What main legislation is applicable to insolvencies and reorganisations?
The Insolvency and Bankruptcy Code 2016 (IBC) is the umbrella law for insolvencies and reorganisations in India. It is a relatively new law and the provisions relating to insolvency and liquidation of corporate persons only came into force on 1 December 2016.
The provisions in the IBC relating to personal bankruptcy are not fully notified. The government has notified certain provisions of the IBC relating to insolvency resolution of personal guarantors of corporate debtors, which came into effect on 1 December 2019.
The IBC provides for a two-stage process to deal with insolvency of a corporate person. In stage one, the corporate debtor undergoes a corporate insolvency resolution process where the creditors of the debtor attempt to resolve the insolvency of the corporate debtor in a time-bound manner. To resolve the insolvency, ‘resolution plans’ for the debtor are invited from eligible persons and thereafter approved by the committee of creditors of the corporate debtor. If the corporate insolvency resolution process fails, the corporate debtor enters stage two for its mandatory liquidation.
Pooja Mahajan and Savar Mahajan authored the India chapter of the Getting The Deal Through - Restructuring & Insolvency published in Lexology.
Please click on the below link to read the full chapter.
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