According to Kolkata based Eminent Lawyer Vivek Murarka, a partner at Saha & Ray and advocate at transaction law firm, the Insolvency and Bankruptcy Code passed by the Parliament overhauls the existing framework dealing with insolvency of corporate, individuals, partnerships and other entities.
However, he is of the opinion that the current legal and institutional framework was not good enough to provide comfort to lenders with effective and timely recovery of stressed assets which in turn slowed down credit growth. The Government introduced the Insolvency and Bankruptcy Code Bill in November 2015, drafted by a specially constituted ‘Bankruptcy Law Reforms Committee’ (BLRC) under the Ministry of Finance to address complex issues pertaining to bad debts and the recovery mechanisms to restore investor confidence in our banking and financial services sector.
After a public consultation process and recommendations from a joint committee of Parliament, both houses of Parliament have now passed the Insolvency and Bankruptcy Code, 2016 (Code).
What does the Code bring to the table?
The Code offers a comprehensive insolvency legislation covering all companies, partnerships and individuals (other than financial firms). The Government intends to create a separate framework for bankruptcy resolution in failing banks and financial sector entities.
The Code allows creditors to assess the viability of a debtor as a business decision and agree upon a plan for its revival or a speedy liquidation. The Code creates a new institutional framework, consisting of a regulator, insolvency professionals, information utilities and tribunals that will facilitate adjudication of insolvency cases either through satisfactory resolution of dues or liquidation of companies in extreme cases.
What are the highlights of the Code?
This story is from the July 2017 edition of The Observer of Management Education.
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This story is from the July 2017 edition of The Observer of Management Education.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
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