List the key features of the Insolvency and Bankruptcy Code 2016 and its impact on recovery rates.
Subtopic: Economy · Banking & insolvency
How to structure your answer
Introduction: IBC 2016 — unified, time-bound insolvency framework; IBBI Quarterly Newsletter Q2 FY25 records ~32% recovery for financial creditors, 745+ resolutions to date.
Body: 1) Pillars — IBBI regulator, NCLT/NCLAT adjudicator, IPs, IUs. 2) CIRP timeline — 330 days (incl. litigation). 3) Outcomes — 28,800+ CIRPs admitted, ₹3.55 lakh crore realised. 4) Pre-pack for MSMEs (Aug 2021).
Way forward: Operationalise Cross-Border Insolvency (UNCITRAL Model Law); group insolvency rules; NCLT capacity augmentation.
Written within the word limit
128 words · target 150 words · 9 min
Introduction: The Insolvency and Bankruptcy Code 2016, notified 28 May 2016, has resolved ₹3.55 lakh crore through 1,068 successful plans by March 2025 (IBBI), with creditor recovery at 32.1% — three times the pre-IBC SARFAESI-DRT recovery of 11%.
Body: Key features. (i) Single consolidated code replacing SICA and Companies Act winding-up. (ii) Time-bound resolution — 180 days extendable to 330 (Essar Steel judgment 2019). (iii) Creditor-in-control regime through the Committee of Creditors, voting by financial-creditor share, displacing promoter control. (iv) Insolvency Professionals and Information Utilities under IBBI. (v) Section 29A bars wilful defaulters. (vi) Cross-border insolvency under Model Law (Bill pending). Impact: average 716-day resolution, liquidation 47% versus 16% resolution; the 'going-concern' principle has processed ₹10 lakh crore in claims.
Way forward: The Ministry of Corporate Affairs should table the Cross-Border Insolvency Bill by Q2 FY27 and operationalise pre-pack resolution under IBC Chapter III-A.
What an examiner expects to see
- IBC enacted 28 May 2016
- Average recovery ~32% (IBBI Q2 FY25)
- CIRP cap 330 days
- Pre-pack for MSMEs since Aug 2021
- Section 29A bars defaulting promoters
- Cross-Border Insolvency draft 2023
Concrete cases, schemes and judgments
- Essar Steel resolution 2019
- Bhushan Steel resolution 2018
- DHFL — first NBFC resolution
- Jet Airways resolution