Lok Sabha has passed the Insolvency and Bankruptcy Code 2016 on May 05, 2016. It covers individuals, companies, limited liability partnerships and partnership firms. The new code will speed up the resolution process for stressed assets in the country. It attempts to simplify the process of insolvency and bankruptcy proceedings. The highlights of bankruptcy code are enumerated hereunder:
1. Strict deadlines : Authority to decide insolvency applications within 180 days further, an extension of additional 90 days can be allowed
2. Fast track Insolvency process: Fast track process is available for Corporate- Debtor with low income and assets, Specified class of creditors and any other category notified by Govt. Under fast track process, 90 days time-limit to complete whole process and further an extension of 45 days is allowed
3. Adjudicating Authority:
NCLT for Corporates
DRTs for Individuals and Partnerships Firms
NCLAT to act as Appellate Authority
4. Insolvency Regulator: To exercise regulatory authority over insolvency professionals, insolvency professional agencies and informational utilities
5. Stringent punishment to defaulter: The bill proposes upto five-year jail term to debtors for concealment of property and debars bankrupt individuals from holding any public office
6. Agreement with foreign Countries: The bill proposes to allow Government to enter into cross-border treaties for enforcing g the provisions of the Code and to get access to defaulters' offshore asset.
7. Appointment of Liquidator: Resolution professionals shall act as liquidator
8. Workmen dues to get priority: Workers’ salaries for up to 24 months will get first priority in case of liquidation of assets of a company ahead of secured creditors.
9. Creation of ‘insolvency information utilities’: The bill provides for creation of information utilities that will collate financial information from listed companies and financial and operational creditors of companies about debtors to prevent serial defaulters from misusing the system to collect