It was enacted in 2016 based on the recommendation of the T.K. Vishwanathan Committee Report.

Objectives

  • To consolidate and amend all insolvency laws that exist in India.
  • To simplify and expedite the process of resolution of Insolvency and Bankruptcy in India.
  • To protect the interests of creditors, including stakeholders in a company.
  • To revive the company in a time-bound manner.
  • To promote entrepreneurship.
  • To provide the necessary relief to creditors and, consequently, increase credit supply in the economy.
  • To work out a new and timely recovery procedure to be adopted by the banks, financial institutions, or individuals.
  • To set up the Insolvency and Bankruptcy Board of India.
  • Maximization of the value of assets of corporate persons.
Insolvency

  • Insolvency refers to a situation in which individuals or companies cannot repay their outstanding debt.

Bankruptcy

  • Bankruptcy refers to a legal status declared by a court of competent jurisdiction for a person or entity that is insolvent i.e., unable to pay off debts.
  • The court issues appropriate orders to resolve the insolvency and protect the rights of creditors.

 

Source: The Hindu