are the ones initiated by the creditors on the ground of non-payment of debts. The basic aim of the Code is to provide common umbrella legislation relating to insolvency resolution in India both for the Indian creditors and the foreign creditors. The erstwhile legislative framework relating to insolvency was incorporated in Companies Act, 2013; SARFAESI Act, 2002; SICA Act, 1985; Presidency Towns Insolvency Act, 1909; Provincial Insolvency Act, 1920, and Limited Liability Partnership Act, 2008 subject to amendment from time to time. The presence of several mechanisms to deal with insolvency under diverse legislations presented a dire need of single, unified umbrella legislation to cater to the needs of various entities. This paper aims to analyze the practical and legal implications of the Insolvency & Bankruptcy Code, 2016 (IBC), and its effectiveness in the consolidation of laws relating to insolvency, bankruptcy, and reorganization. The notable changes in the Code have been identified and examined. Suggestions for better implementation of the Code have been incorporated in this paper.