A Primer On The Increase In Threshold For Invoking The Insolvency And Bankruptcy Code

Object

The object of this article is to analyze the implication of the increase in threshold for invoking The Insolvency and Bankruptcy Code (IBC). It further looks into some of the burning legal questions that have emerged in the aftermath of the increase and how Tribunals and Courts across the country have decided upon them.

Introduction

The soul and substance of the Insolvency and the Bankruptcy Code, 2016 is resolution of insolvency of a firm. This is evident from the Preamble of the Code, which states that the Code seeks to maximize the value of assets of the firm while balancing the interests of all stakeholders. The purpose of bringing in a mechanism for dealing with the increasing cases of insolvency and bankruptcy in the country was to ensure that the resolution process is completed in a time bound manner. However, it was noticed that the Code was being increasingly used as a recovery tool even in cases where the question of insolvency did not arise.