1.Introduction of Insolvency and Bankruptcy Code, 2016
Insolvency and Bankruptcy Code, 2016 (IBC) are those bankruptcy law which came into existence India should unite those existing skeleton to make a solitary legitimate statute for bankruptcy . The report of Bankruptcy Law Reforms Committee (BLRC), set up to outline and propose the law, was submitted in November 2015, this Code was initially presented in Lok Sabha in December 2015 and got passed on 5 May 2016. The Code got the consent of the President of India on 28 May 2016 and certain arrangements of the Act has come into compel from fifth August and 19 August 2016.
The Insolvency and Bankruptcy Code, 2016 (IBC) is an imperative change for India. In a traverse of four months IBBI has been constituted is a honourable exertion. The Insolvency and Bankruptcy Code, 2016 (IBC) is a replacement to divided legitimate system and a split institutional set-up which was continued to convey poor results for quite a long time creditors and distressed business looking for an exit. This will profit everyone creditors, distressed business, economy and the value of the assets will be maximized. The way in which the law is as of now being actualized appears to concentrate more on quick operationalisation. It has introduced the time bound resolution process which is the 180-day timeline speaks deeply about the aim of the IBC – quick determination of insolvency to help with the recovery as to prevail in the economy where there is more proficiency about the recovery framework and maximising the value of assets of distressed business. Since the IBC provides for a time-bound framework, it puts enormous pressure on the promoters as wells as the lenders to fast-track a compromise formula or run the risk of the asset being liquidated.
The Preamble of this code portrays the basic functions as to consolidate and amend the laws relating to reorganization (not defined to put back in going concern)and insolvency, it emphasis resolution of corporate persons , partnership firms & individuals in a time bound manner, for maximization of value of assets of such persons, to promote entrepreneurship, availability of credit & balance (neo capitalistic pattern), the interests of all stakeholders including alteration in order of priority of payment of of Government dues and to establish an Insolvency and Bankruptcy Board of India, and for matters connected therewith or incidental thereto.
In India, the lawful and institutional apparatus for managing obligation default has not been in accordance with worldwide norms. The recuperation activity by loan bosses, either through the Agreements or through uncommon laws, for example, Recovery of Debts due to Banks and Financial Institutions Act 1993 and the The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, has not had sought results. Wiped out Sick Industrial Companies (Special Provisions)Act, 1985 and the twisting up arrangements of the Companies Act, 1956/Companies Act, 2013 have nor possessed the capacity to help recuperation for banks nor help rebuilding of firms. Laws managing singular bankruptcy, the Presidency Towns Insolvency Act, 1909 and the Provincial Insolvency Act. 1920, are very nearly extremely old. This has hampered the certainty of the moneylender. At the point when banks are unconfident, obligation access for borrowers is lessened. This reflects in the condition of the credit advertises in India. Secured credit by banks is the biggest part of the credit advertises in India. Secured credit by banks is the biggest part of the credit showcase in India. Secured credit by banks is the biggest part of the credit showcase in India.
The Code repealed the Presidency Towns Insolvency Act, 1920 Act, 1993 and Sick Industrial Companies (Special Provisions) Repeal Act, 2003, among others to combine and alter a solitary statute.
1.2 Basic Features:
To meet the aims for value maximisation and time bound framework,IBC constituted the four set up:
1.Insolvency Resolution : The Code plots a bankruptcy determination handle for people, organizations and association firms. As indicated by the Section 6 of the code it is expressed that the procedure might be started by either the Corporate account holder or the Financial lenders and operational loan bosses. The most extreme time breaking point of 180 days and 90 days augmentation just if the Adjudicating Authority is convinced for fruition of the very procedure, has been set for corporates and people.
2.Insolvency regulator: The Code sets up the Insolvency and Bankruptcy Board of India, investigate the insolvency process and manage the organizations or association firms enrolled under it. The organization of the Board as it have 10 individuals, including delegates from the Ministries of Finance and Law, and the Reserve Bank of India. Directly Dr. M.S Sahoo is the executive of the Disciplinary Committee under Insolvency and Bankruptcy Board of India under the Insolvency and Bankruptcy Code, 2016
3.Insolvency professionals: The insolvency process will be overseen by authorized experts picked by the creditors in the committee of creditor's meeting. These experts are known as interim resolution professional ,later known as resolution professional will likewise control the benefits of the indebted person amid the bankruptcy procedure.
4. Adjudicating Authority: For people and organizations the Code proposes two separate tribunals to regulate the procedure of indebtedness determination prepare (i) the National Company Law Tribunal (NCLT) for Companies and Limited Liability Partnership firms; and (ii) the Debt Recovery Tribunal (DRT) for people and associations.
3.Establishment of IBBI
The Insolvency and Bankruptcy Board of India (IBBI) is the controller for investigate indebtedness procedures and substances like Insolvency Professional Agencies (IPA), Insolvency Professionals (IP) and Information Utilities (IU) in India, which is was set up on 1 October 2016 and it has been consolidated in understanding as to give statutory powers through the Insolvency and Bankruptcy Code, 2016 which was passed by Lok Sabha. The Board involves 10 individuals, including agents from the Ministries of Finance and Law, and the Reserve Bank of India. It covers Individuals, Companies, Limited Liability Partnerships and Partnership firms their behaviours. The new code accelerates the determination procedure as to assist both the account holder's focused on resources with releasing and loan bosses to recover their instalment in the nation. It rearranges the procedure of indebtedness and chapter 11 procedures as enshrined in Section 7,8,9 and 10. It supervises the cases utilizing two tribunals like NCLT(National Company Law Tribunal) and Debt Redressal Tribunal (DRT).
The IBBI has authorized the principal bunch of IPs just on the basis of their expert experience which was earlier not that stringent and with the new framework IBC,2016.The IBBI has to correct and hire expert HR for screening the noteworthy IPs as to screen them well and guarantee that there will be no misconduct or misrepresentation which earlier harassed the debtors, creditors and distressed business which usually delayed the cases and increased the complexities. The IPs which are selected are required to deal with the complexities of the current cases. IBBI said it will form a team to investigate whether service providers, including IPs, take adequate internal-control measures, procedures and safeguards in performing their duty, with a 10-day prior notice. In case of negligence, they may face disciplinary action. NCLT has admitted around 85 matters, but most of the cases are in the initial stage with interim Insolvency Resolution Professionals (IRPs) appointed. The IRPs are mandated by the code and IBBI regulations to appoint valuers to determine liquidation value, collect claims and set up the committee of creditors involved in a case.
Entire Time Members :Ms. Suman Saxena, WTM Research and Regulation Wing
Shri. Ajay Tyagi, Additional Secretary, Department of Economic Affairs, Ministry of Finance
Shri. Amardeep Singh Bhatia, Joint Secretary, Ministry of Corporate Affairs
Shri. G. S. Yadav, Joint Secretary and Legal Adviser, Department of Legal Affairs, Ministry of Law
Shri. An Unnikrishnan, Legal Adviser, Reserve Bank of India
5.Powers And Functions Of The Board
Section196(1) of the Insolvency and Bankruptcy Code, 2016 controls that the Board might with the subject to the general bearings of the Central Government play out all or any of the capacities coordinated:
(a) Register bankruptcy proficient offices, indebtedness experts and data utilities and re establish, pull back, suspend or cross out such enlistments The IBBI Board should enroll every one of the substances required in Insolvency system.
(b) Specify the base qualification prerequisites for enlistment of bankruptcy expert offices, indebtedness experts and data utilities-The qualification criteria ought to be characterized unmistakably by the Board to the substances required in the determination procedure.
(c) Levy expense or different charges for the enlistment of insolvency resolution Professionals and interim resolution professionals the demand expenses required for the procedure.
(d) Specify by controls principles for the working of insolvency resolution Professionals Interim resolution professionals -holds duty to indicate the directions expressed in the Code.
(e) Lay around directions the base educational programs for the examination of the interim professionals for their enrolment as individuals from the bankruptcy insolvency professional
(f) Carry out assessments and examinations on indebtedness proficient offices, the interim professionals and data utilities and pass such requests as might be required for consistence of the arrangements of this Code and the directions issued hereunder.
(g) Monitor the execution of the interim professionals, interim professionals and data utilities and pass any headings as might be required for consistence of the arrangements of this Code and the controls issued hereunder.
(h) Call for any data and records from the indebtedness proficient organizations, interim professionals and data utilities.
(i) Publish such data, information, inquire about reviews and other data as might be indicated by controls.
(j) Specify by controls the way of gathering and putting away information by the data utilities and for giving access to such information.
(k) Collect and keep up records identifying with insolvency and spread data identifying with such cases.
(l) Constitute such advisory groups as might be required incorporating into specific the councils set down in Section 197.
(m) Promote straightforwardness and best practices in its administration.
(n) Maintain sites and such other generally available vaults of electronic data as might be vital.
(o) Enter into update of memorandum with some other statutory specialists
(p) Issue fundamental rules to the insolvency professional agencies, insolvency professionals and information utilities.
(q) Specify component for redressal of grievances against insolvency professionals, insolvency professional agencies and interim utilities and pass orders relating to complaints filed against the aforesaid for compliance of the provisions of this Code and the regulations issued hereunder.
(r) Conduct occasional review, research and review the working and execution of to the, insolvency professionals , insolvency professional agencies and interim utilities at such interims as might be determined by the Board.
(s) Specify components for issuing controls, including the direct of open meeting forms before notice of any directions.
(t) Make directions and rules on matters identifying with insolvency and bankruptcy as might be required under this Code, including component for time bound transfer of the benefits of the corporate debtor or debtor.
(u) Perform such different capacities as might be endorsed.
2.)The board makes the model bye-laws which would be embraced by indebtedness proficient offices which thusly would accommodate :
a)The benchmark of professional or workplace competence of the members of the insolvency professional
b)A benchmark for professional and moral ethical conduct of the members of the insolvency professional .
c)Mandatory enrolment of professionals as members of insolvency professional which are specified as non-discriminatory. For this clause, ‘non-discriminatory’ would mean no discrimination on grounds of caste, gender, place of birth, religion or any other grounds.
d)The process of issuing of membership.
e)Forming a governing board for the purpose of internal governance and management of insolvency professional agency according to the rules, regulations and bye-laws specified by the board.
f)The information which is required to be submitted by the members including the form and time for submitting such information.
g)The specific group of people who will be provided with certain services at concessional rates and for no remuneration by the members.
h)The basis on which members of the insolvency professional will be charged with penalties.
i)An unbiased system mechanism for redressal of grievances against the members of insolvency professional agencies.
j)The basis on which the insolvency professionals are liable to be expelled from the membership of insolvency professional.
k)The mechanism of collection of fees and the quantum of fee for inducting people as its members.
l)The strategy stages for enrolment of people as members of insolvency professional
m)The process of conducting screening examination for enrolment of insolvency professionals.
n)A way of observing reviewing the working of insolvency professionals who are members of the insolvency professional
o)The responsibilities, duties, obligations and various other activities to be performed by members.
p)The conduct of trail proceedings against its members and imposing penalties if found guilty.
q)To lay guidelines which will ensure proper utilization of the amount received as penalty imposed against any insolvency professional.
3.)The Board while exercising the powers under this code will hold the same powers while trying a suit as they are vested in a Civil Court under the Code off Civil Procedure, 1908 in the matters like:
(a) The Board can ask for the discovery and production of books of account and other documents, at such place and such time as may be specified by the it.
(b) It can issue summons and enforces the attendance of persons for examining them on oath.
(c) Can inspects any books, registers and other documents of any person at any place.
(d) Issues commissions for the examination of witnesses or documents as the Civil Court does.
Various steel and power organizations have moved the NCLT to petition for insolvency, so they can rebuild themselves. ne of the first application filed under Sec 7 of the IBC,2016 Act was ICICI Bank versus Innoventive Industries. The company, which had a debt of Rs 900 crore,
had challenged in the Bombay High Court the constitutional validity of the IBC. The court admitted the constitutional validity of the code as IBC,2016 is a special Act but it needs to adhere by the principle of natural justice and it should provide insolvency application.