Describing the aim of new Bankruptcy and Insolvency Code, Insolvency and Bankruptcy Board of India (IBBI) said that the new code would not deal with corporate frauds and inter managerial disputes but will allow creditors and other stakeholders to go for a health check of the corporate at the first available opportunity. The code aims at time bound resolution for insolvency and exit as part of the ease of doing business.
Noting over the newly enacted code, IBBI chairman M S Sahoo has said that any creditor or even employee can trigger the process if debt repayment default is Rs 1 lakh or above. He added that the code will drive growth of debt market in India, which hardly exists in corporate and business financing. Though the country has a matured and bullish equity market, the debt market in India was yet to develop. The board was not concerned with default in bank credits or about the rising NPAs. It would mainly look into private creditors interest if their money got locked.
Sahoo also said that the board is also working on a framework for direct liquidation by passing insolvency resolution and the framework would be ready by February- March. But to begin the process on code a company has to address to the National Company Law Tribunal (NCLT), while for personal insolvency, a claimant will have to go to the Debt Recovery Tribunal (DRT). But the framework for personal insolvency was not yet ready and it would take some time before a party could move the DRT.