Pillars of Insolvency and Bankruptcy Code, 2016

The Insolvency and Bankruptcy Code, 2016 (IBC) is a comprehensive law that governs insolvency and bankruptcy in India. The Code was enacted with the objective of providing a time-bound and efficient framework for resolving insolvency and bankruptcy cases.

The pillars of the IBC are:

  • Time-bound resolution: The IBC provides for a time-bound resolution of insolvency and bankruptcy cases. The CIRP is a 180-day process, which can be extended by the Adjudicating Authority (AA) for a further period of 90 days. The PIR is a 365-day process, which can be extended by the AA for a further period of 180 days.
  • Fair and equitable treatment of creditors: The IBC provides for a fair and equitable treatment of creditors. All creditors of the corporate debtor are treated equally, and their interests are protected.
  • Participatory approach: The IBC adopts a participatory approach to insolvency resolution. The creditors of the corporate debtor are involved in the resolution process, and their views are taken into account.
  • Protection of debtors’ rights: The IBC protects the rights of debtors. Debtors are given a chance to rehabilitate their businesses, and they are not saddled with debts that they cannot repay.
  • Promoting entrepreneurship and economic growth: The IBC promotes entrepreneurship and economic growth. By providing a time-bound and efficient framework for resolving insolvency and bankruptcy cases, the IBC helps to create a conducive environment for businesses to thrive.

Here are some MCQs on the pillars of the Insolvency and Bankruptcy Code, 2016:

  1. What is the time-bound for the resolution of insolvency and bankruptcy cases under the IBC?
    • 180 days
    • 365 days
    • 540 days
    • 720 days
    • The answer is 180 days. The CIRP is a 180-day process, which can be extended by the Adjudicating Authority (AA) for a further period of 90 days.
  2. How are the creditors of the corporate debtor treated under the IBC?
    • They are treated equally, and their interests are protected.
    • They are treated differently, depending on the size of their debt.
    • They are not treated fairly, and their interests are not protected.
    • None of the above
    • The answer is They are treated equally, and their interests are protected. All creditors of the corporate debtor are treated equally, and their interests are protected under the IBC.
  3. What is the role of the creditors in the resolution process under the IBC?
    • They are involved in the resolution process, and their views are taken into account.
    • They are not involved in the resolution process, and their views are not taken into account.
    • They can choose to be involved in the resolution process, but their views are not taken into account.
    • None of the above
    • The answer is They are involved in the resolution process, and their views are taken into account. The creditors of the corporate debtor are involved in the resolution process under the IBC, and their views are taken into account.
  4. How does the IBC promote entrepreneurship and economic growth?
    • By providing a time-bound and efficient framework for resolving insolvency and bankruptcy cases, the IBC helps to create a conducive environment for businesses to thrive.
    • By protecting the rights of debtors, the IBC helps to encourage people to start businesses.
    • Both of the above
    • None of the above
    • The answer is Both of the above. The IBC promotes entrepreneurship and economic growth by providing a time-bound and efficient framework for resolving insolvency and bankruptcy cases, and by protecting the rights of debtors.