Demystifying - The Insolvency and Bankruptcy Code 2016
What is Insolvency and Bankruptcy? Are they different? Insolvency is when an individual or a firm is unable to meet their financial obligations. This is the financial state of the company. Bankruptcy is the legal process that serves the purpose of resolving the issue of insolvency. This is the legal state of the company What is the need for the Act in India? Under the existing archaic-old laws, banks have had a hard time recovering bad debt, with the case of Kingfisher tycoon Vijay Mallya, who owes banks more than US$1.3 billion bringing the issue into focus. In fact, there was no single law dealing with insolvency and bankruptcy in India which leads to overlapping judgements and process becomes extremely cumbersome. Provisions of insolvency and bankruptcy related can found under various Acts: o The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 o Presidency Towns Insolvency Act, 1909 o The Provin