India has managed to significantly improve its ranking in World Bank’s ease of doing business report – from 130 in 2016 to 77. A major contributor to this is the enactment and implementation of a comprehensive insolvency resolution eco-system through the Insolvency and Bankruptcy Code, 2016 (IBC). Breaking the cumbersome, inefficient, subjective, debtor-in-possession model, the IBC ushered in a simple and modern framework which provides certainty of outcome, ensures value maximization for all stakeholders through a time bound process. IBC arguably has improved the credit culture in India.

Prior to the Code, India did not have a consolidated statute governing incidents of insolvency and bankruptcy of various entities. For example, the provisions relating to the insolvency of corporations were scattered amongst laws as diverse as the Companies Act, 1956 (Companies Act), the Recovery of Debts due to Banks and Financial Institutions Act, 1993 (RDDB Act), the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) and the much-reviled Sick Industrial Companies (Special Provisions) Act, 1985 (SICA). Similarly, there were two statutes, namely, the Provincial Insolvency Act, 1920 and the Presidency Towns Insolvency Act, 1909 governing instances of individual bankruptcy.