IBC Act - 2016
Insolvency and Bankruptcy Code (IBC), 2016
The Insolvency and Bankruptcy Code (IBC), 2016 consolidates and amends laws relating to reorganization and insolvency resolution of corporate entities, partnership firms, and individuals in a time-bound manner.
Key Features:
Time-bound Resolution:
Insolvency resolution must be completed within 180 days, extendable by a maximum of 90 days.
Moratorium (Section 14):
The code shifts management from the debtor to the creditors, ensuring professional and impartial resolution.
Committee of Creditors (CoC):
Formed by financial creditors, the CoC decides the future of the debtor — whether to accept a resolution plan or proceed to liquidation.
Insolvency Professionals (IPs):
Licensed professionals manage the process, ensuring compliance and transparency
Waterfall Mechanism:
Defines the order of priority in distributing proceeds from liquidation — with secured creditors given priority over government dues.
Purpose:
The IBC aims to maximize asset value, promote credit availability, and streamline the insolvency process for both creditors and debtors in a unified legal framework.