INSOLVENCY & BANKRUPTCY

CODE, 2016 (IBC, 2016)

DR KAPIL BANSAL
GLA UNIVERSITY
MATHURA
Under Insolvency & Bankruptcy code (IBC, 2016):

 Winding up by the Tribunal(as per IBC,2016)

 In case of Insolvency Under IBC, 2016 for

initiating CIRP(corporate insolvency
resolution process)
 CIRP(Corporate Insolvency
Resolution Process) Under IBC,
2016
 Corporate Insolvency Resolution Process
Under IBC, 2016
FILING OF PETITION TO
APPROVAL OF IRP (PLAN) SUBMISSION OF PLAN TO
NCLT BY CREDITORS
BY COC WI 180+ 90 days NCLT
AGAINST CD

Resolution Applicant WILL

ACCEPTANCE OR make an IRP (INSOLVENCY
REJECTION OF PETITION RESOLUTION PLAN) IF THE PLAN FAILS?
BY NCLT WI 14 DAYS

APPOINTMENT OF COC
APPOINTMENT OF IP’s BY
NCLT (REFER IBBI)
(COMMITTEE OF LIQUIDATION
CREDITORS) by IP’s
 Introduction
• The Insolvency and Bankruptcy Code, 2016 (IBC)
is the bankruptcy law of India and one stop
solution,
• It seeks to consolidate the existing framework by
creating a single law for insolvency and
bankruptcy.
• It was previously a long process
• It was notified in the official Gazette on 28 May’
2016
 Key features

• Insolvency Resolution
• Insolvency Regulator(IBBI) SITE OF IBBI.docx
• Insolvency Professionals
• Bankruptcy and Insolvency Adjudicator
 Insolvency Resolution process
• The Code outlines separate insolvency
resolution processes for individuals,
companies and partnership firms. The process
may be initiated by either the debtor or the
creditors
 Insolvency Regulator
• The Code establishes the Insolvency and
Bankruptcy Board of India, to oversee the
insolvency proceedings in the country.
 Insolvency Professionals
• The insolvency process will be managed by
licensed professionals. These professionals will
also control the assets of the debtor during
the insolvency process.
Bankruptcy and Insolvency Adjudicator

• National Company Law Tribunal (NCLT) would

deal with matters relating to corporate
insolvency, Limited Liability Partnership.

• Debt Recovery Tribunal (DRT) would deal with

individual insolvency and Unlimited partnership.
 DRT
• There are 39 DRTs and 5 DRATs, which are
single Member Tribunals.
• The e-DRT project has been implemented in
all DRTs and DRATs.
 Objectives of IBC
• 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.
 Objectives of IBC
• Provides for immediate suspension of the
Board of Directors and promoters’ powers.
Provides for an insolvency professional to take
control of the Corporate debtor
 Who can file for corporate Insolvency resolution process?

• Financial creditor (eg. Loan)

• Operational creditor (eg. Claim for goods and
services and employment)

The Code prescribes penalties for false and

frivolous petitions.
 Duties of IP’s

– To collect all information relating to the

assets, finances and operations of the
corporate debtor for determining its financial
position
– To receive and collate all the claims submitted
by creditors
– To constitute a committee of creditors
– Take custody of assets and monitor the assets.
 EXAMPLES
• Essar steel
• Bhushan Steel
• Jet Airways
• Reliance communications
What will happen if the resolution
plan fails?
Answer: Liquidation/winding up
 Liquidation is triggered in case the following
circumstances arise:

• Resolution plan fails

• Creditors’ committee does not reach an
agreement during the stipulated period
of 180 days or any extended period
thereof
• Creditors’ committee decides to proceed
with liquidation.
•  
 News ET
• A total of 190 corporate insolvency
proceedings since the IBC came into
force have ended with successful
resolution plans till December 31,
2019.
• However, in 57.7% of the
proceedings, the court has ordered
liquidation of the corporate debtors’
assets.
 News ET

• Separately, 579 voluntary liquidation

proceedings have been initiated by
corporate debtors till the end of
2019.
 News ET
• Read more at:
https
://economictimes.indiatimes.com/https://eco
nomictimes.indiatimes.com/industry/banking/
finance/lenders-set-to-recover-43-1-from-inso
lvency-proceedings/articleshow/74144226.cm
s?utm_source=contentofinterest&utm_mediu
m=text&utm_campaign=cppst
 MCQ
• When did the Insolvency and Bankruptcy Code
2016 receive the President’s assent
• A. 5 August 2016
• B. 28 May 2016
• C. 5 May 2016
• D. 15 June 2016
 MCQ
• What is the applicability of IBC
A. Companies
B. LLP
C. Partnership
D. Individuals
 MCQ
• What is the impact of IBC on other legislation:
• IBC does Not have any effect on other
legislations
• IBC has an overriding effect on other
legislations.