Q. Consider the following statements regarding Insolvency and Bankruptcy code 2016
1. The code replaced all the existing laws and created a uniform procedure to resolve insolvency and bankruptcy disputes
2. The code aims to resolve insolvencies in a strict time-bound manner – the evaluation and viability determination must be completed within 180 days.
3. It has created Information utilities to keep a record of debts given by creditors along with details of repayments/ dishonor of debt.
Which of the above statements is/are correct?

[A] 1 and 2 only

[B] 2 and 3 only

[C] 1 and 3 only

[D] 1, 2 and 3

Answer: D
Notes:

About IBC 2016: 

  • The code replaced all the existing laws and created a uniform procedure to resolve insolvency and bankruptcy disputes. 
  • It allows creditors to assess the viability of a debtor as a business decision. Further, the creditors can agree with the plan for its revival or suggest for a speedy liquidation. 
  • The Code creates a new institutional framework. This framework facilitated a formal and time-bound insolvency resolution process and liquidation. The framework includes: 
  1. Insolvency Professionals: They will administer the resolution process. They also manage the assets of the debtor and provide information for creditors to assist them in decision-making. 
  2. Insolvency Professional Agencies: The insolvency professionals will be registered with insolvency professional agencies. The agencies would conduct examinations to certify the insolvency professionals and enforce a code of conduct for their performance. 
  3. Information utilities: They will keep a record of debts given by creditors along with details of repayments/ dishonor of debt. 
  4. Adjudicating authorities: They will give the approval to initiate the resolution process, appoint the insolvency professional, and approve the final decision of creditors. 
  5. National Company Law Tribunal (NCLT): It is the adjudicating authority for companies and limited liability entities 
  6. Debt Recovery Tribunal: It is the adjudicating authority for individuals and partnership firms. 
  7. Insolvency and Bankruptcy Board: The Board will regulate insolvency professionals, insolvency professional agencies and information utilities set up under the Code. 
  • The code aims to resolve insolvencies in a strict time-bound manner – the evaluation and viability determination must be completed within 180 days. 
  • Moratorium period of 180 days (extendable up to 270 days) for the Company. For startups and small companies, the resolution time period is 90 days which can be extended by 45 days. 

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