Corporate Affairs Secretary has said that majority of corporate insolvency cases have been resolved and the focus is now on resolving personal insolvency.
Insolvency is a term for when an individual or organization can no longer meet its financial obligations with its lender as debts become due.There are different types of insolvency procedure for individuals (personal insolvency) and companies (corporate insolvency).
There are two routes that could be taken for dealing with personal insolvency.The first is to go through the insolvency resolution process, followed by bankruptcy, and the second is to make a fresh start.
The “Fresh Start” process provides for a debt-waiver to debtors who meet very specific eligibility conditions in terms of their income,assets and debts and thus is likely to apply to a small set of people.
Corporate affairs Secretary has also said that as many as 12,000 cases have been filed since the implementation of the insolvency and Bankruptcy code(IBC).Cases under the IBC can be taken up only after approval from the National company law tribunal(NCLT),which has benches in different parts of the country.
The Insolvency and Bankruptcy Code (IBC) was enacted in 2016 to facilitate a time-bound resolution for ailing and sick firms.It could either be through closure or revival,while protecting the interests of creditors.
The Code creates time-bound processes for insolvency resolution of companies and individuals.These processes should be completed within 180 (extended to 270) days.The resolution processes has to be conducted by licensed insolvency professionals (IPs).These IPs are members of insolvency professional agencies (IPAs).Information utilities (IUs) are established to collect,collate and disseminate financial information to facilitate insolvency resolution.
The National Company Law Tribunal (NCLT) adjudicates insolvency resolution for companies.The Debt Recovery Tribunal (DRT) are adjudicates insolvency resolution for individuals.The Insolvency and Bankruptcy Board of India has been set up to regulate functioning of IPs, IPAs and IUs.