IBC stands for Insolvency and Bankruptcy Code. It is a legislative framework in India that provides a time-bound and efficient process for resolving insolvency and bankruptcy cases. The code was enacted in 2016 and came into effect in December 2016.
The main objective of the IBC is to provide a framework for timely resolution of insolvency and bankruptcy cases and to balance the interests of all stakeholders, including creditors, debtors, and employees. The code is intended to help revive distressed companies, protect the interests of creditors, and improve the ease of doing business in India.
The IBC provides a process for the resolution of insolvency and bankruptcy cases through the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT). The code also establishes the Insolvency and Bankruptcy Board of India (IBBI) to regulate the insolvency professionals, insolvency professional agencies, and information utilities.
Under the IBC, there are two main types of insolvency proceedings: corporate insolvency resolution process (CIRP) and personal insolvency resolution process (PIRP). The CIRP is used to resolve the insolvency of companies and limited liability partnerships, while the PIRP is used to resolve the insolvency of individuals.
The IBC has been widely credited as one of the major structural reforms in India and is considered to be a major step forward in improving the ease of doing business in India. The code has also been praised for its time-bound process, which is a significant improvement over the previous process of resolving insolvency and bankruptcy cases in India, which was often a long and drawn-out process.