Insolvency and Bankruptcy Code#
What is IBC?#
Insolvency and Bankruptcy Code, 2016 is a comprehensive law for resolution of insolvent entities in India.
Applicability#
- Corporate persons (companies, LLPs)
- Partnership firms
- Individuals
- Proprietorships
Key Concepts#
1. Insolvency
- Inability to pay debts
- Default of ₹1 lakh or more
2. Bankruptcy
- Legal declaration of inability
3. Resolution
- Restructuring or liquidation
Process#
1. Initiation
- By creditor or corporate debtor
- Application to NCLT
2. Admit
- NCLT admission
- Interim resolution professional appointed
3. Resolution Process
- 180 days (extendable 90 days)
- Resolution plan preparation
4. Approval
- Committee of creditors approval
- NCLT approval
5. Implementation
- Resolution plan implementation
- Or liquidation
Resolution Professional#
- IBBI registered
- Manages corporate debtor
- Coordinates with CoC
Committee of Creditors (CoC)#
- Financial creditors
- Approves resolution plan
- 66% majority required
Liquidation#
- If no resolution plan
- Liquidator appointed
- Assets sold
- Distribution to creditors