- The Insolvency and Bankruptcy Code (IBC) creates a time-bound process 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 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 mandated a deadline for the completion of the resolution process within 330 days, including all litigation and judicial processes.
Why in News?
- As part of the ongoing ‘Azadi Ka Amrit Mahotsav’ celebrations, the Insolvency and Bankruptcy Board of India (IBBI) is set to conduct the ‘3rd National Online Quiz on Insolvency and Bankruptcy Code, 2016’, to promote awareness and understanding of the Code among various stakeholders, across the country.