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.
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