About Insolvency and Bankruptcy Code, 2016

• The Insolvency and Bankruptcy Code (IBC) provides a time-bound process for resolving the insolvency of corporate debtors called the corporate insolvency resolution process (CIRP).  

• Earlier, the minimum amount of default after which the creditor or debtor could apply for insolvency was ₹1 lakh, but considering the stress on companies amid the covid pandemic, the government increased the minimum amount to ₹1 crore.
• Under CIRP, a committee of creditors is constituted to decide on the insolvency resolution. The committee may consider a resolution plan which typically provides for the payoff of debt by merger, acquisition, or restructuring of the company. 
• If a resolution plan is not approved by the committee of creditors within the specified time, the company is liquidated (the assets of the borrower will be sold to repay creditors).  
• During CIRP, the affairs of the company are managed by the Resolution Professional (RP), who is appointed to conduct CIRP.

• The National Company Law Tribunal (NCLT) adjudicates insolvency resolution for companies and Limited Liability Partnerships. The Debt Recovery Tribunal (DRT) adjudicates insolvency resolution for individuals and partnership firms.
• The code was amended in 2019 which mandated a deadline for the completion of the resolution process within 330 days, including all litigation and judicial processes. 

Insolvency and Bankruptcy Code (Amendment) Act, 2021

• In 2021, the Parliament passed the Insolvency and Bankruptcy Code (Amendment) Act, 2021 to provide an alternate insolvency resolution process (known as pre-packaged insolvency resolution process (PIRP)) for MSMEs.

• Unlike CIRP, PIRP may be initiated only by debtors. Application for initiating PIRP may be filed in the event of a default of at least one lakh rupees. 
• During PIRP, the management of the company will remain with the debtor.