IBC: Purpose, Objectives & Process at NCLT
The Insolvency and Bankruptcy Code, 2016 (IBC) is a landmark legislation designed to streamline and consolidate insolvency resolution for corporate entities. Its primary focus is to ensure time-bound, transparent, and effective resolution of financial distress, thereby strengthening creditor confidence and improving India’s ease of doing business.
Purpose & Objectives
- Maximize the value of assets of the corporate debtor.
- Ensure fair treatment of creditors, employees, and stakeholders.
- Promote resolution over liquidation, wherever possible.
- Provide certainty through defined timelines.
- Encourage a responsible credit culture and financial discipline.
Process for Corporate Debtor at NCLT
- Filing of Application: Creditors (financial/operational) or the debtor may file before NCLT once default of ₹1 crore or more occurs.
- Admission & Moratorium: If admitted, NCLT declares a moratorium (halt on proceedings & asset transfer) and appoints an Interim Resolution Professional (IRP).
- Committee of Creditors (CoC): IRP forms the CoC, which drives decision-making.
- Resolution Plan: Applicants submit revival plans. Approval requires 66% CoC voting.
- Approval or Liquidation: NCLT approves the resolution plan or orders liquidation if revival fails.
The IBC framework is vital for corporate debt resolution, ensuring accountability and creating a fair, efficient mechanism for creditors and debtors alike.
Tags: IBC, Insolvency and Bankruptcy Code, Corporate Debtor, NCLT Process, Insolvency Resolution
