Insolvency and Bankruptcy Code – 2016

THE INSOLVENCY AND BANKRUPTCY CODE, 2016

Question: When the Lok Sabha passed the Insolvency and Bankruptcy Code Bill 2016?
(a) 6 May 2016
(b) 5 May 2016
(c) 1 April 2016
(d) 5 April 2016
Ans.(b)
Related facts:

  • The Lok Sabha passed the Insolvency and Bankruptcy Code Bill 2016 on May 2016.
  • The law will ensure time-bound settlement of insolvency, enable faster turnaround of businesses and create a data base of serial defaulters.
  • These procedures must be completed within 180 days.
  • If insolvency cannot be resolved, the assets of the borrowers may be sold to repay creditors.
  • The resolution processes will be conducted by licensed Insolvency Professionals (IPs).
  • This IPs will be members of Insolvency Professional Agencies (IPAs).
  • Information utilities (IUs) will be established to collect, collate and disseminate financial information to facilitate insolvency resolution.
  • The National Company Law Tribunal (NCLT) will adjudicate insolvency resolution for companies and The Debt Recovery Tribunal (DRT) will adjudicate insolvency resolution for individuals.
  • The Insolvency and Bankruptcy Board of India will be set up to regulate functioning of IPs, IPAs and IUs.
  • This will help in improving India’s ranking in the World Bank’s ‘Ease of Doing Business’ index.
  • It is notable that normally it takes 4 years of time for the settlement of insolvency resolution.
  • The Bankruptcy Bill was introduced in the Lok Sabha on December 21, 2015 and was later referred to a Joint Committee of Parliament. Based on the committee’s suggestions, a modified Code was drafted on April 28, 2016.

Reference:
http://164.100.47.4/BillsTexts/LSBillTexts/PassedLoksabha/349_2015_LS_Eng.pdf
http://www.thehindubusinessline.com/economy/policy/lok-sabha-passes-insolvency-and-bankruptcy-codebill/article8561440.ece