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The role of directors during insolvency proceedings
When a company enters insolvency proceedings, the role of the director significantly shifts. The directors of the company are expected during the financial difficulty period to act in the bona fide interests of the creditors and simultaneously ensure that adequate steps are taken to keep the company off insolvency. We will look into a directors […]
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The Role of Arbitration in Insolvency
Arbitration and insolvency laws clash due to their fundamentally different approaches to resolving any legal issue. While insolvency aims to centralize debt resolution by managing all claims against an insolvent company in court, Role of Arbitration in Insolvency promotes decentralized dispute resolution through private tribunals. This creates a potential conflict when both processes are involved, […]
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Communication Strategies for Creditors During a Bankruptcy
When a corporate debtor and its creditors are involved in the resolution process under the Insolvency and Bankruptcy Code, 2016 (hereon forward known as “the Code”), it becomes necessary to have effective Communication Strategies for Creditors During a Bankruptcy to manage the complexity of the situation. Under the Code, communication is implicitly mentioned in its […]
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How Does Liquidation Affect Employees?
When an insolvent company goes into liquidation, employees face a challenging period as the company ceases operations and ultimately stops all salary payments. During this time, understanding How Does Liquidation Affect Employees becomes crucial, as unpaid wages typically become a claim in the liquidation process. For employees, knowing their rights and exploring any available remedies […]
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What are haircuts in the resolution plan?
In the Insolvency and Bankruptcy Code, 2016 (IBC) haircuts in the resolution plan is the difference between the amount creditors claim and what they receive. It essentially signifies the amount the lender has to “cut off” from their claim due to the company’s inability to fully repay their debts. Critics argue that high haircuts can […]
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Committee of creditors- responsibilities & functions
In 2016, the insolvency law had a major change in the enactment of the Insolvency and Bankruptcy Code, 2016. As per this Code, a new method was available for the creditors to seek resolution of a company by engaging an insolvency professional to take charge of the business operations of the corporate debtor when the […]
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Corporate Bankruptcy: How It Works, What It Means for Investors
Corporate bankruptcy is the process that companies or individuals opt for when they are unable to pay their debts to their creditors on time. It is a difficult time for companies or individuals and creditors, but for investors, it is an opportunity. Potential investors should do their due diligence and thorough research on whether the […]
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Insolvency Frameworks in Developed vs. Developing Nations
Insolvency Frameworks in Developed vs. Developing Nations ensure the timely resolution of distressed businesses and the protection of creditor and debtor rights. These laws facilitate the reorganization of viable businesses and the liquidation of non-viable ones. It has a crucial role in maintaining economic stability by providing a structured framework to manage failing businesses, allowing […]
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Section 9 of IBC – Insolvency and Bankruptcy Code, 2016
The Insolvency and Bankruptcy Code, 2016 (IBC) provides for a speedy and efficient dispute mechanism for the resolution process. Under the IBC, the different classes of people may initiate the process, one of whom is operational creditors. Section 9 of IBC allows for an operational creditor to file an application with the Adjudicating Authority to […]
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Regulatory bodies under IBC
Regulatory bodies under IBC, are crucial as they play a vital role in ensuring the smooth and efficient functioning of the insolvency resolution process. They protect the interests of all stakeholders involved and uphold the integrity of the insolvency system in India by regulating key participants within the IBC framework. Understanding the Key Regulatory Bodies […]
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Role of asset reconstruction companies in insolvency proceedings
The Insolvency and Bankruptcy Code, 2016 (IBC) aims to revive, restructure, or rehabilitate insolvent companies. Insolvent companies face several legal and financial issues, which they overcome with the aid of other professionals and entities. Asset Reconstruction Companies (ARCs) are one of the many options available to them. What Are Asset Reconstruction Companies (ARCs)? Asset Reconstruction […]
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Difference between insolvency professional and registered valuer
In the insolvency and bankruptcy domain, insolvency professionals (IPs) and registered valuers (RVs) have crucial but distinctive roles within the insolvency process under the Insolvency and Bankruptcy Code, 2016 (hereon forward known as “the Code”). While IPs manage the overall insolvency resolution process, ensuring that it progresses in accordance with legal and regulatory requirements, RVs […]
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Position of Homebuyers under RERA and IBC
The Hon’ble Supreme Court in Vishal Chelani and others v. Debashish Nanda held that Homebuyers under RERA and IBC cannot be treated differently from other financial creditors under the Insolvency and Bankruptcy Code, 2016 (IBC) merely because they have obtained orders from the authorities under the real estate laws in India. The insolvency framework under […]
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Pre-Pack Insolvency for MSMEs
The pandemic highlighted the need for a specialised insolvency mechanism to support financially distressed micro, small, and medium enterprises (MSMEs). On 4 April 2021, the government promulgated the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2021, to introduce a Pre-Pack Insolvency for MSMEs (PPIRP)facing financial issues because of the pandemic. Understanding Pre-Pack Insolvency for MSMEs The […]
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Role of NCLT in insolvency proceedings
The National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT) are governed by the Companies Act, 2013, the Insolvency and Bankruptcy Code, 2016, and the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. Both are pivotal in insolvency resolution and the liquidation process of corporate […]
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Role of e-auctions in liquidating assets
The Insolvency and Bankruptcy Board of India (IBBI) issued a circular mandating the exclusive use of the eBKray auction for conducting e-auctions in liquidating assets and listing unsold assets in all liquidation processes under the Insolvency and Bankruptcy Code, 2016 (IBC). This will come into effect from April 1, 2025, and all liquidation cases must […]
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Who is Considered as a Personal Guarantor under IBC?
Personal guarantees are generally used in small or micro businesses or those with inadequate credit history. The Insolvency and Bankruptcy Code of 2016 provides a mechanism for creditors to recover the corporate debtor’s debts, even if the corporate debtor defaults on doing so, by having the corporate debtor have a personal guarantor. Personal Guarantor under […]
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The Role Of Technology In Streamlining Insolvency Processes
To face the complexities of insolvency procedures and streamline the process, the development of technology such as artificial intelligence (AI), blockchain technology, and data analytics plays a crucial role. The role of technology in streamlining insolvency processes has expedited case handling, ensured transparency of legal and financial information, and improved data accuracy throughout the insolvency […]
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The Insolvency of State-owned Enterprises
The Insolvency and Bankruptcy Code, 2016 (IBC) marked a significant turning point in India’s approach to resolving the financial issues of a company. The primary aim was to streamline the resolution process, improve credit culture, and protect stakeholders’ interests. When it comes to Insolvency of State-owned Enterprises (SOEs) implementing the IBC framework introduces unique challenges […]
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The Arbitration and Conciliation Act, 1996
The Arbitration and Conciliation Act, 1996 (hereon forward known as “the Act”) governs both domestic and international arbitration, including the enforcement of foreign arbitral awards. It is essentially a legal framework for resolving disputes outside of traditional court systems through a process where parties mutually agree to appoint an arbitrator to make a binding decision […]
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All About Waterfall Mechanism Under IBC
The insolvency law in India was transformed with the enactment of the Insolvency and Bankruptcy Code, 2016. Among the many changes, the waterfall mechanism Under IBC was introduced as a systematic manner is distributing the proceeds. This ensures that the distribution is done fairly, according to the principle of equitable treatment, and maintains a structured […]
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Chapter 7 vs. Chapter 11: What’s the Difference?
The United States (US) Bankruptcy Code, also known as Title 11 of the US Code, was enacted in 1978 and is the primary federal law that governs bankruptcy. It establishes procedures for individuals and businesses to file for bankruptcy, also outlining the rights of creditors and other stakeholders. This Code has a total of 15 […]
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Four Pillars of the Insolvency and Bankruptcy Code, 2016
The Four Pillars of the Insolvency and Bankruptcy Code, 2016 (IBC), is a legislative framework for corporate debtors’ insolvency, bankruptcy, or liquidation. This framework consists of four pillars that have important roles during the corporate insolvency resolution process (CIRP). In this blog, we will delve into the four pillars of this institutional infrastructure and understand […]
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Liquidator: Powers and Functions under IBC
A Liquidator: Powers and Functions under IBC, with reference to section 5(18) of the Insolvency and Bankruptcy Code, 2016 (hereon forward known as “the Code”), is an insolvency professional who is appointed by the court, which in insolvency law, is the National Company Law Tribunal (NCLT) to manage a company’s liquidation process when it is […]
Read moreContribution of IBC on Economic Growth
The Insolvency and Bankruptcy Code, 2016 (the IBC) came into effect with several objectives, such as maximising the value of debtor’s assets, promoting entrepreneurship, ensuring timely resolution of cases, and balancing the interests of all stakeholders. By fulfilling its objectives, the IBC on Economic Growth contributes of India. The Role of IBC on Economic Growth […]
Read moreWhat to learn from Singapore insolvency framework
Singapore insolvency framework is considered one of the best due to its efficient processes, well-designed mechanisms, amongst other features. Having an effective insolvency framework for debtors can promote entrepreneurship, and responsibility for risk-taking, and prevent distressed companies from closing down. On the other hand, a framework for creditors can help them to recover their debts […]
Read moreImportance of Continuous Education for Insolvency Professionals
The insolvency sector is dynamic and constant evolving, with changes in legislation, market conditions, and best practices shaping how professionals operate. Continuous Education for Insolvency Professionals also stay effective, compliance and competitive. This article explores why ongoing professional development is crucial and offers strategies to help professionals thrive in their careers. Why Continuous Learning is […]
Read moreDifference between a liquidator and an insolvency professional
This article Difference between a liquidator and an insolvency professional aims at providing clarity on the distinct roles of a them. Both of these positions are central to guiding a company through their financial difficulties, although the engagement of both in the insolvency process is distinct. While an IP has the main responsibility with supervising […]
Read moreConstitution of Committee of Creditors under Section 21 of IBC
There are several stakeholders involved in making the resolution process effective, including the Committee of Creditors under Section 21 of IBC. The CoC has a crucial role in the outcome of the proceedings, their decisions determine the revival or liquidation of the distressed companies. The Insolvency and Bankruptcy Code, 2016 (IBC) governs the formation of […]
Read moreOperational Creditor Challenges in IBC
The current insolvency framework in India is focused more on creditors rather than the previous debtor-centric approach. The goal of the resolution process is to maximise asset value while balancing the interests of all stakeholders, attempting to revive struggling businesses. The creditors of the corporate debtor should be treated fairly with equal treatment through the […]
Read moreHow does IBC facilitate mergers and acquisitions?
The enactment of the Insolvency and Bankruptcy Code (IBC) in 2016 has introduced significant reforms to the insolvency framework in India. It provides an efficient mechanism for resolving distressed assets and reviving financially distressed companies. The IBC has the potential to influence mergers and acquisitions (M&A) as an attempt to revive an insolvent company. Understanding […]
Read moreLegal Perspective: Personal Insolvency under IBC
Insolvency and Bankruptcy Code, 2016 incorporates personal insolvency processes for resolving the financial distress of individual debtors in a structured and time-bound resolution. The most common form of personal insolvency under IBC is bankruptcy, however this is not ideal for any individual as debtors are working towards reviving, restructuring, or rehabilitating themselves. Understanding Personal Insolvency […]
Read moreWho Is Eligible For Graduate Insolvency Programme ?
The Graduate Insolvency Programme (GIP) is a specialised course offered by the Indian Institute of Corporate Affairs (IICA) at its Manesar Campus. It is one of the most competitive exams specifically for the insolvency professionals as it admits only 52 candidates all over India. The eligibility for the GIP is restricted to individuals with an […]
Read moreImpact of IBC on Foreign Direct Investment
Having a clear and efficient insolvency process reduces the perceived risk for foreign investors, as they are more confident about recovering their investments if a company they invest in faces financial difficulties. The Insolvency and Bankruptcy Code, 2016 (IBC) streamlines the insolvency process, leading to a quicker resolution, which positively impacts investor sentiment and encourages […]
Read moreKey aspects of UNCITRAL and its impact on insolvency law
Key aspects of UNCITRAL (United Nations Commission on International Trade Law) plays a crucial role in international insolvency law through its Model Law on Cross-Border Insolvency, which was approved by the United Nations General Assembly through a resolution in 1997. The Model Law allows for nations to alter, exclude, or include certain provisions in addition […]
Read moreWhat are the common job roles in the insolvency field?
In insolvency proceedings, the insolvency practitioner takes on multiple roles, each demanding different responsibilities and skills depending on the stage of the process. One of their primary tasks is ensuring that the interests of the corporate debtor, creditors, stakeholders, and other parties are balanced without causing harm to another. Practitioners may act as liquidators, administrators, […]
Read moreWhat is the difference between the SARFAESI Act and IBC?
To understand the difference between the SARFAESI Act and IBC, it’s important to recognize that the Insolvency and Bankruptcy Code (IBC), introduced in 2016, was designed to streamline the process of managing an insolvent’s liabilities and creditor claims through a structured, time-bound resolution. Unlike the SARFAESI Act, which primarily empowers secured creditors to seize and […]
Read moreTreatment of secured and unsecured creditors in insolvency
When a corporate debtor faces financial distress they undergo the insolvency process. If this process is not successful because the debtor and its unsecured creditors are not able to reach a viable repayment plan or the National Company Law Tribunal decides that the corporate debtor should be liquidated, the liquidation process commences under the Insolvency […]
Read moreImportance of the Corporate Debtor as a going concern under IBC
The Insolvency and Bankruptcy Code, 2016 was established to resolve the financial issues of the corporate debtor as a going concern. It is crucial to treat the corporate debtor as a viable business that can continue operating and be sold as a whole unit. But what is the need for continuing an insolvent company that […]
Read moreImportance of Public Announcement in the IBC Process
During the resolution process, an essential element is a public announcement in the IBC Process. Only after the Public Announcement in the IBC Process of the initiation of the corporate insolvency resolution process and the call for submission of the creditor’s claims, can the moratorium period officially begin. What is a Public Announcement in CIRP? […]
Read moreWhat are the implications of insolvency for suppliers and customers?
Companies will go through the insolvency process only when they are under financial duress. In today’s industry this has become often due to the effects of trade disputes, social disruptions, political uncertainties, etc, and not only because of bad management. Insolvency risk is the possibility that a company may be unable to meet its payment […]
Read moreDecoding the Doctrine of Antecedent Debt
Insolvency proceedings are important to resolve the financial issues of companies and require all parties involved in such proceedings to be genuine and provide accurate information. In India, the Insolvency and Bankruptcy Code, 2016 (IBC) is the comprehensive framework to address insolvency and ensure timely resolution. Doctrine of Antecedent Debt is the primary goal to […]
Read moreThe Need for Group Insolvency
When one company within a group becomes insolvent, its financial troubles can affect group companies due to shared financial obligations, making separate insolvency proceedings inefficient. Most insolvency laws are designed to handle individual companies, including the Insolvency and Bankruptcy Code, 2016 (the IBC). Therefore, a dedicated Need for Group Insolvency framework is needed to effectively […]
Read moreThe Doctrine of Piercing the Corporate Veil in Insolvency Cases
A company has a juristic existence that is independent of its shareholder, known as the figurative ‘Corporate Veil in Insolvency’. The members are protected against obligations resulting from the company’s acts. In a series of judgments, courts have taken a consistent view that the Corporate Veil in Insolvencyof a company should be respected as the […]
Read moreThe principle of good faith in insolvency proceedings
In the insolvency framework, good faith in insolvency is represented by the actions of the parties involved in the resolution process. For instance, under the Insolvency and Bankruptcy Code, 2016 (IBC) a creditor has to disclose all relevant information about their debt when filing a claim, an insolvency professional must act impartially, and a debtor […]
Read morePrinciple of Equitable Treatment Under Insolvency Law
When a company becomes insolvent, there are several parties involved in the resolution process, not only the corporate debtor and its creditors. Understanding equitable treatment under insolvency law is essential, as it ensures a fair distribution of assets and protects the interests of all stakeholders. The Insolvency and Bankruptcy Code, 2016 (IBC) provides the framework […]
Read moreRole of Blockchain in Insolvency Framework
Adopting technology within an insolvency framework is crucial to improve the efficiency, transparency, and accuracy of the insolvency process. Technological tools can lead to quicker resolution times and better outcomes for all stakeholders. Different technologies can be used to improve the resolution process, such as artificial intelligence, Blockchain in Insolvency, data analytics, and cloud computing. […]
Read moreDoctrine of Commercial Wisdom of CoC
The enactment of the Insolvency and Bankruptcy Code, 2016 (the IBC) is a revolutionary legislation in insolvency law. The role of the Committee of Creditors (CoC) is crucial in the resolution process as it decides the revival or liquidation of corporate debtors. The Doctrine of Commercial Wisdom of CoC importance is underscored through landmark judgments, […]
Read moreHow do stakeholder influence the insolvency resolution process
Corporate insolvency is the state in which a company is unable to pay its debts when they become due because of several reasons, including cash flow issues and excessive debt. The efficiency of the corporate insolvency resolution process (CIRP) depends on the actions of the stakeholders. The Insolvency and Bankruptcy Board of India (IBBI) regulates […]
Read moreFunctions of Insolvency Professional Agencies in India
Insolvency and bankruptcy laws were consolidated in 2016 through the Insolvency and Bankruptcy Code, 2016. Insolvency Professional Agencies was established under this act and plays a crucial role in regulating and overseeing the conduct of insolvency professionals. This ensures that professionals handling financially distressed companies maintain high ethical standards, possess the necessary expertise, and act […]
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