INSOLVENCY AND

BANKRUPTCY
CODE 2016
Group 9

Regulatory Framework
for Distressed M&As
Under IBC 2016
 Insolvency
◦ Insolvency is a type of financial distress, in which an entity is no longer able to pay its debts or other
obligations.
◦ Total liabilities > Total assets

Cash-flow insolvency Balance-sheet insolvency

When the firm does not have enough
Lack of liquid assets to fulfil debt
assets to meet financial obligations to
obligations.
creditors – Negative net assets.

Namrata Chaudhary - MBA20236

 Presentation Flow

1. Introduction - IBC 2016

2. Corporate Insolvency Resolution Process
3. Liquidation Process
4. Regulation of insolvency professionals and agencies
5. Insolvency and Bankruptcy regulations in Europe
 Insolvency vs Bankruptcy
Insolvency is a state of financial distress, whereas bankruptcy is a legal proceeding.

A bankruptcy is an actual court order that depicts how an insolvent person or business will pay off
their creditors, or how they will sell their assets in order to make the payments. A person or
corporation can be insolvent without being bankrupt, even if it's only a temporary situation. If that
situation extends longer than anticipated, it can lead to bankruptcy. 

Namrata Chaudhary - MBA20236

 Distressed M&A
Distressed M&A is done when a company is,
∙ Facing cash flow issues
∙ Improper planning to manage its liabilities
∙ Lack of means to raise further finance to satisfy future needs
∙ Difficulty in obtaining or paying down trade credit. 
∙ Falling margins, poor profits

∙ Less time to conduct due diligence.

Namrata Chaudhary - MBA20236

Acquiring a financially distressed company is very different (and often more challenging) than acquiring a
financially healthy company in a normal M&A process. 

Statutory Requirements
Reduced Timeframe  Warranties
and Formalities 

Due Diligence Risk of

More Parties Involved
Challenges  Challenge/Litigation 

Namrata Chaudhary - MBA20236

Electrosteel Steels (ESL): A
turnaround success story
◦ In June 2018, Vedanta acquired a 90% stake in ESL, a
primary producer of steel and downstream value-added
products.
◦ Debt - ₹130 billion (US$1.8 billion).
◦ The acquisition was made for a consideration of  ₹ 5,320
crore, paid upfront for a 90% stake.
◦ Following the deal, the Company was delisted from the
Indian Stock Exchange and is now owned by Vedanta
Limited through Vedanta Star Limited.

Namrata Chaudhary - MBA20236

Insolvency and Bankruptcy Code 2016

Before IBC 2016 –

o
Complex and fragmented process across multiple legislations like the Companies Act, 1956, the
Sick Industrial Companies (Special Provisions) Act, 1985, the Securitisation and Reconstruction
of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), the
Recovery of Debts due to Banks and Financial Institutions Act (RDDBFI Act), 1993, etc.
o
Insolvency resolution in India took 4.3 years on an average against other countries such as
United Kingdom (1 year) and United States of America (1.5 years).

Namrata Chaudhary - MBA20236

Namrata Chaudhary - MBA20236
o The Government implemented the Insolvency and Bankruptcy Code (IBC) to consolidate
all laws related to insolvency and bankruptcy and to tackle Non-Performing Assets
(NPA), a problem that has been pulling the Indian economy down for years.
o The previous system concentrated on the dissolution of corporate bodies to discharge debts.
The IBC, on the other hand, focuses on the continuation of the company as a going concern.
This law concentrates on reviving ailing industries to the best of its ability, the code's
primary goal, and liquidating the same if resurrecting is not feasible.

Namrata Chaudhary - MBA20236

 Objectives of IBC 2016
◦ To consolidate and amend the laws relating to re-organization and insolvency resolution of corporate
persons, partnership firms, and individuals.
◦ To fix time periods for execution of the law in a time-bound settlement of insolvency (i.e. 180 days).
◦ To maximize the value of assets of interested persons.
◦ To establish an Insolvency and Bankruptcy Board of India as a regulatory body for insolvency and
bankruptcy law.
◦ To establish higher levels of debt financing across a wide variety of debt instruments.
◦ To provide painless revival mechanism for entities.
◦ To deal with cross-border insolvency.
◦ To resolve India’s bad debt problem by creating a database of defaulters.

Namrata Chaudhary - MBA20236

 Application of IBC 2016
The provisions of this Code shall apply to —
(a) any company incorporated under the Companies Act, 2013 or under any previous company law;

(b) any other company governed by any special Act for the time being in force, except in so far as the said provisions are
inconsistent with the provisions of such special Act;

(c) any Limited Liability Partnership incorporated under the Limited Liability Partnership Act, 2008;

(d) such other body incorporated under any law for the time being in force, as the Central Government may, by
notification, specify in this behalf .

(e) personal guarantors to corporate debtors;

(f) partnership firms and proprietorship firms; and

(g) individuals, other than persons referred to in clause (e)

Namrata Chaudhary - MBA20236

Corporate Insolvency Resolution
Process
•The Corporate Insolvency Resolution Process (‘CIRP’) is a
recovery mechanism for the creditors of a corporate debtor.
•The Insolvency and Bankruptcy Code, 2016 (‘IBC’) lays down
the provisions for conducting insolvency or bankruptcy of
individuals, partnership firms, LLP and companies
•The process of insolvency and liquidation of corporate
debtors under the IBC applies where the minimum default
amount is Rs.1 crore only.

Simran Jajoria MBA20229

When can CIRP be initiated?
On occurrence of default.
A default means non payment of debt when whole or any part or
instalment of the amount of debt has become due and payable is
not repaid by the debtor or corporate debtor.

Simran Jajoria MBA20229

Bhushan Steel
Tata Steel BSL Limited, formerly known as Bhushan Steel Limited, is the largest manufacturer of auto-grade steel in India. Tata
Steel BSL Limited, with an amount of debt in proportion to its equity (0.5 times more). The company's consolidated debt stands at
₹10,686 crore. The Company is spending Rs. 260 billion to expand its capacity to 12 million tonnes annually, from the present
installed capacity of around one million tonnes.
Insolvency proceedings were initiated against the former company on 26 July 2017 under the
Insolvency and Bankruptcy Code, 2016.
Tata Steel on 18 May 2018 announced the completion of its acquisition of the then Bhushan Steel (BSL) through its wholly owned
subsidiary Bamnipal Steel Ltd (BNPL), wrapping up the resolution of the first case under Insolvency and Bankruptcy Code, 2016.
The bankrupt firm was among the 12 stressed assets the RBI had referred for NCLT proceedings last year. On 27 November 2018
the company was renamed as Tata Steel BSL Limited from Bhushan Steel Limited.
This company is distinct from Bhushan Power & Steel (with Sanjay Singal as Chairman & Managing Director). with major claims by
creditors against it, including the Punjab National Bank.

Simran Jajoria MBA20229

Creditors Under IBC
When a company or LLP becomes insolvent or commits a
default, the financial creditor, operational creditor or the
corporate debtor can file an application to initiate the CIRP by
the Adjudicating Authority, i.e. National Company Law Tribunal
(‘NCLT’).

Simran Jajoria MBA20229

Financial creditor
A financial creditor is a person to whom the business owes a
financial debt and includes a person to whom such debt is
legally transmitted or assigned.
A financial debt includes
•The amount borrowed against the payment of interest.
•The amount raised by acceptance under the acceptance credit
facility or its dematerialised equivalent.
•The amount of the liability relating to a lease or hire purchase
contract that is deemed as capital or finance lease
Simran Jajoria MBA20229
•Receivables discounted or sold other than the receivables sold on a non-
recourse basis.
•The amount raised under any other transaction, including any purchase
agreement or forward sale having the commercial effect of a borrowing.
•Any derivative transaction entered in connection with benefit from or
protection against fluctuation in any price or rate.
•Any counter-indemnity obligation relating to a bond, indemnity, guarantee,
documentary letter of credit or other instrument issued by a financial institution
or bank.
•The amount of liability relating to any of the indemnity or guarantee for any of
the points mentioned above.
Simran Jajoria MBA20229
Operational creditors
•An operational creditor is a person to whom the business
owes an operational debt and includes persons to whom such
amount has been legally transferred or assigned for services
or goods given by them.
•An operational debt means a claim relating to the provision of
services or goods, including debt or employment regarding
payment of dues arising under any law in force and payable to
the Central Government, State Government or local authority.

Simran Jajoria MBA20229

Mobilox innovations private limited v.
Kirusa Software Private limited
The appellant (Mobilox innovations pvt. Ltd) was conducting tele-voting process for a program in Star TV which is named as NachBaliye.
The appellant engaged the respondent company (Kirusa software pvt. ltd) for providing various services relating to the TV program, and both
the parties executed a non-disclosure agreement
The non-disclosure agreement stipulated certain conditions such as confidentiality obligations towards Mobilox innovations pvt. Ltd.
During the time period of contract Kirusa software pvt. ltd raised necessary monthly invoices for the rendered services.
Mobilox innovations pvt. Ltd informed Kirusa software pvt. Ltd about the payments that were subsequently withheld due to breach of the
non-disclosure agreement obligations.
Due to the non-payment of the monthly invoices by Mobilox innovations pvt. Ltd, Kirusa software pvt. Ltd sent a demand notice to Mobilox
innovations pvt. Ltd under Section 8 of the Insolvency and Bankruptcy Code.
Mobilox innovations pvt. Ltd’s response to the demand notice stated that there was a bona fide and serious dispute between the parties,
inclusive of the breach of obligations mentioned under the non-disclosure agreement.
Kirusa subsequently filed an application before the NCLT
NCLT rejected the application on the grounds that Mobilox had issued a notice of dispute to the operational creditor.
An appeal against the order of NCLT was subsequently filed by Kirusa stating that mere dispute to the demand notice by the operational
creditor does not amount to a valid ground for rejection
NCLT stated that the defence raised by Mobilox was vague and motivated as the debt demanded was not in connection with the non-
disclosure agreement.
Simran Jajoria MBA20229
Process of Corporate Insolvency
Resolution
•Initiation of CIRP
The financial creditor can initiate the CIRP against the
corporate debtor by applying to NCLT.
A copy of application to be served upon the corporate debtor
stating the date of hearing.
NCLT within 14 days, to ascertain the existence of default and
either admit or reject the application in accordance with IBC
and principles of natural justice, on admission CIRP will
commence.
Simran Jajoria MBA20229
Initiation of CIRP
•The operational creditor should first give a demand notice of an unpaid
invoice to the corporate debtor demanding the default payment amount.
•When the operational creditor does not receive payment from the
corporate debtor after the expiry of ten days of delivery of the demand
notice or invoice demanding payment, he can apply to NCLT for initiating
the CIRP.
NCLT will pass an order within fourteen days of either admitting or
denying the CIRP application. The CIRP will commence from the
admission date of the application by NCLT. The CIRP completion period
is 180 days from the admission date of the CIRP application
Simran Jajoria MBA20229
Declaration of Moratorium and Public
Announcement
A moratorium is a temporary suspension of an activity or law until future consideration warrants
lifting the suspension, such as if and when the issues that led to moratorium have been resolved.
For example, in legal proceedings, a moratorium can be imposed on an activity such as a debt
collection process during bankruptcy proceedings.

After the admission of the CIRP application, NCLT will pass an order-
◦ Declaring a moratorium for prohibiting certain actions and transactions.
◦ Causing a public announcement of initiating the CIRP and call for the submission of claims.
◦ Appointing an interim resolution professional.

Tanvi Sirse MBA20230

 Committee of Creditors (CoC)
•The interim resolution professional will CoC of creditors after collating
all received claims against the corporate debtor and determining its
financial position. The CoC will consist of all the financial creditors of
the corporate debtor.

•The CoC should hold the first meeting within seven days of the
constitution of the committee. The CoC in their first meeting should
decide to either appoint or replace the interim resolution professional
through a majority vote of not less than 66% of the voting share of the
financial creditors.
Tanvi Sirse MBA20230
Appointment of Resolution Professional
● When the CoC decide to continue with the interim resolution professional appointed by
NCLT as the resolution professional, it should communicate its decisions to NCLT, the
interim resolution professional and the corporate debtor.
● When the CoC decides to replace the interim resolution professional, it should file an
application to NCLT to appoint the proposed resolution professional along with his
written consent.
● NCLT should forward the name of the proposed resolution professional submitted by
the CoC to the Insolvency and Bankruptcy Board of India for its confirmation. NCLT shall
appoint the proposed resolution professional after receiving confirmation from the
Board.
● The resolution professional will conduct the entire CIRP and manage and control the
operations of the corporate debtor during the CIRP.

Tanvi Sirse MBA20230

Preparation of Information memorandum
An information memorandum in the form and manner containing the relevant
information should be prepared which is specified by the Board to formulate a
resolution plan.
A resolution applicant should submit a resolution plan prepared based on the
information memorandum to the resolution professional.
The resolution applicant is the person who submits a resolution plan either
individually or jointly with any other person.
The resolution professional will present the resolution plan after its examination
to the CoC for its approval. The CoC can approve the resolution plan by a vote
of not less than 66% of the voting share of the financial creditors.
Tanvi Sirse MBA20230
The resolution professional will examine each resolution plan submitted to him
for confirming that each resolution plan-
•Provides for the payment of the insolvency resolution process costs as specified
by the Board prioritizing the payment of all other debts of the corporate debtor.
•Provides for the payment of debts of the operational creditors as specified by
the Board.
•Provides for managing the affairs of the corporate debtor after approval of the
resolution plan.
•Supervision and implementation of the resolution plan.
•It does not contradict the provisions of the laws in force.
•Confirms to such other requirements specified by the Board.

Tanvi Sirse MBA20230

 Approval of Resolution Plan
•The resolution plan for the revival of the company or LLP should be approved
within 180 days from the commencement of the CIRP by the creditors.
However, NCLT can extend the period of 180 days by another 90 days.
•NCLT will pass an order approving the resolution plan approved by the
committee of creditors after being satisfied that the resolution plan meets the
requirements of the IBC. NCLT order of approval of the resolution plan will be
binding on the corporate debtor and its employees and members.

Tanvi Sirse MBA20230

NCLT order of approval of the resolution plan will also be binding on the
guarantors and stakeholders involved in the resolution plan and the creditors,
including the Central or State Government or any local authority.
NCLT can pass an order to reject the resolution plan if it is satisfied that the
resolution plan does not meet the requirements laid down under the IBC. When
NCLT passes the order of rejection of the resolution plan, it will pass an order of
the liquidation of the corporate debtor.
After the approval of the liquidation of the corporate debtor, the committee of
creditors will appoint the liquidator to sell the corporate debtor’s assets and
share them among the stakeholders. The distribution of the assets will be made
as per the provisions of the IBC.

Tanvi Sirse MBA20230

 Jet Airways
By Nov 2018 Jet Airways was in losses.
By 2019, company referred to NCLT for
bankruptcy proceedings with debt of $1.2 billion.
In early 2020, Enso Group, tried to rescue the
airline with Russian Far East Development Fund,
and participated in talks for buying controlling
stake in it from its committee of
creditors(CoC), but talks fell through
CoC has accepted a ₹1,000-crore bid by a
consortium of UK-based Kalrock Capital and
UAE-based entrepreneur Murari Lal Jalan on
Oct 17, 2020.
Tanvi Sirse MBA20230
 Liquidation
● Liquidation is the process by which a company is bought to an end by redistributing the assets and
properties of the company
● The process of liquidation arises when customs, an authority or an agency in a country responsible for
safeguarding customs duties, determines the final computation or ascertainment of the duties or
drawback accruing on an entry
● Liquidation may either be compulsory (sometimes referred to as a creditors' liquidation or
receivership following bankruptcy, which may result in the court creating a "liquidation trust") or
voluntary (sometimes referred to as a shareholders' liquidation, although some voluntary liquidations
are controlled by the creditors)
● The term "liquidation" is also sometimes used informally to describe a company seeking to divest of
some of its assets. For instance, a retail chain may wish to close some of its stores. For efficiency's
sake, it will often sell these at a discount to a company specializing in real estate liquidation instead of
becoming involved in an area it may lack sufficient expertise in to operate with maximum
profitability.

Satvik Gurram 20221

 Compulsory Liquidation
The parties which are entitled by law to petition for the compulsory liquidation of a company vary
from jurisdiction to jurisdiction, but generally, a petition may be lodged with the court for the
compulsory liquidation of a company by:
● The company itself
● Any creditor which establishes a prima facie case
● Contributories: Those shareholders be required to contribute to the company's assets on liquidation[2]
[3]
● A government minister, usually the one responsible for competition and business
● An official receiver

Satvik Gurram 20221

Voluntary Liquidation
● Voluntary liquidation occurs when the members of a company resolve to voluntarily wind up its
affairs and dissolve. Voluntary liquidation begins when the company passes the resolution, and the
company will generally cease to carry on business at that time (if it has not done so already)
● A creditors’ voluntary liquidation (CVL) is a process designed to allow an insolvent company to close
voluntarily. The decision to liquidate is made by a board resolution, but instigated by the director(s).
75 percent of the company's shareholders must agree to liquidate for liquidation proceedings to
advance.If a limited company’s liabilities outweigh its assets, or the company cannot pay its bills
when they fall due, the company becomes insolvent
● If the company is solvent, and the members have made a statutory declaration of solvency, the
liquidation will proceed as a members' voluntary liquidation (MVL). In that case, the general meeting
will appoint the liquidators. If not, the liquidation will proceed as a creditors' voluntary liquidation,
and a meeting of creditors will be called, to which the directors must report on the company's affairs.
Where a voluntary liquidation proceeds as a creditors' voluntary liquidation, a liquidation committee
may be appointed.

Satvik Gurram 20221

Misconduct
● The liquidator will normally have a duty to ascertain whether any misconduct has been conducted by
those in control of the company which has caused prejudice to the general body of creditors. In some
legal systems, in appropriate cases, the liquidator may be able to bring an action against errant
directors or shadow directors for either wrongful trading or fraudulent trading.

● The liquidator may also have to determine whether any payments made by the company or
transactions entered into may be voidable as a transaction at an undervalue or an unfair preference

Satvik Gurram 20221

Priority of claims
◦ The Liquidator must determine the company title to property in its possession.Property which is in the
possession of the company but which was supplied under a valid retention of title clause will generally
have to be returned to supplier.
◦ Before claims are met secured creditors are entitled to enforce their claims against the assets of the
company to an extent where they have a valid Security Interest
◦ Claimants with non monetary claims against may be to enforce their rights against the company
◦ After removal of all the assets which are subject of retention of title , Fixed security or subject to
proprietary claims of others,the priority of claims will be in following order
1.Liquidator costs 2.Creditors with Fixed charge over assets
3.Costs incurred by admin 4.accounts for employees(wages) 5.Creditors with floating charge over assets
6.Creditors without Security over assets 7. Shareholders

Kolagani Sai Hitesh 20202

Dissolution
◦ Dissolution is the last stage of Liquidification , the process by which a company is brought to an end
and the assets and property of company are gone forever
Process:
◦ The liquidator must call for a Final meeting of members ,if its voluntary winding up or they should
call creditors if its compulsory winding up
◦ The liquidator is then usually required to send final accounts to the register and to notify the court .
◦ Then the company is finally dissolved

Kolagani Sai Hitesh 20202

Striking of the register
◦ In some Jurisdiction the company may elect to simple Struck of the companies register as it is cheaper
way to formally winding up and dissolution of company
Process:
◦ In such cases an application is made to the registrar of the companies ,who will strike of the company
if there are enough proofs to believe that the company is not carrying business
◦ However in cases like if the company does not show any reason to strike off they may be restored to
registrar
◦ In the event the company doesn’t file an annual return or annual accounts and the company’s file
remains inactive , in due course the registrar will strike the company off the register

Kolagani Sai Hitesh 20202

Provisional Liquidification
◦ It is a process which exists as a part of the corporate Insolvency laws of a number of common law
jurisdictions whereby after lodging of a petition for the winding up of a company by the court but
before the courts hears and determines the petition the court may appoint the liquidator on a
provisional basis
◦ When a company has been engaged in misconduct or where the assets of the company are thought to
be in jeopardy then they put the company into provisional liquidifiation
◦ Where a liquidator is appointed as a interim basis to safeguard the position of the company pending
the hearing of full petition session
◦ The duty of the provisional liquidator is to safeguard the assets of the company and maintain the
status quo pending the hearing of petition.

Kolagani Sai Hitesh 20202

Phoenix companies
◦ In UK many companies decide its better to start again by creating a new company called as a Phoenix
company.
◦ It means Liquidating a company as the only option and then resuming it under a different name with same
customers , clients and suppliers
◦ Persons participating in the management of phoenix company may also be held personally liable for the debts
of the company under Insolvency act unless the court approval has been granted
Example:

◦ Motor liquidation company Formerly General motors corporation was the company left to settle past
liability claims . It exited bankruptcy on March 31 2011, only to be carved into four trusts the first to settle
unsecured creditors followed by Environmental response for MLC’s remaining assets,third to handle present
and future employee accounts and fourth for litigation claims

Kolagani Sai Hitesh 20202

Insolvency Professional
● Insolvency Professional are enrolled with an Insolvency Agency and they are involved in the
dissolution process of an insolvent individual, companies, LLPs or partnerships. These professionals
are authorised to act on behalf of such insolvent individual, companies etc.
● During the bankruptcy situation, the insolvency professionals play a vital role in liquidating the entity
assets and other settlement processes. This process has gained momentum with the government
bringing in strict norms through Insolvency and Bankruptcy Code.
● No person shall render his services as insolvency professional under this Code without being enrolled
as a member of an insolvency professional agency and registered with the Board.

Joshua Edwin Ragul - MBA20196

Eligibility for Insolvency Professional
An individual is eligible to become an Insolvency Professional provided, he/she :

● Is an Indian resident and has attained 18 years of age (Majority).

● Is of sound mind and a fit person.

● Is solvent and has not been declared as an insolvent.

● Possess the required qualification and experience as specified by the IBBI.

● Has not been convicted by any competent court/law, for an offence punishable with imprisonment for a term

exceeding six months, or for an offence involving moral turpitude, and a period of five years has not gone from the

date of expiry of the sentence.

Joshua Edwin Ragul - MBA20196

Qualification and Experience

As a first step, any applicant must get themselves registered with Insolvency Professional agency. Listed below are the required

qualifications and experience for an applicant to be registered as an Insolvency Professional:

● They are either required to clear the National Insolvency Examination (or)

● Clear the Limited Insolvency Examination in which case the applicant should have 15 years of experience in management,

after receiving a Bachelor’s degree from a university established or recognised by law (or)

● Has passed the Limited Insolvency Examination and has 10 years of experience as –

○ A chartered accountant and is a member of the Institute of Chartered Accountants of India (or)

○ A company secretary and is a member of the Institute of Company Secretaries of India (or)

○ A cost accountant and is a member of the Institute of Cost Accountants of India (or)

○ An advocate enrolled with a Bar Council

Joshua Edwin Ragul - MBA20196

Functions of an Insolvency Professional
The primary function of an Insolvency Professional is to assess the financial position of the company, partnership, LLPs, individual etc and

to ensure smooth process of its dissolution. These professionals, in certain possible cases look for opportunities to rescue businesses.

Otherwise the main functions of an Insolvency Professional are:

● Analyse the financial statement of the company and understand the position.
● Make arrangements to sell all the assets of the liquidating Individual or company.
● Understand the receivables position of the company/Individual and look after the collection process.
● Conduct formal discussions with debtors/creditors and manage their settlement process.
● Check and agree on the creditors’ claims as per the available funds. This is one of the main duties of Insolvency

professionals.
● Involve in the fund distribution process after setting aside money required to pay the cost of liquidation.
● Deal with the other competing interest, if any.
Joshua Edwin Ragul - MBA20196
Insolvency professionals are required to prepare and submit report to the National Company Law

Tribunal with respect to the following:

○ Liquidation plan and process: This has to be submitted within 75 days of

commencement of the process by the insolvency professional.

○ Detailed report on the asset memorandum.

○ Interim report on how the liquidation process is progressing from time to time.

○ Details about the sale of all the assets.

○ Discussion with the Debtors and Creditors and the conclusions arrived.

○ Final report prior to the dissolution of the company, partnership and others.

Joshua Edwin Ragul - MBA20196

 131 3807

Insolvency Professional Entities Insolvency Professionals

Joshua Edwin Ragul - MBA20196

Information Utility
● Provides high-quality authentic information about debts and defaults
● Access to help in Insolvency Resolution Process
● The categories of information are as follows:

1. Reliable and readily accessible records of liabilities of a solvent entity.

2. Clear evidence of the instance of default.
3. Records of assets that are pledged as collateral against secured credit contracts.
4. Reliable and readily accessible records that comprise the balance sheet and cash flow statements of
the entity

Joshua Edwin Ragul - MBA20196

Joshua Edwin Ragul - MBA20196
The Insolvency and Bankruptcy Board of
India
The Insolvency and Bankruptcy Board of India was established on 1st October, 2016 under the Insolvency
and Bankruptcy Code, 2016 (Code).
The IBC has Dr. M. S. Sahoo as its chairperson and three whole time members heading Registration and
Monitoring, Administrative Law, and Research and Regulation Wing. Additionally, there are four Ex-
officio members and two part-time members.
It has regulatory oversight over the Insolvency Professionals, Insolvency Professional Agencies,
Insolvency Professional Entities and Information Utilities.
It writes and enforces rules for processes, namely, corporate insolvency resolution, corporate liquidation,
individual insolvency resolution and individual bankruptcy under the Code.
It has also been designated as the ‘Authority’ under the Companies (Registered Valuers and Valuation
Rules), 2017 for regulation and development of the profession of valuers in the country.

Shreyansh Sangwan
The Insolvency and Bankruptcy Board of
India and M&A
An M&A opportunity may arise when a Resolution Plan is invited by the Resolution Professional. The plan
can provide for:

i. transfer of all or part of the assets of the corporate debtor to one or more persons;

ii. sale of all or part of the assets whether subject to any security interest or not; and

iii. substantial acquisition of shares, or the merger or consolidation of the corporate debtor with one or
more persons.

Shreyansh Sangwan
Powers and functions of the board
Section 196. (1) The Board shall, subject to the general direction of the Central Government

The Board may make model bye-laws to be to adopted by insolvency professional agencies

Notwithstanding anything contained in any other law for the time being in force, while exercising the
powers under this Code, the Board shall have the same powers as are vested in a civil court under the Code
of Civil Procedure, 1908, while trying a suit

Shreyansh Sangwan
Insolvency Professionals Agencies
(IPAs)
Indian Institute of Insolvency Professionals of ICAI
The activities of the ICAI can be broadly divided into Regulatory, Standard Setting, Disciplinary and Education & Training. The Council
functions through its 4 Standing Committees and 43 Non-Standing Committees. ICAI formulates Accounting Standards as well as
Auditing Standards which have also been converged as per International Standards

ICSI Institute of Insolvency Professionals

ICSI IIP has vested with the power and authority inter alia to enrol, educate, train and also monitor the performance of its registered
members as an Insolvency Professional. Its mandate also includes laying down standards of professional conduct and take steps in the
direction of disciplining its members, whenever required.

Insolvency Professional Agency of Institute of Cost Accountants of India

IPA ICAI is vested with the power to enrol, educate, monitor and regulate the profession of the Insolvency Professionals who are enrolled
as the professional members with it. The functioning of IPA ICAI also includes laying down the best practices, policies and standards on
the different areas developed and emerging areas under the Code, redressing grievances and disciplinary proceedings against the
professional members and conducting inspection of its professional members.

Shreyansh Sangwan
 5 Years of IBC 2016

◦ 4376- Number of cases admitted under IBC since 2016.

◦ 39% - Ratio of cases that remain in the resolution process.
◦ 29% (1277 cases) - Ended into liquidation due to lack of a resolution process.
◦ 46% - Recovery till March 2020.

Namrata Chaudhary - MBA20236

IIM Jammu Legal Insolvency Group for
Europe
It has been prepared by IIM Jammu Legal Insolvency Group practitioners with the support and contribution of IIM JAMMU Legal
practices in 19 countries to help companies in financial crisis understand the different regimes and regulations that may apply. As with all
guides of this type, the content is general in nature and does not take into account individual facts and circumstances nor of any changes that
may have occurred around or after publication date. None of the contributors are responsible in any way for reliance placed by any
person on the content of this publication and it is strongly recommended that you obtain professional advice before taking any action or
decision that will affect your business or your finances.

Siddhant Khairnar - MBA20226

According to European Commission, "companies and individuals in EU are increasingly establishing business activities or economic interests in EU
countries other than where their core activities are located

At the same time the global financial crisis of 2007-2008 leading to the great recession of 2008 2012 is still being felt and has pushed many businesses
into a state of instability. Although the insolvency rates in EU are falling (unlike other regions in the world), the annual number of failures still remains
above the levels before the crisis in several Member States and some business leaders are struggling with difficult choices about the future. There have
also been significant reforms since the last edition of the guide at national and EU level with a recast EU Insolvency Regulation 2015/848 May 2015

IIM Jammu Legal's insolvency experts bring years of experience, helping clients in financial distress or recovery mode by providing options such as
restructuring outside of insolvency proceedings. structured sales and assistance with cross-border insolvency and pre-insolvency proceedings. In Europe
Deloitte Legal's Insolvency Group has helped facilitate pan-European and other regional

legal advice related to insolvency matters including:

businesses having claims against bankrupted European companies: businesses purchasing a distressed company with European subsidiaries: or groups of
companies with cross border activities within Europe facing financial difficulties themselves

Siddhant Khairnar - MBA20226

Given the backdrop of recent changes in European insolvency law, highlighted by two important upcoming events

The first is the implementation, as of June 26, 2017, of the EU insolvency legislation of 2000, which was
modified in 2015 and strengthens, among other things,
1. collaboration among national courts and court-appointed insolvency practitioners.
2. For increased efficiency, the coordination of the various types of procedures offered to distressed
populations.

EU Regulation on insolvency
1. Outline of the key EU Regulations
Insolvency law in the EU is regulated primarily through Regulation No 1346/2000 as updated by
Regulation 2015/848 which comes into effect from 26 June 2017.
If a company is established in several EU Member States, the opening of insolvency proceedings

Siddhant Khairnar - MBA20226

Involves solving 3 classic questions:

Which court has jurisdiction?

What is the applicable law?
What will be the recognition of the proceedings initiated in the various Member States involved?

The 2000 regulation which came into force on 31 May 2002 was the first attempt at rules designed to facilitate
cross border insolvency proceedings. It established common rules on:
the court competent to open insolvency proceedings whenever the debtor has activities,assets or creditors in more
than one Member State, the applicable country's laws which should govern insolvency proceedings within the EU
the recognition of the court's decisions when a debtor (a company, a trader or an individual) becomes insolvent

Siddhant Khairnar - MBA20226

The system is based on the location of the Center Of Main Interests (COMI) of the debtor company . The
court of the Member State where the COMI is located has jurisdiction to open the main insolvency
proceedings The place of its registered office is presumed to be the COMI in the absence of proof
.According to case law, COMI is the company principal place of direction and administration COMI can be
located in another Member State .The competent court must applies its national insolvency law The effects
of these insolvency proceedings are recognized EU-wide, without further formality Local creditors can
claim for the opening of secondary proceedings in the Member State where the debtor company has
establishments. The main proceedings have an universal effect and secondary proceedings are to the
debtor's assets located in the Member States where they are opened Restricted This Regulation also
contains rules on the coordination of main and secondary insolvency proceedings Currently, EU Regulation
on insolvency applies to all Member States of the EU with the exception of Denmark: 27 Member States
are affected by this Regulation.

Siddhant Khairnar - MBA20226

Updated 2015 Regulation The recast Insolvency Regulation of 20 May 2015 entered into force on 26 June 2015 and will
appl to insolvency proceedings from 26 June 2017, Improving its functioning and repair its inadequacies Catching up the
gap with the new economic reality Taking into account the evolution of practice and the laws more responsive to prevention
of difficulties and mechanisms to promote the tumaround Taking into account the EU enlargement to Central Europe
• Avoiding forum shopping which consists for a debt or to take advantage of insolvency proceedings in the most favorable
jurisdiction that will best serve its interests to the detriment of creditors
A. Key changes include
Extension of scope to cover hybrid and pre-insolvency proceedings
Codification of determination of COMI for the opening of main insolvency proceedings Secondary proceedings where a
company has an establishment in another Member State Group companies Registers of insolvency proceedings: greater
transparency Improving rights of foreign creditors: process for lodging claims
1.Extension of scope to cover hybrid and pre-insolvency proceedings
2.Codification of determination of COMI for the opening of main insolvency proceedings
3.Secondary proceedings where a company has an establishment in another Member State
4.Group companies
5.Registers of insolvency proceedings: greater transparency
6 Improving the rights of foreign creditors: process for lodging claims

Siddhant Khairnar - MBA20226

Countries under our expertise
Belgium
Bulgaria Legal Framework
Czech Republic
Finland
Insolvency Proceedings
France
Germany
Our Credentials
Hungary
Italy
Luxemberg
Netherland
Norway
Poland
Portugal
Romania
Spain
Sweden
Switzerland
Ukraine
UK*

Siddhant Khairnar - MBA20226

Thank you!