This study is a serious attempt to understand the impact of the code on the economy and how it has changed the relationship of corporate debtor and creditor. Besides that this study will analyse the areas which needs serious consideration by the government in national as well as international context.
Earlier Insolvency laws in India were not consolidated, that has led to uncertainty amongst the creditors as well as debtors. The credit market in the country was not flourishing. India is one of the youngest economy of the world which is the house for plethora of entrepreneurs. Yet these drivers of the economy is facing the heat of the financial institution in form of non-availability of credit. The Insolvency and Bankruptcy Code, 2016 (Code) has changed the whole dynamics and disrupted the credit market of the country. On one hand, it has brought certainty and uniformity in terms of law and legal proceeding and on the other, it has rebuildthe trust of the creditors and encouraged them to infuse capital in the market. To an extent code has met its objective but it has long distance to cover and stay relevant in the changing dynamics of the global business.
The limited liability company is a contract between equity and debt. As long as debt obligations are met, equity owners have complete control, and creditors have no say in how the business is run. When default takes place, control is supposed to transfer to the creditors; equity owners have no say. This is not how companies in India work today. For many decades, creditors have had low power when faced with default. Promoters stay in control of the company even after default.
Inhaltsverzeichnis (Table of Contents)
- CHAPTER I: AN INTRODUCTION TO PRETEXT OF INSOLVENCY LAWS
- Relevance of the Study
- Object of the Study
- Scope of the Study
- Research Methodology
- Research Questions
- Achievement of a Sound Bankruptcy Law - IBC, 2016.
- Avoid destruction of value
- Drawing the line between malfeasance and business failure.
- CHAPTER II - CREDITORS – KINGPINS AND ITS POWER CONUNDRUM
- Classification of Creditors: Discrimination or Intelligible differentia
- International Perspective
- Mustering the Constitutional Mandate
- Classification of Creditors on the basis of nature of debt is sine qua non for insolvency laws
- Economic Rationale behind treating the Operational Creditors and Financial Creditors differently
- Commercial wisdom of Committee of Creditors - An Unassailable Right
- Legislative Scheme to leave commercial decision on Committee of Creditors.
- Committee of Creditors deals with all the commercial decision of a resolution plan
- Conclusion
- CHAPTER III - PROMOTER/GUARANTOR - CREDITORS – SUBROGATION: A DILEMMA
- Right of creditor vis-à-vis the guarantor
- That the contract of guarantee is an independent contract
- That there is no discharge of guarantor under the Indian Contract Act, 1872.
- Rights of guarantor vis-à-vis the corporate debtor
- The proceedings under the IBC are not recovery proceedings
- In any case, IBC will prevail over Contract Act
- Guarantor Liability under Moratorium Period
- Conclusion
- CHAPTER IV - HISTORY AND EVOLUTION OF CROSS BORDER INSOLVENCY – A MEASURE OF GLOBAL HISTORICAL DEVELOPMENT
- Jurisprudence and Prominent Principle of Insolvency Law
- Maximisation of Asset Value
- Universalism vis-à-vis Territorialism
- Sovereignty is too strong yet too weak
- Modified Universalism and Co-operative territorialism
- Forum Shopping
- UNCITRAL Model Law vis-à-vis Indian Insolvency Law committee Report on Cross Border
- Insolvency Law Committee submits its 2nd Report on Cross Border Insolvency
- Arguments in Favour of Model Law
- Intricacy involved in Cross Border Insolvency
- Case Study of Insolvency proceeding related to Multi-National companies
- Suggestions
- Solution to the Conundrum of Group Companies' Insolvency
- Conclusion
- CHAPTER V - PRE-PACK: A STEP FORWARD TOWARDS REVIVAL
- The rise of the pre-pack
- Advantages and concerns
- Efficiency
- Fairness and expertise
- Controlling the pre-pack
- The 'managerial' solution: a matter of expertise
- The professional ethics solution: expertise and fairness combined
- The regulatory answer
- Evaluating control strategies
- Pre-Pack: A Blueprint for India
- Proposed pre-packaged mechanism for India
- Conclusion
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This term paper analyzes the Indian Insolvency and Bankruptcy Code, 2016 (IBC), tracing its recent developments and assessing its impact on the national and transnational frameworks of insolvency and bankruptcy. The paper delves into the intricate relationship between creditors, debtors, and guarantors under the IBC, examining the power dynamics and legal complexities surrounding their respective rights and obligations. The paper also explores the evolution of cross-border insolvency, analyzing the challenges and opportunities presented by the internationalization of insolvency proceedings. The key themes and objectives of this paper include:- Analyzing the legal framework of the IBC, 2016, and its impact on the national and transnational insolvency landscape.
- Examining the rights and obligations of creditors, debtors, and guarantors under the IBC, highlighting the power dynamics and legal complexities associated with their interactions.
- Investigating the evolution of cross-border insolvency, exploring the challenges and opportunities associated with international insolvency proceedings.
- Analyzing the effectiveness of pre-pack insolvency arrangements as a means of business revival.
- Developing potential solutions and strategies for enhancing the efficiency and fairness of India's insolvency framework.
Zusammenfassung der Kapitel (Chapter Summaries)
Chapter I provides an introduction to the concept of insolvency laws and their relevance in modern economies. It examines the key objectives and scope of the Indian Insolvency and Bankruptcy Code, 2016 (IBC) and explores the research methodology and questions that guide the study.
Chapter II delves into the complexities of creditor rights and power dynamics under the IBC. It examines the classification of creditors, including operational and financial creditors, and analyzes the legal and economic justifications for differentiating between these groups. The chapter also explores the role and significance of the Committee of Creditors in decision-making processes related to insolvency resolutions.
Chapter III focuses on the relationship between promoters, guarantors, and creditors in insolvency proceedings. It examines the rights and obligations of guarantors under the IBC, particularly in relation to the moratorium period, and explores the interplay between the IBC and the Indian Contract Act, 1872. This chapter also analyzes the subrogation rights of creditors in relation to guarantors.
Chapter IV traces the historical development of cross-border insolvency and explores the key principles and challenges associated with resolving insolvency cases involving multinational companies. The chapter examines different jurisdictional approaches to cross-border insolvency, including universalism, territorialism, and modified universalism, and analyzes the UNCITRAL Model Law and its potential impact on Indian insolvency law. It also explores the role of the Insolvency Law Committee in India and its recommendations for a cross-border insolvency framework.
Chapter V examines the pre-pack insolvency arrangement as a promising tool for business revival. It explores the advantages and concerns associated with this mechanism, including efficiency, fairness, and expertise, and discusses various strategies for controlling pre-pack arrangements to mitigate potential risks. The chapter also proposes a blueprint for implementing pre-pack insolvency mechanisms in India.
Schlüsselwörter (Keywords)
Insolvency and Bankruptcy Code, 2016, IBC, creditors, debtors, guarantors, cross-border insolvency, pre-pack insolvency, business revival, Committee of Creditors, resolution plan, moratorium period, subrogation, UNCITRAL Model Law, insolvency law committee, international insolvency, national insolvency, legal framework, power dynamics, legal complexities, challenges, opportunities, efficiency, fairness, expertise.- Quote paper
- Chaitanya Verma (Author), 2020, National and Trans-National Framework of Insolvency and Bankruptcy Code, Munich, GRIN Verlag, https://www.grin.com/document/985536
