IBC (Insolvency and Bankruptcy Code, 2016)

IBC, 2016 — Preamble

India's comprehensive insolvency legislation that consolidates and amends laws relating to reorganisation and insolvency resolution of corporate persons, partnership firms, and individuals. Provides time-bound CIRP, promotes entrepreneurship, availability of credit, and balances interests of all stakeholders.

In practice, the IBC is the recovery tool a creditor reaches for when the goal is the company itself rather than a single charged asset. Because admission of a petition triggers a moratorium and hands control to a resolution professional and the Committee of Creditors, a financial creditor uses the Code's time-bound CIRP to extract a resolution plan or, failing that, liquidation — a different lever from SARFAESI's asset-by-asset enforcement. Choosing the forum matters: a secured creditor with strong collateral may prefer SARFAESI or DRT, while a creditor facing a borrower with scattered assets and going-concern value may prefer insolvency. The classic error is filing insolvency to apply pressure where there is no genuine "default" the NCLT will admit, or ignoring that once admitted, the moratorium freezes the creditor's own SARFAESI and DRT remedies. Creditors weigh whether resolution, liquidation or direct enforcement best fits the matter before invoking the Code.