The Insolvency and Bankruptcy Code, 2016

Insolvency and Bankruptcy Code, 2016

This Code consolidates and amends laws relating to reorganization and insolvency resolution of corporate persons, partnership firms, and individuals. Its primary objectives are to maximize the value of assets, promote entrepreneurship, ensure credit availability, and balance the interests of stakeholders.

Key Provisions:

• Corporate Insolvency Resolution Process: This process is initiated by financial creditors or operational creditors and involves an insolvency professional agency.


• Fresh Start Process: Eligible individuals can apply for a fresh start order to restructure their debts.


• Bankruptcy Order: Individuals can be declared bankrupt if they fail to repay debts.

Powers and Functions of the Board:

The Insolvency and Bankruptcy Board of India (IBBI) has been established to oversee corporate insolvency resolution processes. The IBBI's powers include:

• Registering insolvency professional agencies


• Enforcing compliance with regulations


• Authorizing insolvency professionals

Insolvency Professionals:

Insolvency professionals are authorized to act in the role of insolvency professional agencies. They must be enrolled under section 206 and follow specific guidelines.

Information Utilities:

Financial information utilities provide core services, including accepting electronic submissions, recording financial data, authenticating and verifying financial information, and providing access to stored information.

Offences and Penalties:

The Code prescribes various offences, including concealment of property, transactions defrauding creditors, and wilful omissions from statements relating to affairs of corporate debtors. Penalties range from fines to imprisonment.

Regulation of Insolvency Professionals, Agencies, and Information Utilities:

The Code regulates the activities of insolvency professionals, agencies, and information utilities through registration, licensing, and enforcement mechanisms.

Amendments and Repeals:

Various amendments and repeals have been made to the Code, including changes to sections 201, 205, and 211.

Schedules:

The Code includes several schedules, including the First Schedule (List of Companies), Second Schedule (List of Financial Service Providers), Third Schedule (List of Scheduled Banks), Fourth Schedule (List of Public Financial Institutions), Fifth Schedule (List of Small Savings Instruments), Sixth Schedule (List of Investment Schemes), and Eighth Schedule (List of Reserve Bank of India Acts).