The IBC In 2019

Not only has the 2019 Amendment closed the loop on a lot of open/ contentious issues, it will be remembered as an example of swift action on the part of the legislature in protecting the basic tenets of the law

- 

Since its enactment in 2016, the Insolvency and Bankruptcy Code, 2016 (“IBC”) has seen multiple challenges. Right from timelines and categorization of creditors to the role of the committee of creditors and tribunals, each of its key elements have faced judicial scrutiny. However, the design of the IBC and the research and groundwork behind various amendments has been robust and as a result, the courts have upheld the fundamental tenets of the IBC. While dealing with new issues sprouting over a large number of corporate insolvency resolution processes, words, perceptions, and interpretations of the IBC have evolved. However, the spirit of the law has only been reinforced. The most recent example of ensuring that vital elements of the IBC continue to exist as contemplated by the architects of the law, is the Insolvency and Bankruptcy Code (Amendment) Act, 2019 (“2019 Amendment”).

This amendment of the IBC primarily reaffirms the importance of: timely resolution of firms and protection of interests of all stakeholders. It further provides flexibility to resolution applicants in terms of devising means of resolving distressed companies and provides clarity on the voting process when dealing with a class of creditors in the committee of creditors. Each of these are important issues which have plagued the IBC regime in recent times. In this article, I highlight the key features of the 2019 Amendment and provide an overview of its implication on the market.

Expeditious resolution of firms was a vital element of the 2016 insolvency reform. However, the mandatory nature of timelines specified in the IBC was diluted over time. Increasing litigation in the IBC regime and a dire need for capacity building at the National Company Law Tribunals (“