The Insolvency and Bankruptcy Code, 2016 (IBC) has transformed the way financial distress is handled in India. Designed to consolidate and amend laws relating to reorganization and insolvency resolution, IBC provides a time-bound process for resolving insolvency in companies, partnerships, and individuals.
Under the Code, the National Company Law Tribunal (NCLT) plays a central role in admitting insolvency applications and supervising the process. Creditors, both financial and operational, can initiate insolvency proceedings when defaults occur. Once admitted, a moratorium is imposed to prevent further suits against the debtor, ensuring a fair and transparent resolution process.
The Corporate Insolvency Resolution Process (CIRP) is one of the most significant features of IBC. It allows creditors and resolution professionals to work together in identifying viable plans for the debtor company. If resolution fails within the stipulated period, liquidation follows, ensuring that creditors still receive value through asset realization.
Over the years, IBC has improved India’s global ranking in ease of doing business, especially in resolving insolvency. It has provided much-needed confidence to investors, creditors, and financial institutions by creating accountability and promoting a creditor-driven mechanism.
While challenges such as delays, capacity of tribunals, and complex cross-border cases remain, IBC continues to be a cornerstone for economic stability and corporate governance in India. Understanding its framework is essential for businesses, creditors, and professionals alike.
