An Analysis on Corporate Insolvency Resolution Process with Special Reference to Time Limit

Abstract

The term ‘insolvency’ has not been defined by the Insolvency and Bankruptcy Code, 2016. It basically means the company being in debt and not being able to pay with the assets the company holds or has. The terms ‘insolvency’ and ‘bankruptcy’ are both interrelated to one another but there is a slight difference between the two. Insolvency means the insolvency of an individual and the company, who is not able to meet the requisites of the company’s norms or has failed to carry out his duties1 . Whereas, the term bankruptcy is a lawful procedure which passes orders regarding the insolvency of an individual and companies2 . Corporate insolvency depends upon the insolvency of the company. Initially the provisions relating to insolvency related problems were under multiple legislations, such as the Companies Act 2013, the Sick Industrial Companies (Special Provisions) Act, 1985, Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, the Recovery of Debts due to Banks and Financial Institutions Act (RDDBFI Act), 1993, and others3 . After a period of time, the Government of India felt it was necessary to bring out a separate legislation towards insolvency related problems. On 22 August 2014, the Bankruptcy Law Reforms Committee (BLRC) was formed by the Ministry of Finance. The Committee was headed by T. K. Viswanathan. They were formed with the objective of bringing in a new bankruptcy law4 . On November 4th, 2015, the Committee submitted its report, which also included a draft bill5 . Arun Jaitley, the Finance Minister, presented the Insolvency and Bankruptcy Code, 2015 bill in the sixteenth Lok Sabha6 . The revised version of the draft bill took into account public concerns. On December 23, 2015 the revised version of the bill was submitted7 . The bill was referred to the Joint Parliamentary Committee (JPC) for a thorough review8