The Insolvency and Bankruptcy Code, 2016 (the “Insolvency Code, 2016“) had received the assent of the President of India on May 28, 2016. Since then, there have been discussions among the stakeholders with respect to its implementation and its repercussions on the interested parties, including corporates and individuals.
There have been certain material developments around the Insolvency Code, 2016 in last few days wherein the major provisions relating to the Insolvency Code, 2016 have been brought into force.
To start with, the provisions relating to the setting up of the Insolvency Professional Agencies (“IPA“) and Insolvency Professional (“IP“) got notified. In this respect, the Insolvency and Bankruptcy Board of India (“IBBI“), vide a notification dated November 21, 2016, has notified the Insolvency and Bankruptcy Board of India (Insolvency Professional Agencies) Regulations, 2016 and the Insolvency and Bankruptcy Board of India (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016 which inter alia govern the procedure of registration of IPA with IBBI and mandates the IPA to adopt bye-laws, respectively. The IBBI has also notified the Insolvency and Bankruptcy Board of India (Insolvency Professional) Regulations, 2016, by way of a notification dated November 23, 2016, which inter alia provide for the procedure of appointment and registration of IP. Presently, several IPs and three IPAs namely, Indian Institute of Insolvency Professionals of ICAI, New Delhi, ICSI Insolvency Professionals Agency, New Delhi and Insolvency Professional Agency of ICAI, New Delhi, have been registered.
In the initial phase, the provisions relating to the insolvency process of the company, limited liability partnership (“LLP“) and other body corporate have been notified. However, provisions relating to liquidation process, voluntary liquidation and fast track corporate insolvency process for the corporate person have not been notified as yet – which we expect to get notified in near future. In the later phase, provisions relating to bankruptcy process for individuals and partnership firms will get notified.
In respect to the insolvency process for corporate persons, the IBBI has, vide a notification dated November 30, 2016, also notified the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (“IRPCP Regulations, 2016“), which have come into effect from December 01, 2016.
In order to initiate any process for insolvency resolution, an applicant is required to file an application with the Adjudicating Authority under the Insolvency Code, 2016 and therefore, the Ministry of Corporate Affairs (“MCA“) has come up with the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (“AAA Rules, 2016“), which duly provide for such filings related framework.
For ease of reference, we have set out herein below the important provisions of the Insolvency Code, 2016, which have been notified and brought into force:
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