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Parliament passes the Insolvency and Bankruptcy Code

News and Press Release - Dated:- 12-5-2016 - Today is a historical day for economic reforms in India when the Rajya Sabha passed the major economic reform Bill moved by the Government i.e. Insolvency and Bankruptcy Code, 2016 . This is considered as the biggest economic reform next only to GST. The Lok Sabha had earlier passed the Bill on 5th May, 2016. In India, the legal and institutional machinery for dealing with debt default has not been in line with global standards. The recovery action by .....

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ring of firms. Laws dealing with individual insolvency, the Presidential Towns insolvency Act, 1909 and the Provincial Insolvency Act. 1920, are almost a century old. This has hampered the confidence of the lender. When lenders are unconfident, debt access for borrowers is diminished. This reflects in the state of the credit markets in India. Secured credit by banks is the largest component of the credit market in India. The corporate bond market is yet to develop. The objective of the new law i .....

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mited liability partnerships and other entities with limited liability), unlimited liability partnerships and individuals, presently contained in a number of legislations, into a single legislation. Such consolidation will provide for a greater clarity in law and facilitate the application of consistent and coherent provisions to different stakeholders affected by business failure or inability to pay debt. The salient features of the law are as follows: i- Clear, coherent and speedy process for .....

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respect of companies and limited liabilities entities respectively. iv- Establishment of an Insolvency and Bankruptcy Board of India to exercise regulatory oversight over insolvency professionals, insolvency professional agencies and information utilities. v- Insolvency professionals would handle the commercial aspects of insolvency resolution process. Insolvency professional agencies will develop professional standards, code of ethics and be first level regulator for insolvency professionals me .....

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e proposals from various players about resuscitating the company or taking it into liquidation. When decisions are taken in a time-bound manner, there is a greater chance that the firm can be saved as a going concern, and the productive resources of the economy (the labour and the capital) can be put to the best use. This is in complete departure with the experience under the SICA regime where there were delays leading to destruction of the value of the firm. The vision of the new law is to enco .....

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