Pillars of Insolvency & Bankruptcy Code, 2016

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The Insolvency & Bankruptcy Code, 2016 is a special legislation which governs the procedure of insolvency and bankruptcy in India so that the process becomes faster, more transparent and efficient. Claims against insolvent companies, partnerships and individuals needed to be settled in a time bound manner for maximisation of value of assets of such persons, and to be able to promote entrepreneurship and balance of interest of all the stakeholders. In order to enforce and make the code effective, there are four pillars of the code-

 

1. Insolvency Professional-

 

Section 3(19) defines the term Insolvency Professional as a person who has been enrolled under section 206 with an Insolvency Professional Agency as its member. This member also needs to be registered with the Board as an Insolvency Professional under section 207. This Insolvency Professional is appointed as a Resolution Professional for conducting the Corporate Insolvency Process. Both sections 206-207 deal with obtaining membership and registration of an Insolvency Professional Agency.

 

2. Information Utility-

 

Section 3(21) defines the term Information Utility as a person who is registered with the Board as an Information Utility under section 210 of the code. The section 210 deals with giving permission to carry the business as an Information Utility post receiving a certificate of registration by the Board.

 

3. Adjudication-

 

The Adjudication is divided as per the relevant cases and facts at the hand. However, these have been provided and mentioned as-

 

i. Debt Recovery Tribunal shall be the Adjudicating Authority when the default matter is with respect to Individuals or Unlimited Liability Partnership Firms. Any appeals that are to be filed against the Debt Recovery Tribunal will be made to the Debt Recovery Appellate Tribunal.

 

ii. National Company Law Tribunal shall be the Adjudicating Authority when the default matter is with respect to Companies, Limited Liability Partnerships or any other Limited Liability Entities. Any appeals that to be filed against the National Company Law Tribunal shall lie to the National Company Law Appellate Tribunal.

iii. The Supreme Court of India will Act as an Appellate Tribunal over the orders that are passed by the Debt Recovery Appellate Tribunal and the National Company Law Appellate Tribunal.

4. 4. Regulation-

 

Regulation by the Regulator is basically the Insolvency & Bankruptcy Board of India who has the power of regulatory overseeing the Insolvency Professional, Insolvency Professional Agencies and the Information Utility.

 

The Board has been functions to carry such as registering the Insolvency Professional Agencies, Insolvency Professionals and Information Utilities and renewing, withdrawing, suspending or cancelling such registrations; the work also involves specifying the minimum eligibility requirements for registration of Insolvency Professional Agencies, Insolvency Professionals and Information Utilities.

 

The Board also has to ensure to levy fee or other charges, specify by regulations standards for the functioning and to lay down by regulations that are to be followed by the Insolvency Professional Agencies, Insolvency Professionals and Information Utilities.

Also read- Assets that do/don't form part of the liquidation asset- IBC