The Insolvency and Bankruptcy Code in India was reformative and different from the earlier Insolvency regimes in India and globally, as well. It was created in an attempt to resolve the problems that the previous insolvency codes failed to tackle. It was fairly different with a few key differentiating factors- low admission threshold, a committee of financial creditors who each had an equal vote, disqualification of certain bidders from the election process. The already developed Codes addressed these issues but were not comprehensive enough. This code brought in 2016 helped the government tackle the problem of Non-Performing Assets (NPAs).
QUESTIONS OF LAW:
a) Whether all the provisions of the code were constitutionally correct
b) Is it different from the earlier Insolvency Code
The Supreme Court of India in 2019 held the provisions of the Insolvency and Bankruptcy Code constitutionally valid. The number of stakeholders in the Insolvency Resolution will be impacted. The admission process will become more comfortable after this code passed the constitutionally valid test. It was a landmark case as it shaped the way we interpret the code. Its implementation has been carried forward and is accepted by the law. It puts the focus back on the intention of the IBC to mitigate and restore the corporate debtor and thus noticeably strengthens the attempts of creditors and other stakeholders to achieve this goal. International experts have shown that it takes a few decades to establish court rulings to direct the application of insolvency law.