Insolvency And Bankruptcy Code (IBC)
The Insolvency and Bankruptcy Code was introduced in the year 2016 by the Government of India. It is the extant bankruptcy resolution frame work in the country. The Insolvency and Bankruptcy Code was first introduced in December 2015 in the Lok Sabha and passed by both the houses in May 2016. The code received the assent of the President also in May 2016. The code has 11 Schedules and 255 sections.
- The IBC enlists separate insolvency resolution methods for default by individual borrowers, companies and partnerships.
- The code defines time norms for resolution process to be completed, thereby ensuring that the recovery of overdues is completed in a time bound manner.
- IBC provides for appointment of an Insolvency professional, who will work out a resolution / revival plan to revive the defaulted borrower’s business. In case the revival plan is accepted by the lender or group of lenders, the same would be implemented. If majority of the lenders do not agree, the borrowing entity would be liquidated.
- The Insolvency and Bankruptcy Board of India (IBBI) is constituted to oversee the implementation of IBC.
Insolvency and Bankruptcy Board of India (IBBI)
The Insolvency and Bankruptcy Board of India (IBBI) was established as the regulator for the proper implementation of IBC on October 1, 2016. The board has 10 members. At present, M. S. Sahoo is the Chairman of IBBI and Navrang Saini, Mukulita Vijayawargiya and Sudhaker Shukla are the three whole-time members of the board.
IBBI allows transfer of illiquid assets and debt
Recently, IBBI has allowed a liquidator to transfer illiquid assets or not readily realizable assets to third parties for quick closure of the liquidation process. The board has also allowed any creditor to transfer or assign the due debt to any other person in accordance with the law.
“Not readily realisable asset” or “illiquid asset” is defined as any asset that is included in the liquidation estate but could not be sold through available options. Such assets can be disputed assets, undervalued, extortionate credit and fraudulent transactions, and assets underlying proceedings for preferential.