Understanding insolvency resolution procedure in India

Abstract

The parliament of India passed the Insolvency and Bankruptcy Code in May 2016. This came after the realization that the prevailing structure of bankruptcy resolution was plagued due to multiple overlapping laws to deal with insolvency of corporations. This structure had created a strain in the Indian credit system because there was no concrete way for timely recovery of lenders’ money from distressed assets. The introduction of IBC is seen as a major economic reform in India and is expected to improve the business environment. This CCS project is aimed at developing a detailed analysis of the insolvency and bankruptcy resolution procedure under the Insolvency and Bankruptcy Code, 2016. The CCS study includes a brief analysis of major laws regarding the bankruptcy resolution before the introduction of IBC. The propositions in the IBC and a procedural analysis of the bankruptcy resolution under IBC has been analysed in depth. The impact of the code on the Indian economy, on firms, both owner-managed as well as professionally managed, and on credit market(lenders) has been analysed. The role of Insolvency Professionals and Insolvency and Bankruptcy Board of India shall also be described in depth. Moreover, the CCS report highlights the major similarities/differences between the IBC and the bankruptcy laws in the USA and other developed nations. The aim of this comparison is to evaluate the effectiveness of IBC as compared to the laws in developed economies. The CCS project also includes detailed case studies of the corporations that have undergone bankruptcy procedure in India in the past few years.