Insolvency and Bankruptcy Code (IBC) 2016 Streamlining Insolvency Resolution in India

The Insolvency and Bankruptcy Code (IBC) of 2016 was enacted to address the issue of bad loans in India’s banking sector and to streamline the insolvency and bankruptcy resolution process for individuals, partnership firms, and companies. The key objectives of the IBC include consolidating and amending existing insolvency laws, simplifying insolvency proceedings, protecting creditors’ interests, and ensuring the revival of companies within a specified timeframe. Additionally, it aims to promote entrepreneurship and increase the supply of credit in the economy.

The IBC applies to any default amount of at least Rs. 1 lakh, although the Central Government may specify a higher amount. However, the law does not apply to banks, financial institutions, or insurance companies. The Insolvency and Bankruptcy Board of India (IBBI) plays a regulatory role by overseeing insolvency professionals, professional agencies, and information utilities under the Code.

A key feature of the IBC is its focus on timeliness. The law was designed to provide a time-bound resolution of insolvency cases, with an initial deadline of 180 days, extendable by 90 days, ensuring a quick and efficient process for resolving financial distress.