Insolvency and Bankruptcy Code (IBC)

• The Code creates time-bound processes for insolvency resolution of companies and individuals.  These processes will be completed within 180 days (unless extended by a one time extendable period of 90 days).  If insolvency cannot be resolved, the assets of the borrower may be sold to repay creditors (known as liquidation).
• The resolution processes are conducted by licensed insolvency professionals (IPs).  These IPs are members of insolvency professional agencies (IPAs).
• Information utilities (IUs) are established to collect, collate and disseminate financial information to facilitate insolvency resolution.
• 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 Insolvency and Bankruptcy Board of India (IBBI) regulates the functioning of IPs, IPAs and IUs.
• IBC was later amended with the provision to bar promoters from bidding for their own companies. It prevented defaulters from regaining control of their companies at a cheaper value.
• The code was again amended in 2019 which mandates a deadline for the completion of the resolution process within 330 days, including all litigation and judicial processes. 

Why in News?

• The government has promulgated an ordinance to amend the Insolvency and Bankruptcy Code whereby fresh insolvency proceedings will not be initiated for at least six months starting from March 25 (the day when the nationwide lockdown) amid the COVID-19 pandemic.
• The move is expected to provide relief for corporates as the pandemic and subsequent lockdown had significantly impacted economic activities.