Analyzing the effectiveness of the insolvency and bankruptcy code (IBC), 2016 in a corporate context

Abstract

The Insolvency and Bankruptcy Code (IBC) was enacted in 2016 with an objective of providing a onestop solution to corporate insolvency issues in a manner that is time-bound and maximizes the value of assets to all stakeholders. It came at a time when the gross Non Performing Assets (NPAs) on banks’ balance sheets were soaring and adversely affecting the lending ability of the financial sector. Previous legislations like Companies’ Act (1956), SICA (1985), RDDBI (1993), SARFAESI (2002) led to ambiguity, capacity issues, inconsistent incentive structures to help the creditors and cases went on for years. IBC seeks to bring more consistency in the insolvency resolution procedures, in line with the objectives of UNCITRAL.