STRIKING A BALANCE BETWEEN CORPORATE DEBTORS AND CREDITORS: AN ANALYSIS OF THE INSOLVENCY AND BANKRUPTCY CODE

Abstract

One of the most contemporary issues in the field of law is that of the process of insolvency and liquidation especially with regard to the Insolvency and Bankruptcy code recently introduced in India to establish an effective regulatory framework for liquidation and insolvency related matters. While the Insolvency and Bankruptcy Code provides for insolvency resolution in a timely manner and establishment of an expedient process to decide the application and to opt for the process of liquidation if the plan is rejected, it doesn’t seem to provide for any involvement of the corporate debtor which could lead to a negative impact on the company. On an analysis of relevant provisions of the Code from the perspective of a corporate debtor, it can be seen that the Code gives great powers as well as rights to the financial creditor to get back their loans but no recourse is given to the corporate debtors to address their grievances. An imbalance is created favouring the creditors against the corporate debtors. While the object of the Code is to give priority to the creditors, through various case laws it can be seen that the corporate debtor was genuinely concerned and interested in revival and paying back loans but the creditor’s power prevailed and the company was taken into liquidation. The issue that arises is whether the debtor should be taken into consideration during this process.