Exit strategy for solvent companies under Indian insolvency law

Abstract

The Insolvency and Bankruptcy Code, 2016 (IBC) was enacted with the objective to create robust ecosystem for entrepreneurship. One of the key features under this regime is availing exit strategies for business entities or corporate persons which may not be financially distressed or solvent but with non-viable businesses. The doctrinal legal research methodology is adopted with the help of cases to check the efficacy and purpose of the law. The articles test the two major theories on corporate insolvency and bankruptcy to derive on the theory which influences the Indian voluntary liquidation regime. The article attempts to compare voluntary liquidation proceedings of corporate person are dealt with under erstwhile Companies Act 1956 and 2013 with IBC 2016. The Current voluntary liquidation regime provides legal remedy for small yet solvent businesses to exit the market without acquiring financial burden, hence supporting entrepreneurship in India.