Thursday, 7 July 2016

What is Insolvency and Bankruptcy Code 2016?

Insolvency and Bankruptcy Code 2016

Insolvency and Bankruptcy code 2016 passed by Rajya Sabha on 11 May 2016. Earlier it had been passed in Lok Sabha on 5th May 2016.

What is Insolvency and Bankruptcy Code 2016?

It is the law relating to reorganization and insolvency resolution in a time bound manner.

It will be specifically useful for debtors and creditors, as the code seek to achieve certainty for recovery and enforcement proceedings.

India legal and institutional machinery regarding dealing with debt default has not be in line with global Standards.

The existing law of contract Act or Recovery of Debts Due to Banks and Financial Institutions Act, 1993 or the Securitisation and Reconstruction of Financial Assets or Enforcement of Security Interest Act, 2002 or Sick Industrial Companies (Special Provisions) Act, 1985 or the winding up provisions of the Companies Act, 1956 ,had not given desirous results to the creditors when he had used the same for recovery proceedings. In this context Indian market has remains a risky option for investment for national and international investors.

The Insolvency and Bankruptcy Code 2016 has consolidate various existing laws and will prove to be the important step in changing the legislative infrastructure of India by removing the negativity attached to time and ease of recovery.

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