Insolvency and Bankruptcy

The Insolvency and Bankruptcy Code, 2016, (IBC) is a landmark reform in India’s insolvency and bankruptcy laws. It takes care of the systemic issues, promoted a time-bound resolution process, and transformed the way distressed entities are dealt with in the country, so as to settle the past and start afresh. The IBC is an efficient, transparent, and time-bound framework for resolving financial distress, and also promotes the creditor’s rights and thereby facilitating economic growth. The IBC is also provides to strike a balance between the interests of debtors and creditors, provide a clear hierarchy for debt repayment, and create an environment conducive to business rescue and asset realization. There are two factors in IBC. Insolvency Law and Bankruptcy Laws. Insolvency law governs situations in which individuals or entities are unable to meet their financial obligations and debts as they become due, and facilitate the orderly resolution of financial difficulties, and involves the procedures for debt restructuring, repayment plans, and, in some cases, liquidation of assets to satisfy creditors’ claims, whereas, Bankruptcy law is a specific subset of insolvency law that deals with the legal processes and procedures that are followed when individuals or entities declare themselves bankrupt or are declared bankrupt by a court.