Corporate Insolvency and Bankruptcy Under the IBC, 2016

Abstract

The Insolvency and Bankruptcy Code, 2016 brings about a paradigm shift in the recovery and resolution process of stressed assets by introducing the concept of "Creditor in Control" instead of "Debtors in Possession". This brings about value enhancement of the corporate debtor as once this process starts, the Board of Directors cede control of the company and the Insolvency Professional with the help of advisors starts managing the company. Creditors now have the guidelines that clarify details till the last mile, including distribution of the recovery proceeds. The Reserve Bank of India in order to align the resolution mechanism with the IBC subsequently withdrew all circulars such as CDR. The Flexible Structuring of the of Existing Long Term Project Loans, SDR, Change in Ownership outside SDR, 5 by 25 Scheme and S4A. The Joint Lenders Forum was also discontinued. The paper, which is exploratory in nature, aims to explain The Corporate Insolvency Resolution Process and the Corporate Liquidation Process along with the waterfall mechanism of distribution of assets in a sequential manner, for the benefit of the readers with extensive reference to the Insolvency & Bankruptcy Code, 2016 and also various reports and practice manuals on the subject in the public domain.