The Insolvency and Bankruptcy Code, 2016 (Code), came into force on 28 May 2016 and consolidated several laws relating to the insolvency and bankruptcy of individuals, corporates and partnership firms. The key feature of the Code is that it allows the creditors to assess the viability of the debtor's business and formulate a resolution plan.
In case the resolution plan fails, the debtor goes into liquidation. Apart from the insolvency provisions, the new Code also provides a closure option to solvent corporates by way of voluntary liquidation. The new Code has established an institutional framework of insolvency professionals, an adjudicating system, and information utilities, which will help in facilitating timebound insolvency processes and liquidation.