Published Paper Details:

Abstract: Businesses all over, whether small or big, need efficient and speedy procedures for exit as much as for start-up. As businesses grow in size there is also a possibility that poor management, bad business decisions or even for that matter fraud, may result in a business becoming unviable, the business becoming unfeasible. A close look at the Indian system neither provides an opportunity for speedy and effective rehabilitation nor for an efficient, coherent or a well regulated exit. The Insolvency & bankruptcy laws were scattered in lot more enactments and could not help recovery as it were time consuming, a need was felt that new stringent laws be enacted which would take care of the existing defaulters in a time bound manner. Also the process of liquidation and also the winding up is very costly, witnessing inordinate delays and resulted in almost erosion of asset value. As we all are aware that an effective insolvency system is an important element of financial system stability. The Insolvency & Bankruptcy Code (IBC) received the assent of the President of India on 28th May, 2016. The Parliament enacted this new law for the reorganization and insolvency resolution of LLP, corporate persons, individuals and partnership firms within a time bound manner for maximization of value of assets and to consolidate the existing framework by creating a single law for insolvency and bankruptcy. There is a need to change the negative perception of recovery and litigation associated with the debt recovery mechanism prevalent in India. The IBC is to facilitate a better and faster debt recovery mechanism. The IBC is very clear, only in case there is failure to work out a resolution plan under the corporate insolvency resolution process which is prescribed under the code, then and then only the corporate debtor must be liquidated.