From UPSC perspective, the following things are important :
Prelims level: IBBI, IBC
- Why in the News?
- The Insolvency and Bankruptcy Board of India (IBBI) has proposed amendments to the Insolvency Resolution Process for Corporate Process regulations to enhance efficiency, reduce costs, and increase transparency.
- This aims to align with the Companies (Registered Valuers and Valuation) Rules and streamline the Corporate Insolvency Resolution Process (CIRP).
Do You Know?Since its enactment, the IBBI has achieved notable successes in resolving insolvency cases and recovering debts:
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Proposed amendments by IBBI
- Simplified Valuation: Instead of separate reports for different types of assets, there will be one comprehensive valuation report covering the entire company. This helps in keeping valuation consistent and clear.
- Single Valuer for Small Companies: For smaller companies with assets up to ₹1,000 crore and MSMEs, only one valuer will be appointed to determine the company’s value unless there’s a good reason for more than one.
- Option for Two Valuers: If needed, the creditors’ committee can choose to have two valuers to deal with complex cases, but they have to explain why.
- Faster Appointment of Representatives: Representatives appointed to represent creditors can start participating in meetings as soon as their application is submitted, to avoid delays.
- Guarantees in Resolution Plans: If a resolution plan suggests releasing guarantees, it won’t stop creditors from going after guarantors or using the guarantees according to their agreements.
About Insolvency and Bankruptcy Board of India (IBBI)
| Details | |
| Establishment | Established on 1st October 2016 under the Insolvency and Bankruptcy Code (IBC), 2016.
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| Responsibility | Responsible for implementing and enforcing the IBC,
IBC consolidated laws related to insolvency resolution for individuals, partnership firms, and corporate entities. |
| Functions |
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| Composition | Total 10 members
The term is 5 years or until age 65, with reappointment possible. |
Adjudicating Authorities under the IBC:
Under the IBC, two primary adjudicating authorities handle insolvency cases based on the nature of the entity:
- National Company Law Tribunal (NCLT): NCLT adjudicates insolvency cases involving corporate entities and other limited liability entities.
- Debt Recovery Tribunal (DRT): DRT has jurisdiction over insolvency cases concerning individuals and partnership firms, excluding Limited Liability Partnerships (LLPs).
Recent Amendments to the IBC:
- Approval for segregated sale of assets or resolution plans.
- Increase in the number of NCLT benches to 16 for faster adjudication.
- Extension of timelines for filing claims to accommodate procedural complexities.
- Sector-specific amendments tailored to address unique challenges in various industries.
- Modifications in procedural forms such as Form G2 to enhance clarity and efficiency in insolvency proceedings.
PYQ:[2017] Which of the following statements best describes the term ‘Scheme for Sustainable Structuring of Stressed Assets (S4A)’, recently seen in the news? (a) It is a procedure for considering the ecological costs of developmental schemes formulated by the Government. (b) It is a scheme of RBI for reworking the financial structure of big corporate entities facing genuine difficulties. (c) It is a disinvestment plan of the Government regarding Central Public Sector Undertakings. (d) It is an important provision in ‘The Insolvency and Bankruptcy Code’ recently implemented by the Government. |
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