The Insolvency and Bankruptcy Code, 2016.

Summary of the Insolvency and Bankruptcy Code, 2016 (IBC)
Overview
*Act Name: Insolvency and Bankruptcy Code, 2016
*Coverage: Corporate Persons, Individuals, and Partnership Firms
Key Components
1. Initiation of Insolvency Process
• Initiators: Financial Creditors (Section 7), Operational Creditors (Section 8), and Corporate Applicants (Section 10)
• Outcome: Appointment of Interim Resolution Professional and Public Announcement (Section 13)
2. Moratorium
• Provisions (Sections 13-14):
• Halt on legal proceedings against the corporate debtor
• Restriction on asset transfer or encumbrance by the corporate debtor
• Exceptions for critical supply of goods/services and notified transactions
• Duration: From insolvency commencement date until process completion, approval of resolution plan, or liquidation order (Section 15)
3. Resolution Process Governance
• Resolution Professional’s Role (Sections 16-18): Management of debtor’s business, asset valuation, and facilitation of resolution plan
• Timeline (Section 12): 180 days for resolution, extendable
• Oversight: By the Insolvency and Bankruptcy Board of India (IBBI)
4. Liquidation
• Trigger: Failure of resolution process or direct order (Section 33)
• Liquidator’s Role: Asset realization and distribution according to IBC hierarchy
5. Distribution Hierarchy
• Priority Order (Inferred, not directly provided): Secured Creditors, Operational Creditors, etc., guided by principles akin to Section 60 for insolvency resolution

"Legislative History:

The Insolvency and Bankruptcy Code, 2016

Short Title - The Insolvency and Bankruptcy Code, 2016

Act Number / Year - Act No. 31 of 2016

India Code Act ID - 201631

Introduced In - Parliament Lok Sabha

Presidential Assent Date - May 28, 2016

Official Gazette Publication - May 28, 2016 (Extraordinary Gazette Part II, Section 1)

Enforcement Date - 5th August, 2016

Nodal Ministry - Ministry of Corporate Affairs

Precedent & Statutory Rationale

1. Consolidation of Fragmented Insolvency Frameworks:

o Prior to 2016, insolvency and debt recovery were governed by overlapping, disparate statutes (such as SICA, SARFAESI, and winding-up under Companies Act), resulting in parallel judicial proceedings, multi-year delays, and severe value erosion for creditors.

2. Shift to ""Creditor-in-Control"" Model & Time-Bound Resolution:

o Replaced the outdated debtor-in-possession regime with a creditor-driven resolution process (CIRP). The Code instituted a mandatory time-bound matrix (180 days, extendable up to 330 days including litigation) to resolve distressed assets or proceed to liquidation.

3. Establishment of Dedicated Ecosystem and Regulators:

o Created a specialized multi-pillar institutional architecture comprising the Insolvency and Bankruptcy Board of India (IBBI) as the regulator, Insolvency Professionals (IPs), Information Utilities (IUs), and dedicated adjudicating authorities (NCLT for corporates/LLPs and DRT for individuals/partnerships).

Parliamentary Trajectory & Enactment

• Formulation: Developed based on the Bankruptcy Law Reforms Committee (BLRC) report chaired by Dr. T. K. Viswanathan, and introduced by Finance Minister Arun Jaitley.

• Parliamentary Passage: Introduced in the Lok Sabha on December 21, 2015; referred to a Joint Parliamentary Committee (JPC), which submitted its report on April 28, 2016. Passed by the Lok Sabha on May 5, 2016, and subsequently passed by the Rajya Sabha on May 11, 2016.

• Presidential Assent: Received formal Presidential Assent on May 28, 2016, entering the statute book as Act No. 31 of 2016.

Source: India Code Official Repository and Ministry of Corporate Affairs / Ministry of Finance Official Records

"