{"id":269028,"date":"2023-11-11T19:11:06","date_gmt":"2023-11-11T13:41:06","guid":{"rendered":"https:\/\/forumias.com\/blog\/?p=269028"},"modified":"2023-11-14T09:12:46","modified_gmt":"2023-11-14T03:42:46","slug":"on-insolvency-and-bankruptcy-code-of-india-keep-your-promise","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/on-insolvency-and-bankruptcy-code-of-india-keep-your-promise\/","title":{"rendered":"On Insolvency and Bankruptcy Code of India – Keep Your Promise"},"content":{"rendered":"

Source:<\/b><\/strong>\u00a0The post \u00a0on Insolvency and Bankruptcy Code of India is based on the article \u201cKeep Your Promise- SC does well backing personal guarantees in IBC cases\u201d published in \u201cThe Times of India\u201d on 11th November 2023.<\/p>\n

Syllabus:<\/strong>\u00a0GS2- polity- Government Policies and Interventions for Development in various sectors and Issues arising out of their Design and Implementation.<\/p>\n

News:<\/strong>\u00a0The article discusses how India’s Supreme Court upheld laws allowing creditors to claim personal guarantees from defaulting company owners, emphasizing the need to improve debt recovery systems.<\/p>\n

What is the Insolvency and Bankruptcy Code (IBC)?<\/b><\/strong><\/h2>\n

The Insolvency and Bankruptcy Code (IBC) is a legal framework in India, introduced in 2016 to address the rising issue of Non-Performing Assets (NPAs) and debt defaults.<\/p>\n

Its key aims include a) Revamping India’s corporate distress resolution system. b) Consolidating laws for a time-bound resolution process. C) Shifting control from debtors to creditors.<\/p>\n

\"\"<\/p>\n

For more information on IBC read here<\/u><\/a><\/p>\n

What is the significance of Supreme Court rule on IBC?<\/b><\/strong><\/h2>\n

Upholds IBC Provisions:<\/strong>\u00a0The Supreme Court ruling supports the Insolvency and Bankruptcy Code’s inclusion of personal guarantors, allowing creditors to claim from company owners’ personal assets if their companies fail to repay debts.<\/p>\n

Closes Loopholes:<\/strong>\u00a0This decision plugs legal gaps, ensuring that company promoters can’t easily avoid their debt responsibilities.<\/p>\n

Promotes Contract Sanctity:<\/strong>\u00a0The ruling reinforces the importance of respecting contractual obligations in the business world.<\/p>\n

What are the challenges faced by IBC?<\/b><\/strong><\/h2>\n

The IBC faces challenges in speed and efficiency. The resolution process is slow, averaging 724 days between April and September 2023, far beyond the 330-day limit set by the IBC.<\/p>\n

For more details on challenges faced by IBC read here<\/u><\/a><\/p>\n

What should be done?<\/b><\/strong><\/h2>\n

Speed Up Resolution Process:<\/strong>\u00a0The current average resolution time is 724 days, significantly more than the IBC’s 330-day limit. This needs to be reduced to preserve company value.<\/p>\n

Increase Recovery Rates:<\/strong>\u00a0With only 5.2% recovery from personal guarantor cases, efforts must be intensified to improve this rate, making it closer to the 31.6% rate in corporate insolvency cases.<\/p>\n

Timely Appointments to NCLT:<\/strong>\u00a0The Government of India should focus on making timely appointments to the National Company Law Tribunal to handle cases more efficiently.\"\"<\/p>\n

 <\/p>\n

Question to practice <\/strong><\/p>\n

Discuss the implications of the Supreme Court’s decision to uphold certain provisions of the Insolvency and Bankruptcy Code (IBC) in India.<\/p>\n","protected":false},"excerpt":{"rendered":"

Source:\u00a0The post \u00a0on Insolvency and Bankruptcy Code of India is based on the article \u201cKeep Your Promise- SC does well backing personal guarantees in IBC cases\u201d published in \u201cThe Times of India\u201d on 11th November 2023. Syllabus:\u00a0GS2- polity- Government Policies and Interventions for Development in various sectors and Issues arising out of their Design and… Continue reading On Insolvency and Bankruptcy Code of India – Keep Your Promise<\/span><\/a><\/p>\n","protected":false},"author":10309,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[212,10496],"class_list":["post-269028","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-gs-paper-2","tag-times-of-india","entry"],"jetpack_featured_media_url":"","views":{"total":4,"cached_at":"","cached_date":1699727621},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/269028","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10309"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=269028"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/269028\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=269028"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=269028"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=269028"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}