To handle the non-performing assets the government of India came up with the Insolvency or Bankruptcy Code (IBC) to regulate all the laws related to insolvency or bankruptcy. The regulators of the Insolvency and Bankruptcy Code are the Insolvency and Bankruptcy Board of India (IBBI). The Insolvency and Bankruptcy Code was introduced in the Lok Sabha in 2015 and it obtained Presidential assent in 2016. I hope you can understand what is Insolvency and Bankruptcy Code.
What is Insolvency and Bankruptcy Code 2016?The Insolvency and Bankruptcy Code introduced in 2016 states the following:
A notice is mailed to the debtor stating all the dues that have to be paid by the debtor within 10 days of the notice period or to come to a settlement.
If there is no reply from the debtor’s side, the creditor has to make an application to the tribunal to initiate the insolvency proceedings.
If the tribunal finds that the dues the debtor needs to pay are legit and he is not willing to pay, the tribunal is supposed to take the matter into its own hands after 14 days. The tribunal and the Insolvency professional is appointed to make the company of the debtor non-operational.
The IRP creates a plan and submits it to the tribunal which has all the information to execute the process within 180 days, although it can also be extended if both the parties have consented.
If the creditor accepts the plan then the debtor company and the creditor can come to a settlement to clear the dues.
In case the plan has not been accepted the tribunal can pass and command for liquidation of the company to pay the dues to the creditor.
I hope you can understand now what is Insolvency and Bankruptcy Code 2016.
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Authors Of The Question
what is insolvency and bankruptcy code
Rashbhari
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2021-11-15T19:11:54+00:00 2021-11-15T19:11:55+00:00Comment
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