Here I react to developments being made in India’s Insolvency and Bankruptcy Code.
“IBC was a necessity after all options failed on NPAs.”
– Arun Jaitley
Legislative History
A number of laws have been enacted in India to deal with the problem of NPAs.
1985:The Sick Industrial Companies Act (SICA) forced banks to file suits in courts that were already dealing with several civil and criminal matters.
1993: The Recovery of Debts Due to Banks and Financial Institutions Act (RDDBFIA) established a Debt Recovery Tribunal (DRT), an improvement over SICA, but still NPAs continued to rise as banks had no power to sell the assets of a corporate debtor.
2002: This was changed by the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI) as banks could auction commercial property of corporate debtors to recover loans.
Despite these efforts NPAs in the country continued to rise and for the first time instead of stricter laws, there was the need of a new approach.
2016: While all the other acts focus on maximizing recovery from a dying company, the Insolvency and Bankruptcy Code (IBC) focuses on breathing new life into it and making its present condition a near-death experience.
The Present
As of today, the 6th of June 2021, the IBC has undergone several amendments within a short span of time in a bid to eradicate any loopholes and/or ambiguities.
In this journey of IBC, the relevant authorities and legislative think tanks have played a crucial role by manifesting new dimensions of law within the strict time lines of the code.
All the stakeholders played an important role and the approach adopted by them so far has made it a success as envisaged in the code.
The IBC 2016 has completely changed the entire architecture of insolvency and bankruptcy laws and proved to be a milestone in the Indian legal framework.
Legal Ease 