10 Years of Insolvency and Bankruptcy Code

Source: PIB
GS II: Important International institutions, agencies and fora- their structure, mandate

Overview

1. News in Brief
2. How it helps

Why in the News?

Insolvency and Bankruptcy Code (IBC) which came into force in 2016 has completed 10 years of its existence today.

News in Brief

• Code has emerged not merely as a legislative reform, but as an institutional transformation with far-reaching implications for credit markets, corporate behaviour, investor confidence, and economic efficiency.
• Till March 2026, a total of 8,987 cases has been admitted, with 7,102 had reaching closure.
• Of these closed cases, while 4,099 companies- around 58% of these closures were successfully rescued, another 3,003 cases culminated in liquidation.
• 42% of the cases that ended with resolution plans had previously been with the Board for Industrial and Financial Reconstruction.
• Code has also played a significant role in fostering credit discipline and strengthening repayment culture among borrowers.

Insolvency and Bankruptcy Code 2016

An Act to consolidate and amend the laws relating to reorganisation and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximisation of value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interests of all the stakeholders including alteration in the order of priority of payment of Government dues and to establish an Insolvency and Bankruptcy Board of India, and for matters connected therewith or incidental thereto.

Application

The provisions of this Code shall apply to

• Any company incorporated under the Companies Act, 2013 (18 of 2013) or under any previous company law
• Any other company governed by any special Act for the time being in force, except in so far as the said provisions are inconsistent with the provisions of such special Act
• Any Limited Liability Partnership incorporated under the Limited Liability Partnership Act, 2008 (6 of 2009)
• Such other body incorporated under any law for the time being in force, as the Central Government may, by notification, specify in this behalf
• Personal guarantors to corporate debtors
• Partnership firms and proprietorship firms
• Individuals, other than persons referred to in clause

Feature

• Insolvency and Bankruptcy Board of India was established under sub-section (1) of section 188.
• IBC brought together all of these different laws into a single, complete code made the insolvency process the same and consistent across all sectors.
• Time-bound approach ensures that value is preserved, delays are minimised, and businesses can be revived quickly or closed efficiently.
• Corporate Insolvency Resolution Process
  • The company defaults on debt repayment of more than ₹1 crore.
  • A creditor (financial or operational) or the debtor itself can trigger the process by applying to the National Company Law Tribunal (NCLT).
• Committee of Creditors (CoC) and Decision Making
  • It is composed mainly of financial creditors (e.g., banks).
  • It has the authority to approve or reject resolution plans.
  • Decisions are taken with a 66% voting threshold.

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