THE INSOLVENCY RESOLUTION PROCESS BY FINANCIAL CREDITOR UNDER THE INSOLVENCY AND BANKRUPTCY CODE 2016
Keywords:
corporate debtor, insolvency, bankruptcyAbstract
The year 2017, a year of reforms rather landmark reforms firstly the GST and then the Insolvency and Bankruptcy code (IBC), the latter is just beginning to be examined closely and thoroughly. Due to these two enactments we are to witness a lot of changes in the manner businesses are conducted. The Insolvency & bankruptcy laws were scattered in lot more enactments and could not help recovery as it were time consuming, a need was felt that new stringent laws be enacted which would take care of the existing defaulters in a time bound manner. Therefore the Government of India decided to replace all the existing insolvency laws namely the Recovery of debts due to Banks and Financial Institutions Act 1993, the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA), the Securitizations and Reconstructions of Financial Assets and Enforcement of Security Interest Act, 2002. The IBC received the assent of the President of India on 28th May, 2016. The Parliament enacted this new law for the reorganization and insolvency resolution of LLP, corporate persons, individuals and partnership firms within a time bound manner for maximization of value of assets and to consolidate the existing framework by creating a single law for insolvency and bankruptcy. The IBC is also to facilitate a better and faster debt recovery mechanism and is surely to change the negative perception1 of recovery and litigation associated with it India. The IBC provides that the insolvency process can be initiated either by the financial creditor or the operational creditor or the corporate debtor itself.
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