IBC Code 2016 | Insolvency and Bankruptcy Code 2016 | Indian Economy for UPSC

Summary

The video script discusses the Indian Government's schemes to reduce non-performing assets (NPAs) in banks. It details the Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code (IBC) 2016, which aims to resolve NPA issues. The process begins with the admission of an insolvency application by the National Company Law Tribunal (NCLAT). It continues with the appointment of an insolvency professional to manage the company's affairs and a committee of creditors. The script also addresses the eligibility criteria for resolution applicants, including restrictions on promoters and defaulters. The video concludes by emphasizing the time-bound nature of CIRP, which is designed to be completed within 330 days.

Takeaways

• 📜 The Indian Government launched schemes to reduce non-performing assets (NPAs), which are detailed in the video.
• 🏦 The Insolvency and Bankruptcy Code (IBC) 2016 provides a step-by-step process to resolve NPA issues, known as the Corporate Insolvency Resolution Process (CIRP).
• 📋 The first step of CIRP is the admission of an insolvency application by the National Company Law Tribunal (NCLAT), which was established in 2016.
• 🏛️ If a bank is unable to recover its loan, it can submit an insolvency application to NCLAT through any of its branches.
• ⚖️ Appeals against NCLAT's decisions can be made in the Appellate Tribunal, which could be the National Company Law Appellate Tribunal (NCLAT) or the Supreme Court.
• 🔄 After the application is submitted, the lending party has the option to withdraw the application within 30 days.
• 👥 The next step involves the appointment of a Committee of Creditors (CoC) and Insolvency Professionals to oversee the resolution process.
• 💼 An Insolvency Professional is assigned to manage the company's affairs and maximize the value of its assets during the CIRP.
• 💡 Resolution applicants, potential investors, are invited to submit plans to the CoC, which then selects the most viable plan.
• 🚫 The IBC 2016 has certain eligibility conditions for resolution applicants, such as excluding undischarged insolvents and those with a history of defaults.
• ⏳ The entire CIRP process is time-bound, with a maximum of 330 days allocated for the completion of the process, starting with a 14-day period for the admission or rejection of the insolvency application.

Q & A

What is the purpose of the schemes launched by the government mentioned in the script?

The schemes are launched to reduce the non-performing assets (NPAs) of banks by resolving the issues of insolvent companies through a detailed process.

What does the term 'SARFAESI' stand for as used in the script?

SARFAESI stands for the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, which is related to the recovery of loans and enforcement of security interest.

What is the full form of 'IBC' mentioned in the script?

IBC stands for the Insolvency and Bankruptcy Code, which is a legal framework for insolvency and bankruptcy in India.

What is the significance of the year 2016 in the context of the script?

2016 is significant as it is the year when the Insolvency and Bankruptcy Code was enacted in India, providing a comprehensive legal framework for resolving insolvency.

What is the role of the National Company Law Tribunal (NCLAT) in the insolvency process as described in the script?

NCLAT is the appellate authority for decisions made by the National Company Law Tribunal (NCLT) and is involved in the appeals process against decisions related to the insolvency resolution process.

What is the first step in the Corporate Insolvency Resolution Process (CIRP) as per the script?

The first step in the CIRP is the admission of the insolvency application, where a bank can submit an application to the NCLT if it is unable to recover its loan.

What is the term used for the professionals who handle the affairs of a company during the CIRP?

The term used for such professionals is 'Insolvency Professionals', who are assigned to handle the company's affairs and try to maximize the value of its assets during the CIRP.

What is the role of the Committee of Creditors (CoC) in the insolvency resolution process?

The Committee of Creditors is formed to include all those who have lent money to the company and whose money is stuck. They play a crucial role in selecting the resolution plan and overseeing the process.

What is a 'Resolution Plan' in the context of the insolvency resolution process?

A resolution plan is a proposal submitted by potential investors who believe they can invest in the company and turn it around, aiming to revive the company's financial health.

What changes were made to the IBC in 2017 to prevent misuse as mentioned in the script?

In 2017, the IBC was amended to include a condition that promoters cannot bid for their own companies to prevent them from manipulating the insolvency resolution process.

How long is the time allocated for the admission of an insolvency application according to the script?

The time allocated for the admission of an insolvency application is 14 days.

What is the total time allocated for the entire Corporate Insolvency Resolution Process (CIRP) as per the script?

The total time allocated for the entire CIRP is 330 days.