IndiaFilings Review of The Insolvency and Bankruptcy Code
IndiaFilings Review of The Insolvency and Bankruptcy Code
The recently passed Insolvency and Bankruptcy Code, 2015 has overhauled the insolvency proceedings in India and creates a time-bound process for insolvency resolution for companies and individuals. In this article, we review the Insolvency and Bankruptcy Code, 2015 in detail.
Insolvency Professional Agency (IPA)
The Insolvency and Bankruptcy Code, 2015 has proposed the creation of insolvency professional agencies (IPAs). The primary function of the insolvency professional agencies will be to regulate insolvency professionals by conducting examinations to enrol them, and enforcing a code of conduct. Further, the insolvency professionals will be responsible for carrying out the resolution process and managing the company during insolvency resolution.
Only persons registered as a member of an insolvency professional agency and Board can provide services relating to insolvency resolution. Further, the insolvency professional agency are required to make bye-laws to the minimum standards of professional competence for its members, the standards for professional and ethical conduct of its members and requirements for enrolment of persons as its members.
Information Utilities
The Insolvency and Bankruptcy Code, 2015 has proposed the creation of information utilities. Information Utilities would be used to collect, collate, authenticate and disseminate financial information to facilitate insolvency, liquidation and bankruptcy proceedings. Information utilities will be setup under a commercial model with any entity intending to submit financial information paying a fee after completion of registration. Entities accessing the information would be required to pay a fee for each time information is requested.
Bankruptcy Fund
The Insolvency and Bankruptcy Code, 2015 has proposed for the creation of a Insolvency and Bankruptcy Fund for the purposes of insolvency resolution, liquidation and bankruptcy of persons under the Code. Funds from the following are to be credited to this account:
- Grants made by the Central Government for the purposes of the Fund;
- Amount deposited by persons as contribution to the Fund;
- Amount received in the Fund from any other source; and
- Interest or other income received out of the investment made from the Fund.
Adjudicating Authorities
The Insolvency and Bankruptcy Code, 2015 has recommended designating the National Company Law Tribunal (NCLT) and Debt Recovery Tribunal (DRT) as the Adjudicating Authorities for corporate persons and firms and individuals, respectively, for resolution of insolvency, liquidation and bankruptcy. In case any person is aggrieved by the order of the Adjudicating Authority, they can appeal to the National Company Law Appellate Tribunal (NCLAT).
