Why in news
- The Insolvency and Bankruptcy Board of India (IBBI) commemorated its 10th Annual Day, evaluating institutional progress under the Insolvency and Bankruptcy Code, 2016.
Key terms
IBBI
Statutory authority established in 2016 regulating insolvency professionals and entities.
Creditor-in-control
Model where financial creditors control corporate affairs through a resolution professional during insolvency.
CIRP
Corporate Insolvency Resolution Process mandated under IBC to resolve distressed assets within strict timelines.
Haircut
The percentage reduction in the total outstanding claim accepted by creditors during resolution.
What is the IBC, 2016?
- Consolidated statutory regime providing time-bound insolvency resolution for corporate persons, partnership firms, and individuals.
- Replaced a fragmented legal regime, creating the Insolvency and Bankruptcy Board of India (IBBI) as the regulator.
Institutional Architecture
- National Company Law Tribunal (NCLT) serves as the Adjudicating Authority for corporate insolvency resolution processes (CIRP).
- Debt Recovery Tribunal (DRT) adjudicates insolvency matters involving individuals and partnership firms.
Why it matters
- Shifting control from debtor-in-possession to creditor-in-control significantly improved credit discipline among corporate borrowers.
- Systemic challenges remain, including infrastructural bottlenecks at NCLT benches and haircuts taken by financial creditors.
Prelims facts
- IBBI regulates both the service providers and the processes under the Insolvency and Bankruptcy Code.
Mains discussion
- Impact of the IBC on resolving the Twin Balance Sheet problem and resolving non-performing assets.
Source: PIB
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