Now before this code was formed, the matters of insolvency and bankruptcy were managed separately which means the procedure for both of the issues took a long time to resolve. Now a company files for insolvency and bankruptcy, when there are financial troubles in the company and there are exceeding amounts of bad debts and loans. With Insolvency and Bankruptcy issues coming under one code, the process of it became quite easier. According to Wikipedia,”The Insolvency and Bankruptcy Code, 2016 (IBC) is the bankruptcy law of India which seeks to consolidate the existing framework by creating a single law for insolvency and bankruptcy”. Now as you know there are various cases that come on the desk of the court everyday and to solve each and every issue with proper and just decisions, it takes a lot of time. The IBC Code which was introduced in the Lok Sabha and then passed on get 5th May 2016, believed in resolving major banking issues and to make the process of filing easier. The harmonious work of these to act coming together and forming one code single did not resolve everything but it did change a few things.
Well as muchas we want to believe that all the banking issues regarding the insolvency and bankruptcy issues were resolved, it wasn’t the case because of the problems that dropped due to undisclosed bad debts and loans and it still poses a major threat and concern. The Code also helps the enterprise back on their feet if they present them with a resolution plan but the few people that are excluded are the willful defaulters, disqualified directors and promoters or management of the company who have outstanding non performing debts for over a year.
IBC Code is the solution to make the process easier and efficient but even with this, there are still many more issues that are unresolved but it did solve most of the problems for the companies that were facing such insolvency and bankruptcy issues.