Restructuring vs. Liquidation: A Comparative Analysis Of India And The UK

Introduction

Corporate insolvency frameworks play a vital role in managing financial distress by ensuring a balance between protecting creditors' rights and preserving business viability. Two key mechanisms in insolvency resolution process are restructuring and liquidation. Restructuring aims to rehabilitate a financially distressed company by modifying its financial and operational structure to keep it as a going concern, whereas liquidation involves winding up the company's affairs and distributing its assets to its creditors. Both India and the United Kingdom (UK) have distinct yet robust insolvency regimes governing these processes.

In India, the Insolvency and Bankruptcy Code, 2016 (IBC) governs restructuring and liquidation, whereas the UK follows the Insolvency Act, 1986, supplemented by the Corporate Insolvency and Governance Act, 2020 (CIGA, 2020), and further provides for Part 26A of the Companies Act, 2006, which includes the cross-class cram down