Innovation Of 'Zero Period' In The Insolvency And Bankruptcy Code, 2016

The preamble of the Insolvency and Bankruptcy Code, 2016 ('Code') states its objectives, which are maximisation of value of assets, promote entrepreneurship, within the stipulate time frame. Apart from the initiation of Corporate Insolvency Resolution Professional ('CIRP') or the Liquidation Process, the Code also provides for a class of transactions which can be 'avoided' or 'undone' by the appointed Resolution Professional ('RP') or the Liquidator, by preferring an Application before the Adjudicating Authority. This piece looks to develop the law of avoidance transactions for the benefit of the stakeholders.

The Code apart from providing for rehabilitation and turnaround also provides for avoidance of transactions which are entered by the Corporate Debtor with third parties before the initiation of the Insolvency Commencement Date ('ICD'), this practice also seeks to help in value maximisation of the recovery made by the stakeholders. The Code outlines a