UNIT-2

INSOLVENCY AND BANKRUPTCY CODE,2016

1. INTRODUCTION
 The Insolvency and Bankruptcy Code, 2016 (IBC) is the bankruptcy law of India which seeks to
consolidate the existing framework by creating a single law for insolvency and bankruptcy.

 The Recommendation of the Bankruptcy Law Reforms Committee (BLFC) lead to the enactment
of the Insolvency and Bankruptcy Code 2016 (IBC) on May 28 2016, it was enacted as Insolvency
Bankruptcy Code (Amendment)Act 2018

 The Insolvency & Bankruptcy code, 2015 was introduced in Lok Sabha on 21 December, 2015
and referred to the joint committee on the insolvency & bankruptcy code, 2016. the committee
had presented its recommendations and a modified bill based on its suggestions.

 Further, the Insolvency and Bankruptcy Code, 2016 was passed by both houses of parliament
and notified in May 2016. being one of the major economic reforms it paves the way focusing
on creditor driven insolvency resolution.

2. HISTORY OF INSOLVENCY AND BANKRUPTCY CODE, 2016

 August 22, 2014, BLRC (Bankruptcy Law Reform Committee) formed under the Chairmanship of
 Tk. Vishwanathan.
 February 05, 2015: BLRC submitted its interim report to ministry of finance.
 February 10, 2015: MOF invited public comments on interim report of BLRC.
 November 04, 2015: volume i- final report of BLRC, volume ii- draft code.
 December 21, 2015: code introduced in the parliament.
 December 23, 2015: code referred to joint parliamentary committee.
 January 22, 2016: Joint committee invited comments on the code.
 May 05, 2016: Bankruptcy code passed by LOK SABHA.
 May 11, 2016: Bankruptcy code passed by RAJYA SABHA
 May 28, 2016: received President's assent.

3. INCEPTION OF INSOLVENCY LAWS IN INDIA

 Presidency towns insolvency act, 1909
 Provincial insolvency act, 1920
 Indian partnership act, 1932
 Companies act, 1956
 Sick industrial companies act, 1985
 Recovery of debts due to banks & financial institutions act, 1993
 SARFAESI, 2002
 Companies act, 2013
 Insolvency & bankruptcy code, 2016
4. APPLICABILITY OF THE CODE
Act extends to whole of India except J&K. The provisions of the code apply to following entities:

 Any company under companies act, 2013

 Any LLP under limit liability partnership act, 2008
 An Individual & partnership firm
 Any Other entity established under a special statute.
 Any Body incorporated under any law as notified by central government

5. WHY IS THE CODES NEEDED?

 Current Bankruptcy Regime in India Is Highly Fragmented.
 Delay In Legal Processing Due to Overlapping Legislations
 Conflict Between Laws and Over Jurisdiction
 Lack Of Credible Financial Data.
 Locked-Up Asset Will Be Freed.
 Protect Workers.

6. Meaning Of Insolvency
• Insolvency is the inability of a person or companies to pay their debts due to

insufficient assets.

• If insolvency cannot be resolved, assets of the debtor may be sold to raise money,

and repay the outstanding debt.

7. Meaning Of Bankruptcy:
• Bankruptcy is when an individual is legally declared incapable of paying their due

and payable bills.

Liquidation:
• Liquidation is the process of winding up a corporation or incorporated entity.

• Entities that can initiate proceedings to cause liquidation are:

regulatory bodies, directors of company, shareholders of company, unpaid

creditors.

8. STRUCTURE OF INSOLVENCY AND BANKRUPTCY CODE, 2016

The code is structured into

 5 parts
 comprising of 255 sections and
 12 schedules
  Each part deals with a distinct aspects of the insolvency resolution process

It includes
 provisions relating to corporate insolvency resolution process
 provisions relating to liquidation process of corporates
 provisions relating to Fastrack corporate insolvency resolution process of
 small corporate persons
 provisions relating to voluntary liquidation
 winding up of companies
 Bankruptcy of individual and firms

9. INSOLVENCY BANKRUPTCY CODE DOES NOT COVER

 Bank
 Financial Institutions
 Insurance Company
 Assets Reconstruction company
 Mutual fund
 Collective investment schemes or Pension Fund
 Insolvency and Bankruptcy Code, 2016

10. OBJECTIVE FOR INTRODUCTION OF IBC CODE

 Promotion of entrepreneurship.
 Improved handling of conflicts between creditors & debtors
 Availability of credit.
 Balance of interest of all stakeholders.
 Alteration in the order of priority of payment of government dues.
 To consolidate and amend all existing insolvency laws in India.
 To simplify and expedite the Insolvency and Bankruptcy Proceedings in India.
 To protect the interest of creditors including stakeholders in a company.
 To revive the company in a time-bound manner.
 To get the necessary relief to the creditors and consequently increase the credit supply in the
economy.
 To work out a new and timely recovery procedure to be adopted by the banks, financial
institutions or individuals.
 To set up an Insolvency and Bankruptcy Board of India.
 Maximization of the value of assets of corporate persons.

11. SOCIAL, LEGAL, ECONOMIC AND FINANCIAL PERSPECTIVES

Social Perspectives of IBC
1. To consolidate and amend the laws relating to re-organization and Insolvency resolution
of corporate persons, partnership firms and Individual.
2. To fix time periods for execution of the law in a time – bound settlement of Insolvency
( i,e.180 days)
 3. To maximize the value of assets of interested persons.
4. To promote entrepreneurship
5. To increase the availability of credit
6. To balance stakeholders’ interest
7. To establish an Insolvency and Bankruptcy Board of India as a regulatory body for
insolvency and bankruptcy law.
8. To provide painless revival mechanism for entities.
9. To deal with cross-border Insolvency
10. To establish IBBI as a regulatory body for Insolvency and bankruptcy law.

Legal Perspectives of IBC

1. The highlight of the code is the institutional framework it envisions.
2. This framework consists of the regulator (Insolvency and Bankruptcy Board of India)
Insolvency Professionals, Insolvency Utilities and Adjudicating mechanisms.
3. These Institutionals and structures are aimed at promoting corporate governance
4. It also enables a time bound and formal resolution of Insolvency.
5. The creation of several new Institutions has been achieved by the code.
6. It possesses specialized functions in the Insolvency resolution process.
7. The IBC has created the supervisory and regulatory body called IBBI.
8. IBBI has the overall responsibility to effectively operationalize, implement ,educate and
smoothen functionality of IBC.
9. IBBI studies the practical implications to overcome any hurdle and difficulty.

FINANCIAL PERSPECTIVES OF IBC

1. Strong recovery laws
2. Strong Insolvency law
3. Where lenders can enforce repayment,
4. Higher credit access
5. At lower price
6. With longer maturity
7. Lower collateral maturity

12. DEFINITIONS OF THE TERMS

1. SEC 3(6) "CLAIM"
(A) means a right to payment, whether or not such right is reduced to judgment, fixed,
disputed, undisputed, legal, equitable, secured or unsecured,
(B) Right to remedy for breach of contract under any law for the time being in force, if such
breach gives rise to a right to payment, whether or not such right is reduced to judgment, fixed,
matured, unmatured, disputed, undisputed, secured or unsecured;
 2. "CHARGE" MEANS
an interest or lien created on the property or assets of any person or any of its undertakings or both, as
the case may be, as security and includes a mortgage,

3. SEC 3/7): "CORPORATE PERSON" MEANS

a company as defined in clause (20) of section 2 of the companies act, 2013, a limited liability
partnership, as any other person incorporated with limited liability under any law for the time being in
force but shall not include any financial service provider,

4. SEC 3(8) "CORPORATE DEBTOR MEANS - a corporate person who owes a debt to any
person
5. "CORE SERVICES MEANS -
services rendered by an information utility for-
(a) accepting electronic submission of financial information in such form and manner as may be
specified;

(b) safe and accurate recording of financial information;

(c) authenticating and verifying the financial information submitted by a person; and

(d) providing access to information stored with the information utility to persons as may be specified:

SEC 3(10): "CREDITOR" MEANS

any person to whom a debt is owed and includes a financial creditor, an operational creditor, a secured
creditor, an unsecured creditor and a decree-holder:

SEC 3(11): "DEBT" MEANS

a liability or obligation in respect of a claim which is due from any person and includes a financial debt
and operational debt

SEC 3(12): "DEFAULT" MEANS –

non-payment of debt when whole or any part or instalment of the amount of debt has become due and
payable amount is not repaid by the debtor or the corporate debtor, as the case may be

"FINANCIAL INSTITUTION" MEANS

(a) a scheduled bank;

(b) financial institution as defined in section 45-1 of the reserve bank of India act, 1934;

(c) public financial institution as defined in clause (72) of section 2 of the companies act, 2013;

SEC 3(13) "FINANCIAL INFORMATION", in relation to a person, means

one or more of the following categories of information, namely

(a) records of the debt of the person

(8) records of liabilities when the person is solvent

(c) records of assets of person over which security interest has been created

(d) records, if any, of instances of default by the person against any debt,

(e) records of the balance sheet and cash-flow statements of the person, and

(f) such other information as may be specified.

"FINANCIAL SERVICE - includes any of the following services, namely

(a) accepting of deposits
(b) safeguarding and administering assets consisting of financial products, belonging to another person,
or agreeing to do so

(c) effecting contracts of insurance

(d) offering, managing or agreeing to manage assets consisting of financial products belonging to
another person,

(e) rendering or agreeing, for consideration, to render advice on or soliciting for the purposes of

(1) buying, selling, or subscribing to, a financial product,

(2) availing a financial service; or

(3) exercising any right associated with a financial product or financial service:

(f) establishing or operating an investment scheme:

(g) maintaining or transferring records of ownership of a financial product;

(h) underwriting the issuance or subscription of a financial product; or

(i) selling, providing, or issuing stored value or payment instruments or providing payment services:

"FINANCIAL SERVICE PROVIDER" means

a person engaged in the business of providing financial services in terms of authorization issued or
registration granted by a financial sector regulator;

"FINANCIAL SECTOR REGULATOR" MEANS

an authority or body constituted under any law for the time being in force to regulate services or
transactions of financial sector and includes the reserve bank of India, the securities and exchange board
of India, the insurance regulatory and development authority of India, the pension fund regulatory
authority and such other regulatory authorities as may be notified by the central government;

"INSOLVENCY PROFESSIONAL MEANS

a person enrolled under section 206 with an insolvency professional agency as its member and

SEC 3(23): "PERSON" INCLUDES -

(a) an individual,

(b) a Hindu Undivided Family;

(c) a company;

(d) a trust;

(e) a partnership;
(f) a limited liability partnership, and

(g) any other entity established under a statute, and includes a person resident outside India;

"PROPERTY" INCLUDES
money, goods, actionable claims, land and every description of property situated in India oroutside India
and every description of interest including present or future or vested or contingent interest arising out
of, or incidental to, property;

SEC 3(31): "SECURITY INTEREST MEANS

right, title or interest or a claim to property, created in favor of, or provided for a secured creditor by a
transaction which secures payment or performance of an obligation and includes mortgage, charge,
hypothecation, assignment and encumbrance or any other agreement or arrangement securing
payment or performance of any obligation of any person: provided that interest shall not include
performance guarantee

13. CORPORATE INSOLVENCY RESOLUTION PROCESS

Corporate Insolvency Resolution is a process during which financial creditors assess whether the
debtor's business is viable to continue and the options for its rescue and revival, if any. if the insolvency
resolution process fails or financial creditors decide that the business of debtor cannot be carried on in a
profitable manner and it should be wound up, the debtor will undergo liquidation process and the
assets of the debtor shall be realized and distributed by the liquidator.

• the code creates time-bound processes for insolvency resolution of companies and individuals. these
processes will be completed within 180 days, extendable by 90 days. it also provides for fast-track
resolution of corporate insolvency within 90 days. if insolvency cannot be resolved, the assets of the
borrowers may be sold to repay creditors.

Process flow
Filing of application before NCLT

Adjudication admission or rejection of application

Moratorium and public announcement

Appointment of interim resolution professional

Formation of the committee of creditors

Preparation and approval of the resolution plan

Consequences of non-submission of the resolution plan

14. AUTHORITIES AND ENFORCEMENT MECHANISM IN IBC 2016
There are 4 pillars of IBC Institutional framework
1. IBBI- Insolvency and Bankruptcy Board of India
2. AA- Adjudicating Authorities
3. Insolvency Professionals
4. Information Utilities

14 (1)INSOLVENCY AND BANKRUPTCY BOARD OF INDIA (IBBI)

The code provides for establishment of a regulator who will oversee these entities and to perform
legislative, executive and quasi- judicial functions with respect to the Insolvency professional agencies
and information utilities.

The insolvency and bankruptcy board of India was established on october 1, 2016. The head office of
the board is located at new delhi.

The board is a body corporate, having perpetual succession and a common seal, with power, subject to
the provisions of this code, to acquire, hold and dispose of property, both movable and immovable, and
to contract and shall, by the said name, sue or be sued.

COMPOSITION OF THE BOARD(IBBI)

(a) a chairperson

(b) three members from amongst the officers of the central government not below the rank of joint

secretary or equivalent, one each to represent the ministry of finance, the ministry of corporate affairs

and ministry of law, ex-officio;

(c) one member to be nominated by the reserve bank of India, ex officio,

(d) five other members to be nominated by the central government, of whom at least three shall be the

whole-time members

POWERS OF INSOLVENCY AND BANKRUPTCY BOARD OF INDIA (IBBI)

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, in respect of the following matters, namely:-

(a) the discovery and production of books of account and other documents, at such place and such time
as may be specified by the board.

(b) summoning and enforcing the attendance of persons and examining them on oath.

(c) inspection of any books, registers and other documents of any person at any place.
(d) issuing of commissions for the examination of witnesses or documents.

FUNCTIONS OF INSOLVENCY AND BANKRUPTCY BOARD OF INDIA (IBBI)

section 196. (1) the board shall, subject to the general direction of the central government, perform all
or any of the following functions namely

1. register insolvency professional agencies, insolvency professionals and information utilities and
renew, withdraw, suspend or cancel such registrations.
2. promote the development of, and regulate, the working and practices of, insolvency
professional agencies and information utilities and other institutions, in furtherance of the
purposes of this code.
3. specify the minimum eligibility requirements for registration of insolvency professional agencies,
insolvency professionals and information utilities.
4. levy fee or other charges for carrying out the purposes of this code, including fee for registration
and renewal of insolvency professional agencies, insolvency professionals and information
utilities.
5. specify by regulations standards for the functioning of insolvency professional agencies,
insolvency professionals and information utilities.
6. lay down by regulations the minimum curriculum for the examination of the insolvency
professionals for their enrolment as members of the insolvency professional agencies.
7. carry out inspections and investigations on insolvency professional agencies, insolvency
professionals and information utilities and pass such orders as may be required for compliance
of the provisions of this
8. monitor the performance of insolvency professional agencies, insolvency professionals and
information utilities and pass any directions as may be required for compliance of the provisions
of this code and the regulations issued hereunder.
9. call for any information and records from the insolvency professional agencies,insolvency
professionals and information utilities.
10. publish such information, data, research studies and other information as may be specified by
regulations.
11. specify by regulations the manner of collecting and storing data by the information utilities and
for providing access to such data.
12. collect and maintain records relating to insolvency and bankruptcy cases and disseminate
information relating to such cases.
13. constitute such committees as may be required including in particular the committees laid down
in section 197.
14. promote transparency and best practices in its governance.
15. maintain websites and such other universally accessible repositories of electronic information.

OBJECTIVES OF IBBI
The objective of the board is to utilize all legislative, executive and quasi- judicial functioning so
as to achieve a well- functioning bankruptcy process in India.
 1. High recovery rates in an NPV sense.
2. Low delays from start to end
3. Sound coverage of the widest possible class of claims
Ex: bank loans, corporate bonds etc.
4. A perceptive in the minds of persons in the economy that India has a swift and
competent bankruptcy process.

SCOPE OF THE BOARD (IBBI)

The board under the code has been set up to regulate all the matters of insolvency and
bankruptcy that persons defined under the act face.
They include;

1. Limited liability entities

2. Firms
3. Companies
4. Individuals
Including all organizations and entities other than financial service providers.

14(2).ADJUDICATING AUTHORITIES
IBC CODE 2016, has 2 adjudicating authorities.
(a) NATIONAL COMPANY LAW TRIBUNAL (NCLT): for corporate persons
(b) DEBT RECOVERY TRIBUNAL (DRT): for Individuals and partnership firms
(a) National Company Law Tribunal (NCLT)
 A type of court with the authority to decide who is right in particular types of dispute or
disagreement
 NCLT is a quasi-judicial body that adjudicates matters pertaining to companies in India
 The Central Government has constituted National Company Law Tribunal (NCLT)
 NCLT was formed based on the recommendations of the Justice Eradi Committee.
 under section 408 of the Companies Act, 2013 (18 of 2013) w.e.f. 01 st June 2016.

NCLT CONSOLIDATE THE CORPORATE JURISDICTION OF FOLLOWING AUTHORITY:

NCLT was designed to replace the jurisdiction of the following.

 Company Law Board (CLB)

 The Board of Industrial and Financial Reconstruction (BIFR)
 The Appellate Authority for Industrial and financial Reconstruction (AAIFR)

With the establishment of the NCLT and NCLAT, the Company Law Board under the companies Act will
stand dissolved.
 Define NCLT: The adjudicating authority for corporate person having territorial
jurisdiction over the place where the registered office of the corporate person is located.

ROLE/POWER OF NCLT under IBC

 Tribunal regulate their own procedure based on natural justice
 Vested with the same power as that of civil court
 summoning and enforcing the attendance of any person and examining him on oath;
 requiring the discovery and production of documents;
 receiving evidence on affidavit
 issuing commissions for the examination of witness or document
 setting aside any order of dismissal of any representation for default or any order
passed by it
 Nature of decree(order) and its execution
 Adjudicating Authority for insolvency proceedings under the Insolvency and Bankruptcy code
(IBBI) 2016
 Power to punish for contempt (sec 425)
 Delegation of power (sec 426)
 To enquire the proceeding
 Protection of action taken in good faith
 Power to seek assistance of chief Metropolitan Magistrate etc.

JURISDICTION OF NCLT
 The state of situation of registered office of the corporate entity shall be the deciding
criterion for insolvency and resolution and liquidation of corporate persons, corporate
debtors and personal guarantors.
 The application for initiating the insolvency resolution process or liquidation of
corporate debtors shall be filed before NCLT having jurisdiction, where the registered
office of the corporate entity is situated.
 The section 63 of the code also states that the Civil courts shall not have any authority
to entertain any suit or proceedings in respect to any matter on which NCLT has power
to entertain under the code.
 The adjudicating authority for corporate person shall be NCLT.
 The appeals if any against the order of NCLT shall be filed before NCLAT.
 Further any person aggrieved by the order of NCLAT may file an appeal to the supreme
court.
 The appeal before supreme court shall be only one question of law arising out of order
passed by order of NCLT or NCLAT.
NATIONAL COMPANY LAW APPELLATE TRIBUNAL (NCLAT)
 NCLAT is a tribunal which was formed by the government under Section 410 of the Companies
Act,2013.
 NCLAT is responsible for hearing appeals from the orders of the National Company Law Tribunal.
 Decisions taken by the NCLT can be appealed to the National Company Law Appellate Tribunal
(NCLAT).

The decisions of the NCLAT can be appealed to the Supreme

COMPOSITION OF NCLAT
The president of the tribunal and the chairperson and judicial members of the Appellate
tribunal shall be appointed after consultation with the Chief Justice of India.

The Member of the Tribunal and the Technical Member of the Appellate Tribunal shall be
appointed on the recommendation of a Selection Committee consisting of:
1. Chief justice of India or his nominee-Chairperson.
2. A senior Judge of the Supreme Court or a Chief Justice of High Court-Member.
3. Secretary in the Ministry of Corporate Affairs-Member.
4. Secretary in the Ministry of law and Justice-Member.
5. Secretary in the Department of Financial Services in the Ministry of Finance-Member.

FUNCTIONS OF NCLAT
 It hears appeals against the order of National Company Law Tribunal(s)(NCLT), with
effect from 1st June 2016.
 It is the Appellate Tribunal for hearing appeals the order passed by NCLT(s)under section
61of the Insolvency and Bankruptcy Code,2016(IBC).
 It is the Appellate Tribunal for hearing appeals against the orders passed by Insolvency
and Bankruptcy board of India under section 211 of IBC.
 It is the Appellate Tribunal to hear and dispose of appeals any direction issued or
decision made or order passed by the Competition Commission of India (CCI)
 NCLAT is also the Appellate Tribunal to hear and dispose of appeals against the orders of
the National Financial Reporting Authority

APPEAL TO SUPREME COURT

 If a person is not satisfied and is aggrieved by the order of NCLAT then in such
case he can file an appeal to the supreme court.
 The application before supreme court shall be filed with 45 days from the date of
receipt of order of NCLAT.
  However, the supreme court may allow extension beyond 45 days if it is satisfied
that person was prevented by sufficient clause.
 The extension allowed shall be only 15 days beyond 45days duration.

(B) DEBT RECOVERY TRIBUNAL (DRT): FOR INDIVIDUALS AND

PARTNERSHIP FIRMS
 DEFINE DRT- the Adjudicating authority for individuals and partnership firms
having territorial jurisdiction over the place where Individual debtor actually or
voluntarily resides or carries on business or personally works for gain.

ROLE and POWERS OF DRT UNDER IBC

 The primary objective and role of DRT is the recovery of money from borrowers which is
due to financial institutions and banks.
 The tribunal has all the powers vested with the District Court.
 Any application or proceedings by or against the Individual debtor.
 Any claim made by or against the Individual debtor and
 Any questions of priorities or any questions of law or facts arising out of or in relation to
the insolvency and bankruptcy of the individual debtor or firm under this code.
 However, it cannot listen to claims of damages, or criminal negligence on the lender’s
part.
 DRT’s have the power to examine their own decisions.
 The DRTs has to resolve the claim within six months.

CONSTITUTION OF DEBT RECOVERY TRIBUNAL (DRT)

The DRT entertains applications for recovery of debt of value equal to or exceeding 20lakh
rupees.
The act bars all courts from having administration over the matter relating to debt recovery,
except the High court and the Supreme court.

JURISDICTION OF DRT
The territorial jurisdiction shall be the place of residence (actual or voluntary) of the individual
debtor, or the place of business or any place from where debtor works for gain.
Sec 180 of the code states that the Civil Courts shall not have any authority to entertain any suit
or proceedings in respect to any matter on which DRT has the power to entertain under the
code.

DEBT RECOVERY APPELLATE TRIBUNALS (DRAT)

 Define DRAT – The appeals if any against the order of DRT shall be filed before
DRAT.

DRAT:
 The motive of DRAT is to hear the plea of the person who is not happy with the hearings
of DRTs
 Once the application under IBC is admitted by the DRT against the Individual or
partnership firm then any person aggrieved by the order of DRT may prefer an appeal
before the DRAT.
 Every appeal then shall be filed before DRAT within 30days.
 An appeal can be filed beyond 30days duration if DRAT is satisfied that there was a
sufficient clause for not being able to file within the 30days duration.
 Then extension allowed shall be only 15 days beyond 30days duration only.

COMPOSITION OF DRAT
 It consists of one person who acts as the chairperson of DRAT and the chairperson
should be the qualified judge of high court.
 He should be a member of legal service and should have held office as a presiding
officer for atleast 3years.
 He can preside over the chair for a tenure of 5years or could hold the office till the
age of 65 years, whichever is earlier.

APPEAL TO SUPREME COURT

 An appeal from an order of a DRAT can be filed before Supreme court within 45days
only on question of law.
 This period can be extended by further 15days by supreme court if sufficient cause is
shown.

14(3) INSOLVENCY PROFESSIONALS:

The code provides for establishment of insolvency professionals agencies to enroll and regulate
insolvency professionals as its members in accordance with the insolvency and bankruptcy code
2016 and read with regulations.
  Principles governing registration of insolvency professional agency
 to promote the professional development of and regulation of insolvency professionals
 to promote the services of competent insolvency professionals to cater to the needs of debtors,
creditors and such other persons as may be specified
 to promote good professional and ethical conduct amongst insolvency professionals
 to protect the interest of debtors, creditors and such other persons as may be specified
 to promote the growth of insolvency professional agencies for the effective resolution of
insolvency and bankruptcy processes under this code

 Functions of insolvency professional agencies

 Drafting detailed standards and codes of conduct thorough bye-laws, that are made public and
are bonding on all members
 monitoring, inspecting and investigating members on a regular basis
 malfeasance in the conduct of IP duties
 gathering information on their performance, with the over-arching objective of preventing
frivolous behavior
 adressing grievances aggrieved parties, hearing complaints against members and taking
suitable actions

14(4) INFORMATION UTILITIES

 the code envisages creation of information utility to collect, collate, authenticate and
disseminate financial information of debtors in centralized electronic databases, at all times.
 the code requires creditors to provide financial information of debtors to multiple utilities on an
ongoing basis. such information would be available to creditors, resolution professionals,
liquidators and other stakeholders in insolvency and bankruptcy proceedings.
 the purpose of is to remove information asymmetry and dependency on the debtor's
management for critical information that is needed to swiftly resolve insolvency.

 Duties /Obligations of information utility:
an information utility shall provide such services as may be specified including core services to any
person if such person complies with the terms and conditions as may be specified by regulations. for the
purposes of providing core services to any person, every information utility shall-

1. create and store financial information in a universally accessible format:

2. accept electronic submissions of financial information from persons who are under obligations
to submit financial information
3. accept, in specified form and manner, electronic submissions of financial information from
persons who intend to submit such information;
4. meet such minimum service quality standards as may be specified by regulations;
5. get the information received from various persons authenticated by all concerned parties before
storing such information;
 6. provide access to the financial information stored by it to any person who intends to access such
information in such manner as may be specified by regulations:
7. publish such statistical information as may be specified by regulations;
8. have inter-operability with other information utilities.

CONCLUSION:
Because of the Introduction of IBC, it makes the doing business in India easy after the
unification of several insolvency law. It promotes to entrepreneurship and tries to balance the
interest of the various stakeholders.
Its Introduction is really a revolutionary step as it provides the benefit to Indian capital market
and government should try to develop more its key players namely IBBI, IPAs, IPRs, and IUs.