The IBC consolidated India’s fragmented insolvency laws into a single time-bound framework for resolving insolvency of companies, partnerships and individuals, aiming to maximise asset value and balance the interests of all stakeholders including creditors and employees.
Section 7 allows a financial creditor to initiate the Corporate Insolvency Resolution Process (CIRP) against a defaulting company, while Section 9 allows operational creditors to do the same. Once admitted, a moratorium under Section 14 halts all legal proceedings against the company, giving it breathing room to restructure.
The Committee of Creditors, formed under Section 21, decides on a resolution plan within a strict 330-day timeline (including litigation), failing which the company moves to liquidation under Section 33. This time-bound approach was designed to prevent the years-long delays seen under the earlier BIFR regime.
The Code also introduced the Insolvency and Bankruptcy Board of India (IBBI) as the regulator, and Insolvency Professionals who manage the resolution process, bringing professional discipline to what was earlier a largely judicial and bureaucratic process.