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After much debate and anticipation, Insolvency and Bankruptcy Code, 2016 "IBC" or "ode" was notified on 28th May 2016. The Code is historical development for economic reforms in India. The Code reduces the resolution time, boosts investors' confidence, simplify complex legal framework, address NPA situation and develops credit and bond market.
Where one claims are pending over a debtor in Indian market then this is the act.If you have provided services, supply goods, lend money and you are unable to recover it and amount is undisputed, then this is the act one should look forward. One would be only covered under this act where the minimum amount in defaultis one lakh rupees or one thousand five hundred seventy USD.
The Code lays down certain objectives in a way to addressing the burden of domestic and foreign creditors. The Code consolidates and amends the laws relating to reorganization and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximization of the value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interests of all the stakeholders.
This Code gives priority to payment of financial debt owed by unsecured creditor over the Government dues.
The Code provides a moratorium period of 180 days to Corporate Debtor over all other pending legal proceeding. All such proceedings in respect of any debt shall be deemed to be stayed; the creditors shall not initiate any fresh legal action/proceeding and on the other hand the debtor shall not transfer, alienate, encumber or dispose of any of its assets or his legal rights or beneficial rights herein.
WHO CAN INTITIATE INSOLVENCY RESOLUTION PROCESS
Section 6 of the Code specifies that the insolvency and bankruptcy proceeding against Corporate Debtor could be triggered by three entities.
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