According to the World Bank, India is ranked 136 among 189 countries on the parameter of resolving insolvency and that it takes more than four years to resolve a case of bankruptcy in India. Currently, over 70,000 liquidation cases are pending in debt recovery tribunals and courts.With a view to make it easier to wind up a failing business and recover debts in Asia’s third-largest economy, parliament has attempted to overhaul the bankruptcy law in India. The Insolvency and Bankruptcy Bill, 2015 which seeks to strengthen the hands of lenders to recover outstanding debts, was earlier passed by the Lok Sabha (Lower House) on May 5, 2016, and was passed by the Rajya Sabha (Upper House) on May 11, 2016. With the president providing his assent on 28 May 2016, India now has a new bankruptcy law – The Insolvency and Bankruptcy Code, 2016 (the Bankruptcy Code) which will ensure time-bound settlement of insolvency, enable faster turnaround of businesses and create a database of defaulters. Before the enactment of the Bankruptcy Code, India had multiple laws to deal with insolvency, which led to significant delays in winding up a company. The Bankruptcy Code aims to consolidate the existing framework by repealing the Presidency Towns Insolvency Act, 1090 and the Provincial Insolvency Act, 1920. In addition, it amends 11 other laws including the Companies Act, 2013, Recovery of Debts Due to Banks and Financial Institutions Act, 1993, and Sick Industrial Companies (Special Provisions) Repeal Act, 2003. The Bankruptcy Code envisages a framework for the resolution of insolvency for individuals, companies, limited liability partnerships and partnership firms. Salient features of the act Conclusion –––––––––––– |
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