Insolvency Code: Another Look Through Rose Tinted Glasses?

Insolvency, explained simply, refers to an individual or an entity's inability to pay debts due from it. The recent and most illustrious enactment by the Parliament, the Insolvency and Bankruptcy Code, 2016 ("IBC") encompasses this wide-ranging arena of insolvency and bankruptcy.

Prior to the introduction of the IBC, the resolution process was governed by the Sick Industrial Companies (Special Provisions) Act, 1985 ("SICA"), Maharashtra Relief Undertaking (Special Provisions) Act, 1958 ("BRU"), Corporate Debt Restructuring ("CDR"), Joint Lenders Forum ("JLF"), etc. The CDR and its successor JLF mechanism were voluntary in nature unlike the SICA and BRU which were statutory. However the key difference between the aforesaid and the IBC remains that while the SICA and BRU applied to a specific set of borrowers, the CDR and BRU apply to specific set of lenders who have agreed to follow the said voluntary process by signing the Inter Creditor Agreement and the Debt