Insolvency and Bankruptcy Code: Lack of permanent heads a concern, deluge awaits once moratorium ends
- Posted By
6th January, 2021
- In its fifth year of existence of the Insolvency and Bankruptcy Code (IBC), the insolvency body has been without a full-time president ever since.
What are the present concerns arising with the insolvency body?
- The drop of 40 per cent was seen in the resolution of cases, which could be further increase. All these issues have taken their toll on the IBC and the impact is likely to be seen even in the coming financial year.
What is National Company Law Tribunal?
- The National Company Law Tribunalis a quasi-judicial body in India that adjudicates issues relating to Indian companies.
- The tribunal was established under the Companies Act 2013 and was constituted on 1 June 2016
- It is based on the recommendation of the V. BalakrishnaEradi committee on law relating to the insolvency and the winding up of companies.
- The National Company Law Tribunal is the adjudicating authority for the insolvency resolution process of companies and limited liability partnerships under the Insolvency and Bankruptcy Code, 2016.
- Decisions of the tribunal may be appealed to the National Company Law Appellate Tribunal, the decisions of which may further be appealed to the Supreme Court of India on a point of law.
What is the significance of the Insolvency body?
- It was brought with an aim to speed up the bad debt resolution process in the country and clean up banks’ books.
What are the suggestions for its efficient functioning?
- Hearings could be started through video conferencing.
- The complexity in new system of filing online submissions and cases should be resolved.
Insolvency and Bankruptcy Code, 2016 (IBC)
- The Insolvency and Bankruptcy Code, 2016 (IBC) is the bankruptcy law of India which seeks to consolidate the existing framework by creating a single law for insolvency and bankruptcy.
- The bankruptcy code is a one stop solution for resolving insolvencies which previously was a long process that did not offer an economically viable arrangement.
- The code aims to protect the interests of small investors and make the process of doing business less cumbersome.
- The Code establishes the Insolvency and Bankruptcy Board of India, to oversee the insolvency proceedings in the country and regulate the entities registered under it.
- The Board will have 10 members, including representatives from the Ministries of Finance and Law, and the Reserve Bank of India.