The Insolvency and Bankruptcy Code, 2016 is a comprehensive code introduced recently in India to bring matters related to insolvency, bankruptcy, liquidation, or voluntary liquidation of companies, partnership firms, individuals, and limited liability partnerships under the ambit of single legislation. The vision of the Code is to encourage entrepreneurship and innovations. The Code reinforces the availability of credit and balances the interest of all the stakeholders.

The Code repeals earlier laws like Sick Industrial Companies (Special Provisions) Act, 1985 and amends other laws governing the insolvency and bankruptcy provisions.

The Code is divided into 5 parts having 255 sections and 11 schedules.

PILLARS OF THE CODE:

• INSOLVENCY AND BANKRUPTCY BOARD OF INDIA (IBBI): This is the Insolvency Regulator. IBBI is a body corporate, having perpetual succession, can enter into contracts, can sue or be sued. The head office of IBBI is in New Delhi. The IBBI consists of a whole-time chairperson; 3 part-time members from the ministry of finance, ministry of corporate affairs, ministry of law; 1 part-time member nominated by the Reserve Bank of India; 3 full-time and 2 part-time members nominated by the central government. These members shall be persons of ability, integrity, and standing having special knowledge in the field of law, economics, etc.

           (i)POWERS: IBBI has the same powers as vested under Code of Civil Procedure, 1908 to a civil court in respect of the following matters-

                   (a) discovery and production of books of accounts and other documents;

                   (b) inspection of books, registers, and documents at any place of any person;

                   (c) issuing commission for the examination of witness or documents;

                   (d) summoning and enforcing the attendance of persons and examining them on oath.

          (ii)ROLE:  (a) regulating all insolvency and bankruptcy matters;

                         (b) setting out regulatory standards for insolvency professionals;  

                         (c) setting out eligibility requirements of insolvency intermediaries.

• INSOLVENCY PROFESSIONAL AGENCY: These Agencies are required to be registered with the IBBI to obtain a certificate of registration to carry on their activities as an Agency. Agency should be incorporated as Section 8 Company having a minimum net worth of 10crore rupees and paid-up capital of 5crore rupees. IBBI (Model Bye-Laws and Governing Board of Insolvency Professional Agency) Regulations, 2016 specifies model bye-laws regulating the Agency. For example, ICSI Institute of Insolvency Professionals, Insolvency Professional Agency of Institute of Cost Accountants of India, Indian Institute of Insolvency Professionals of ICAI.

             FUNCTIONS:  (a) redressing consumer grievances;

                                 (b) granting memberships to the artificial body as Insolvency Professional or suspend or cancel the  membership;

                                 (c) for its members laying down standards of professional conduct.

• INSOLVENCY PROFESSIONALS: The work related to insolvency and bankruptcy will be handled by an insolvency professional. First-tier control will be of insolvency professional agency and final control will be of IBBI. They are the intermediaries who play a key role in the efficient working of the bankruptcy process. The first schedule to IBBI (Insolvency Professional) Regulations, 2016 prescribes the Code of Conduct for Insolvency Professionals.

• INFORMATION UTILITY: They provide services as specified by IBBI. They collect, collate, authenticate, and disseminate financial information to be used in insolvency, liquidation, and bankruptcy proceedings. Thereby they create a level playing field and remove all information symmetry. They also help in decision-making by making available information authenticated by all the concerned parties.

• ADJUDICATING AUTHORITIES: Debt Recovery Tribunal deals with insolvency and bankruptcy of individuals and partnership firms. Appeals against orders of Tribunal shall lie to Debt Recovery Appellate Tribunal (DRAT). NCLT deals with the insolvency of corporate and LLP. Appeals against orders of NCLT shall lie to NCLAT. Appeals relating to orders of the IBBI on insolvency professionals, information utilities, and insolvency professional agencies shall lie to NCLAT. Appeals against the orders of DRAT and NCLAT shall lie to Supreme Court.

This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being. Further, despite all efforts that have been made to ensure the accuracy and correctness of the information published, White Code Legal and Tax shall not be responsible for any errors caused due to human error or otherwise.