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 IBC applies to all persons, including individuals, companies, limited liability partnerships, and partnership firms. The Code also applies to certain financial institutions and other entities.

The IBC provides for two main insolvency resolution processes:

  • Corporate Insolvency Resolution Process (CIRP): This process is applicable to companies and limited liability partnerships.
  • Personal Insolvency Resolution Process (PIR): This process is applicable to individuals.

The CIRP is a creditors’ driven process. The creditors of the corporate debtor (i.e., the company or limited liability partnership) can initiate the CIRP. 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 debtor-driven process. The individual debtor can initiate the PIR. The PIR is a 365-day process, which can be extended by the AA for a further period of 180 days.

The IBC also provides for a liquidation process. The liquidation process is initiated by the AA when the CIRP or PIR is unsuccessful. The liquidation process is a 120-day process, which can be extended by the AA for a further period of 90 days.

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

  1. What is the objective of the Insolvency and Bankruptcy Code, 2016?
    • To provide a time-bound and efficient framework for resolving insolvency and bankruptcy cases.
    • To protect the interests of creditors and debtors.
    • To promote entrepreneurship and economic growth.
    • All of the above
    • The answer is All of the above. The Insolvency and Bankruptcy Code, 2016 is a comprehensive law that aims to provide a time-bound and efficient framework for resolving insolvency and bankruptcy cases, protect the interests of creditors and debtors, and promote entrepreneurship and economic growth.
  2. What are the two main insolvency resolution processes under the IBC?
    • Corporate Insolvency Resolution Process (CIRP) and Personal Insolvency Resolution Process (PIR)
    • Liquidation process and Corporate Insolvency Resolution Process (CIRP)
    • Personal Insolvency Resolution Process (PIR) and Liquidation process
    • None of the above
    • The answer is Corporate Insolvency Resolution Process (CIRP) and Personal Insolvency Resolution Process (PIR). The IBC provides for two main insolvency resolution processes: the CIRP and the PIR.
  3. Who can initiate the CIRP?
    • The creditors of the corporate debtor
    • The corporate debtor
    • The Government
    • The National Company Law Tribunal (NCLT)
    • The answer is The creditors of the corporate debtor. The CIRP is a creditors’ driven process. The creditors of the corporate debtor can initiate the CIRP by filing an application with the NCLT.