Lok Sabha passes Insolvency and Bankruptcy Code, 2015
The Lok Sabha has unanimously passed Insolvency and Bankruptcy Code, 2015 by a voice vote.
The code seeks to ensure time-bound settlement of insolvency, faster turnaround of businesses and create a unified data base of serial defaulters.
Highlights of the Code
- The Code creates time-bound processes for resolution of the insolvency of companies and individuals.
- These processes will be completed within time-bound 180 days. If insolvency is resolved in stipulated time, the assets of the borrowers may be sold to repay creditors.
- The resolution of the insolvency of processes will be conducted by licensed insolvency professionals (IPs). These IPs will be members of insolvency professional agencies (IPAs).
- IPAs under insolvency resolution will also furnish performance bonds equal to the assets of a company.
- The Code facilitates establishment of Information utilities (IUs) to collect, collate and disseminate financial information to facilitate insolvency resolution.
- The insolvency resolution for companies will be adjudicated by the National Company Law Tribunal (NCLT). The Debt Recovery Tribunal (DRT) will adjudicate insolvency resolution for individuals.
- The Code also gives statutory backing establishment of the Insolvency and Bankruptcy Board of India to regulate functioning of IPs, IPAs and IUs.