When Zero Hour Strikes: The Insolvency And Bankruptcy Code As An Exit Mechanism

The Insolvency and Bankruptcy Code, 2016 ("Code") caused a magnanimous shift in the field of insolvency and bankruptcy laws in India. The Code has transformed the insolvency regime from a "debtor in possession" to a "creditor in control" one, providing major control to the financial and operational creditors of a corporate debtor in an insolvency or a liquidation process.¹

The Code offers a balance of benefits to creditors, corporate debtors, and the management of corporate debtors. While on one hand, it provides a better mechanism to recover the debts of creditors, it also offers an option to run the operations of the corporate debtor while the insolvency process is in motion. Further, it also allows the management of the corporate debtor to focus on important matters other than the insolvency or liquidation process of the corporate debtor.