Insolvency & Bankruptcy Code

Insolvency & Bankruptcy Law in India is primarily governed by the Insolvency and Bankruptcy Code, 2016 (IBC). This law provides a structured legal framework for resolving insolvency and bankruptcy matters relating to companies, partnership firms, and individuals. The Code aims to ensure timely resolution of financial distress while balancing the interests of creditors, debtors, employees, investors, and other stakeholders. The primary objective of the Insolvency and Bankruptcy Code is to help financially distressed businesses recover or resolve their debts efficiently. Before the introduction of the IBC, insolvency proceedings in India were often delayed and complex. The Code introduced a time-bound resolution process to maximize the value of assets, improve recovery for creditors, and reduce financial uncertainty in the economy.

This sector is highly important because insolvency directly affects businesses, banks, employees, investors, and economic stability. When companies fail to repay debts, it can lead to financial losses, unemployment, reduced investments, and disruption of economic activities. The IBC provides mechanisms for restructuring, revival, or liquidation of businesses in a lawful and organized manner. One of the most significant aspects of the Insolvency and Bankruptcy Code is the Corporate Insolvency Resolution Process (CIRP). Under this process, creditors may initiate insolvency proceedings against defaulting companies before the National Company Law Tribunal (NCLT). Insolvency professionals manage the affairs of the company during the resolution process while creditors decide whether the company should be revived or liquidated.