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Insolvency and Bankruptcy Code to be operational from Dec 1, 2016

01 Dec 2016 Evaluate

The Insolvency and Bankruptcy Code, marking the start of the new era is all set to be operational from December 1, 2016. Insolvency and Bankruptcy Code, 2016, seeks to consolidate and amend laws relating to reorganisation as well as insolvency resolution of corporate persons, partnership firms and individuals in a time-bound manner. Finance and Corporate Affairs Minister Arun Jaitley has said that there are a lot of expectations from the new insolvency mechanism and expressed confidence that it would deliver the desired results in years to come.

The Insolvency and Bankruptcy Board of India (IBBI) has been set up under the Code that seeks to consolidate and amend laws relating to reorganisation as well as insolvency resolution of corporate persons, partnership firms and individuals in a time-bound manner. As many as 15 insolvency professionals and three insolvency professional agencies have already been registered with the IBBI. So far, four sets of regulations have been issued by the IBBI. These pertain to resolution process for corporate persons, insolvency professionals, model bye-laws and governing board of insolvency professional agencies, and the insolvency professional agencies. With the Board for Industrial and Financial Reconstruction (BIFR) becoming redundant, corporate insolvencies will now be dealt by the National Company Law Tribunal and proprietorship and partnership insolvencies by the Debt Recovery Tribunal.

A firm registered under Section 8 of the Companies Act, 2013 -- having a minimum net worth of Rs 10 crore and a paid-up capital of Rs 5 crore -- will be eligible to be an insolvency professional agency. Among others, advocates, chartered accountants, company secretaries and cost accountants with 15 years of experience in their respective fields can serve as insolvency professionals.

The apex body of company secretaries, Institute of Company Secretaries of India’s (ICSI) President, Mamta Binani has said that the Code will help quicker resolution of cases and unlock value of assets. She said that both ICSI and ICAI (Institute of Chartered Accountants of India) have registered not-for-profit companies under the Code to act as insolvency professional agencies.


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