The Insolvency and Bankruptcy Code, 2015 was introduced in Lok
Sabha on December 21, 2015 and was referred to Joint committee
on The Insolvency and Bankruptcy Code, 2015. The report was
presented in Loksabha and laid down in Rajya sabha on April 28,
2016. The code has been passed by Lok Sabha on May 05, 2016
and Rajya Sabha on May 11, 2016.
The preamble of the code reads ads under:
To consolidate and amend the laws relating to reorganisation and
insolvency resolution of corporate persons, partnership firms and
individuals in a time bound manner for maximisation of value of
assets of such persons, to promote entrepreneurship, availability of
credit and balance the interests of all the stakeholders including
alteration in the order of priority of payment of Government dues
and to establish an Insolvency and Bankruptcy Fund, and for
matters connected therewith or incidental thereto.
The Code proposes to cover Insolvency of individuals, unlimited
liability partnerships, Limited Liability partnerships (LLPs) and
companies.
The Insolvency Resolution Process (IRP) for individuals and
unlimited liability partnerships varies from that of companies and
LLPs. The Debt Recovery Tribunal (“DRT”) shall be the Adjudicating
Authority with jurisdiction over individuals and unlimited liability
partnership firms. Appeals from the order of DRT shall lie to the
Debt Recovery Appellate Tribunal (“DRAT”). The National Company
Law Tribunal (“NCLT”) shall be the Adjudicating Authority with
jurisdiction over companies, limited liability entities. Appeals from
the order of NCLT shall lie to the National Company Law Appellate
Tribunal (“NCLAT”).
The Code seeks to repeal the Presidency Towns Insolvency Act,
1909 and Provincial Insolvency Act, 1920.
The Code seeks to amend the following 11 Legislations.
1. The Indian Partnership Act 1932
2. The Central Excise Act 1944
3. The Income Tax Act 1961
4. The Customs Act. 1962
5. Recovery of Debts Due to Banks and Financial Institutions Act,
1993
6. The Finance Act 1994
7. The Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act 2002
8. Sick Industrial Companies (Special Provisions) Repeal Act, 2003
9. The payment and Settlement Systems Act 2007
10. The Limited Liability Partnership Act 2008
11. the Companies Act, 2013
The Code proposes to establish an Insolvency Regulator (The
Insolvency and Bankruptcy Board of India) to exercise regulatory
oversight over
1. Insolvency Professionals,
2. Insolvency Professional Agencies and
3. Information Utilities.
The Code proposes to regulate insolvency professionals and
insolvency professional agencies. Under Regulator’s oversight, these
agencies will develop professional standards, codes of ethics and
exercise a disciplinary role over errant members leading to the
development of a competitive industry for insolvency professionals.
The Code proposes for information utilities which would collect,
collate, authenticate and disseminate financial information from
listed companies and financial and operational creditors of
companies. An individual insolvency database is also proposed to be
set up with the goal of providing information on insolvency status of
individuals.
The Code proposes a swift process and timeline of 180 days for
dealing with applications for corporate insolvency resolution. This
can be extended for 90 days by the Adjudicating Authority only in
exceptional cases. During insolvency resolution period (of 180/270
days), the management of the debtor is placed in the hands of an
interim resolution professional/resolution professional.
Further, an insolvency resolution plan prepared by the resolution
professional has to be approved by a majority of 75% of voting
share of the financial creditors. Once the plan is approved, it would
require sanction of the Adjudicating Authority. If an insolvency
resolution plan is rejected, the Adjudicating Authority will make an
order for the liquidation.
The Code proposes for a fast track insolvency resolution process for
companies with smaller operations. The process will have to be
completed within 90 days, which may be extended upto 45 more
days if 75% of financial creditors agree. Extension shall not be
given more than once.
Company Secretary GAURAV SHARMA+919990694230 Connect on Watts App with Gaurav Email us [email protected] Official Blog Fema India Experts Connect with our Facebook Page:- Click and Like our Page Subscribe our Email updates like other 21,000 Members, Free/Easy/Comfortableway
