What is In­sol­vency & Bank­ruptcy Code, 2016

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— The Code high­lights in­sol­vency pro­cesses for in­di­vid­u­als, com­pa­nies and part­ner­ship firms. It may be noted that, un­der IBC debtor and cred­i­tor both can start ‘re­cov­ery’ pro­ceed­ings against each other.

— Com­pa­nies have to com­plete the en­tire in­sol­vency ex­er­cise within 180 days un­der IBC. The dead­line may be ex­tended if the cred­i­tors do not raise ob­jec­tions on the ex­ten­sion.

— For smaller com­pa­nies in­clud­ing star­tups with an an­nual turnover of Rs 1 crore the whole ex­er­cise of in­sol­vency must be com­pleted in 90 days and the dead­line can be ex­tended by 45 days.

— In­sol­vency and Bank­ruptcy Board of In­dia has been ap­pointed as a reg­u­la­tor and it can over­see th­ese pro­ceed­ings. IBBI has 10 mem­bers; from Fi­nance Min­istry and Law Min­istry the Re­serve Bank of In­dia.

— IBC per­mits hir­ing ser­vices of li­censed pro­fes­sion­als who have to­tal con­trol over as­sets of debtor while the pro­ceed­ings are go­ing on at a tri­bunal.

— Two tri­bunals have been au­tho­rised to re­solve in­sol­vency is­sues and pro­nounce their judge­ment on them. One is Na­tional Com­pany Law Tri­bunal for com­pa­nies and the other Debt Re­cov­ery Tri­bunal for in­di­vid­u­als.

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