BY: PRAGATI GOYAL
The insolvency and Bankruptcy code , 2016 (IBC) is the law in India and which has the aim to consolidate the existing framework by creating a single law for insolvency and bankruptcy and amend the laws relating to the entities in India with the passage and demands of the time. It was passed by Lok Sabha on 5 May 2016. This code deals with only four entities namely individuals, partnership firms, limited liability partnership (LLP) and companies .This code doesn’t apply to any other entities like societies trust boards etc. This code deals with insolvency, bankruptcy, and liquidation, where insolvency and bankruptcy are the terms which seems to be same but the actual meaning is different, insolvency means the situation where the liabilities of the entities are more than its assets and unable to meets its debts where bankruptcy refers to a situation or a legal process where a court of competent jurisdiction has declared the entity insolvent on the application made by that entity to declare itself. And in 2019 this act was amended for the first time where prior home buyers were not included were now included in the list after the amendment to recover their debts and more amendments made with time to time.
CURRENT ISSUE :
MS Sahoo is the chairperson of the Insolvency and the Bankruptcy Board of India (IBBI), a key authority in implementing the Code. On 22 nd march, 2020 he said that The Code provides for a time-bound and market-linked resolution of stressed assets, but if the resolution does not happen the company can perform its liquidation. It is another kind of Swachhata (cleanliness) drive to clean up NPAs (non-performing assets) and to put companies in the hands of capable and credible people. He stated that 190 companies have been rescued, while 780 were referred for liquidation. “As and when they find a problem, they try to address it as prompt as possible. The insolvency professionals, creditors, NCLT, IBBI all are on a vertiginous learning curve. The Supreme Court has been settling matters at a quick pace. I believe the road to success is always under construction,” he told. This is another kind of Swachhata (cleanliness) drive to clean upNPAs (non-performing assets) and to put companies in the hands of capable and credible people”.
QUESTION OF LAW:
The statement given by the chief of IBBI that they have recovered 207 percent of the realizable value of assets which is 107 more and that is really comprehend but here the question arises that only 190 companies have been resolved but 780 companies have been referred for liquidation which is around 4 times more. He told for the overall growth but actually most of the companies were referred to liquidation which should also be focus. No doubt is very beholden that due to IBC the companies are able to resolve or liquidate and which lead to the growth and at 207 percent which is not bad but this fact should also be consider as majority of the companies referred to liquidation.
As the code of IBC is now being successful as stated by the chief of the IBBI where he told that assets being handover to the capable companies who will utilize those assets in the efficient manner. This is very cheerful that the creditors had recovered around 1.7 lakh crores which is 207 percent at the average but inspite of this it should also be noted that only 190 companies have been resolved and 780 companies referred for liquidation which is 4 times more so there should such provisions that lesser companies would lead for liquidation which will be consider as the actual growth of the business sector as well as economic growth of the nation.