Q. Consider the following statements regarding Insolvency and Bankruptcy Code
1. National Company Law Tribunal(NCLT) is the adjudicating authority for companies and limited liability entities
2. Defaulter and the creditors cannot close the insolvency case in any condition.
3. Debt Recovery Tribunal is the adjudicating authority for individuals and partnership firms
Which of the statements given above is/are correct?

[A] 1 and 2 only

[B] 2 and 3 only

[C] 1 and 3 only

[D] 1, 2 and 3

Answer: C
Notes:
  • The Insolvency and Bankruptcy  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. 
  • National Company Law Tribunal(NCLT): It is the adjudicating authority for companies and limited liability entities  
  • Debt Recovery Tribunal: It is the adjudicating authority for individuals and partnership firms. 
  • Section 12A under the IBC: This section allows the defaulter and the creditors to close the insolvency case. With banks going in for a one-time settlement with defaulting promoters. This is being used as a loophole under the IBC 

SourceLivemint