Corporate resolution under insolvency and bankruptcy code

Abstract

The IBC code introduced in December 2016 was a much-needed legislation to resolve NPAs by providing an operational turnaround to the entity. It allows a firm or any firm’s financial and operational debtors to file for insolvency of the corporate debtor at a very initial stage, thus helping the assets to deteriorate further due to prolonged mismanagement, lack of funds or operational inefficiency. Steps are taken to resolve the filed case in a period of 180 to 270 days. The code focuses having a resolution plan which if not passed by the committee shall result into liquidation of the entity’s assets and helps in prevention of arbitrage due to multiple regulations. The code eyes on the matter of Insolvency, liquidation, voluntary liquidation and Bankruptcy. Objectives: • To consolidating and amending laws related to bankruptcy and insolvency. • To have a time-bound resolution. • To promote entrepreneurship and lure in investors and creditors for the resolution plan. • To maximize value in resolution plan or if liquidated. • To prioritize payments in case of liquidation