Will insolvency code bring certainity?

Abstract

India does not have a good insolvency legal system, and corporate failures can have rippling impact on the economy, affecting the solvency of many other businesses. The existing framework is outdated, inadequate, and ineffective and results in undue delays in resolution of distress assets. Therefore, it is necessary that there is a highly efficient corporate insolvency regime that ensures minimise losses to all stake holders. However, recently the Insolvency and Bankruptcy Code, 2015 (IBC) was passed by the Parliament and soon hopefully, India will have a modern insolvency law. The objective of IBC is to consolidate various laws relating to insolvency and bankruptcy of corporate, partnerships, and individual in a time bound manner. If within stipulated time, the issue cannot be resolved, then assets of the borrowers can be sold to repay creditors. The IBC will help promote entrepreneurship, availability of credit, and balancing of interest of various stake holders. It would also enable timely resolution of distress assets, support credit market, improve ease of doing business and consequently facilitate more investments and higher economic growth.

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