Why in the News?
The Insolvency and Bankruptcy Code (Amendment) Bill, 2025 was introduced in the Lok Sabha by Finance Minister to streamline insolvency, cut tribunal delays, and add new tools like creditor-led resolution and cross-border insolvency.
About the Insolvency and Bankruptcy Code (IBC), 2016:
- IBC is India’s bankruptcy law, covering corporate persons, partnership firms, and individuals.
- Insolvency: Liabilities exceed assets; entity cannot meet obligations.
- Bankruptcy: Legal declaration of inability to pay debts.
- Objective: Time-bound, creditor-driven resolution to improve recovery and business confidence.
- Regulating Authority: Insolvency and Bankruptcy Board of India (IBBI), a statutory body with members from Ministry of Finance, Ministry of Corporate Affairs, and Reserve Bank of India.
- Adjudicating Authority:
- National Company Law Tribunal (NCLT) for companies/LLPs.
- Debt Recovery Tribunal (DRT) for individuals and partnership firms.
Key Amendments Proposed in IBC (2025):
- Creditor-Initiated Insolvency Resolution Process (CIIRP): Out-of-court creditor resolutions with NCLT approval; faster timelines and promoter involvement.
- Group Insolvency: Joint proceedings for related companies to preserve asset value and cut costs (e.g., Videocon Group case).
- Cross-Border Insolvency: Framework to handle overseas assets and debts, allowing Indian lenders access to foreign assets.
- Pre-Packaged Insolvency (PPIRP): Faster, affordable restructuring route for Micro, Small, and Medium Enterprises (MSMEs) while operations continue.
- Other Reforms: Segregated asset sales, more NCLT benches (now 16), extended claim timelines, sector-specific provisions, and debtor audits.
Achievements of IBC:
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| [UPSC 2017] Which of the following statements best describes the term ‘Scheme for Sustainable Structuring of Stressed Assets (S4A)’, recently seen in the news?
Options: (a) It is a procedure for considering ecological costs of developmental schemes formulated by the Government. (b) It is a scheme of RBI for reworking the financial structure of big corporate entities facing genuine difficulties. (c) It is a disinvestment plan of the Government regarding Central Public Sector Undertakings. (d) It is an important provision in ‘The Insolvency and Bankruptcy Code’ recently implemented by the Government. * |
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