Insolvency and Bankruptcy Code 2016

umbrella legislation consolidating laws related to reorganization & insolvency of corporate persons, partnership firms
shift from debtor in possession to creditor in control model
recommendation of TK Vishwanathan’s Bankruptcy Law Reforms Committee

Review of Working of Insolvency and Bankruptcy Code (IBC) and Emerging Issues

report by Parliamentary Standing Committee on Finance

Issues identified by committee

low recovery rates & asset valuation
- excessive haircut
- timing of admission is too late
lack of transparency and uniform standards in asset valuation
statutory overlap / legal conflict with PMLA
CIRP takes 713 days on average vs. the 330 day limit, causing delays, backlog
- due to frivolous litigation
Misuse of MSME registration to gain concessions
No enforceable code of conduct for committee of creditors
lack of robust framework for handling insolvency when assets spread across multiple intl. jurisdictions

strengthen judicial, institutional capacity
- expand NCLT, NCLAT benches to clear backlog
- special fast track court
immediate operationalization of Insolvency & Bankruptcy Fund
reducing delays, frivolous litigation
improving recovery rates, asset valuation
enhancing accountability
- RP monitoring mechanisms
- specialized training
Stakeholder reforms
- simplify PPIRP for MSME
- review waterfall mechanism for fairer distribution
selective adoption of UNCITRAL Model Law on Cross Border Insolvency to aid in cross border insolvency cases

Insolvency and Bankruptcy Board of India (IBBI): regulator for overseeing IP & IU
Insolvency Professionals (IP): regulated persons who manage corporate debtor & resolution process
Information Utilities (IU): Electronic repositories that collect & validate financial data to provide evidence of default
Adjudicating Authority (AA): NCLT & DRT

CRISIL Data

IBC has helped resolving Rs.26L.Cr of debt

IIM-A Study

IBC stimulated firm’s performance post resolution