• UGI USER
  • May 19, 2024
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CREDITORS ONLY RECEIVED 4% OF CLAIMS UNDER IBC PROCESS

Why in the news?

  • Only 17% of cases under the Insolvency and Bankruptcy Code (IBC) yielded a resolution plan.
  • Post-National Company Law Tribunal (NCLT) admission, the majority of cases were withdrawn.
  • Liquidation for 960 corporate debtors was completed, but creditors realised only 4% of their total admitted claims.
source:slideshare

About The Insolvency and Bankruptcy Code (IBC), 2016:

  • The Insolvency and Bankruptcy Code (IBC), 2016, consolidates and amends existing laws regarding insolvency and bankruptcy in India.
  • It addresses situations where liabilities exceed assets, leading to inability to meet debts.
  • IBC provides a time-bound, creditor-driven process for insolvency resolution.
  • It aims to improve the credit culture and business environment.
  • IBC focuses on resolving claims involving insolvent companies to tackle bad loan issues in the banking system.
About National Company Law Tribunal (NCLT):

  • Establishment: Formed on June 1, 2016, under the Companies Act, 2013, based on the recommendation of the Balakrishna Eradi committee.
  • Composition: Includes a President and Judicial and Technical Members as required.

Powers:

  • Not bound by Code of Civil Procedure, guided by principles of natural justice.
  • Can enforce its orders like a court.
  • Empowered to scrutinise its own orders and regulate its procedure.
  • Acts as the adjudicating authority for insolvency resolution processes under the Insolvency and Bankruptcy Code, 2016.

About Corporate Insolvency Resolution Process (CIRP) :

  • CIRP initiated by financial or operational creditors or the corporate.
  • Aimed at reviving the company, including raising funds or selling as a going concern.
  • Must be completed within 330 days, including litigation time, under IBC 2016.