Insolvency and Bankruptcy Code, 2016 (IBC)

 

Here’s a concise overview of the Insolvency and Bankruptcy Code, 2016 (IBC) — India’s key legislation for insolvency resolution.

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⚖️ Insolvency and Bankruptcy Code, 2016 (IBC)

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🧾 What is IBC?

IBC is a comprehensive insolvency law consolidating and amending laws relating to the reorganization and insolvency resolution of companies, partnership firms, and individuals.

It aims to:

• Speed up insolvency resolution

• Maximize asset value

• Protect interests of creditors and debtors

• Ensure time-bound process (usually within 270 days)

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📌 Key Features

Feature	Description
Applicability	Corporate persons, partnership firms, individuals
Adjudicating Authority	National Company Law Tribunal (NCLT) for companies
	Debt Recovery Tribunal (DRT) for individuals
Key Stakeholders	Financial Creditors, Operational Creditors, Corporate Debtor, Resolution Professionals, Committee of Creditors (CoC)
Resolution Process	Corporate Insolvency Resolution Process (CIRP)
Liquidation Process	When resolution fails, company assets are liquidated
Fast-track Resolution	For small companies and startups

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📑 Important Sections

Section	Subject
3	Definitions
7	Initiation of CIRP by Financial Creditor
8	Demand notice by Operational Creditor
9	Initiation of CIRP by Operational Creditor
10	Initiation of CIRP by Corporate Debtor (Voluntary)
12	Time limit for CIRP (270 days)
17	Committee of Creditors (CoC)
22	Approval of Resolution Plan
33	Liquidation Order
31	Submission of Resolution Plan

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🏛️ Process Flow

1. Default Occurs (typically ₹1 crore or more)

2. Initiation of CIRP (by financial creditor under Section 7, operational creditor under Section 9, or corporate debtor under Section 10)

3. Admission by NCLT (tribunal admits or rejects application)

4. Interim Resolution Professional (IRP) appointed

5. Committee of Creditors (CoC) formation

6. Resolution Plan submission and approval

7. If resolution fails, liquidation ordered

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🧑‍⚖️ Purpose & Benefits

• Provides clear, time-bound insolvency resolution

• Reduces litigation and delays

• Improves credit availability and trust in the market

• Protects creditors’ interests and business continuity