The Insolvency and Bankruptcy Code, 2016
Parliament of India
  • 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.
CitationAct No. 31 of 2016
Territorial extentIndia
Enacted byLok Sabha
Passed5 May 2016
Enacted byRajya Sabha
Passed11 May 2016
Assented to28 May 2016
Commenced28 May 2016
Legislative history
Bill introduced in the Lok SabhaThe Insolvency and Bankruptcy Code, 2016
Bill citationBill No. 349 of 2015
Bill published on21 December 2015
Introduced byArun Jaitley
Committee reportReport of the Joint Committee
Date passed by conference committee28 April 2016
Status: In force

The Insolvency and Bankruptcy Code, 2016 (IBC) is the bankruptcy law of India which seeks to consolidate the existing framework by creating a single law for insolvency and bankruptcy. The Insolvency and Bankruptcy Code, 2015 was introduced in Lok Sabha in December 2015. It was passed by Lok Sabha on 5 May 2016 and by Rajya Sabha on 11 May 2016.[1] The Code received the assent of the President of India on 28 May 2016.[2] Certain provisions of the Act have come into force from 5 August and 19 August 2016.[3] The bankruptcy code is a one stop solution for resolving insolvencies which previously was a long process that did not offer an economically viable arrangement. The code aims to protect the interests of small investors and make the process of doing business less cumbersome.[4] The IBC has 255 sections and 11 Schedules.


The Insolvency and Bankruptcy Code, 2015 was introduced in the Lok Sabha on 21 December 2015 by former Finance Minister, Late Arun Jaitley.[5] The Code was referred to a Joint Committee of Parliament on 23 December 2015, and recommended by the Committee on 28 April 2016.[6] The Code was passed by the Lok Sabha and the Rajya Sabha on 5 May and 11 May 2016 respectively. Subsequently, it received assent from President Pranab Mukherjee and was notified in The Gazette of India on 28 May 2016.[7]

The Code was passed by parliament in May 2016 and became effective in December 2016.[8] Section 243 of this Code repeals the Presidency Towns Insolvency Act, 1909 and Provincial Insolvency Act, 1920.[9]

The first insolvency resolution order under this code was passed by National Company Law Tribunal (NCLT) in the case of Synergies-Dooray Automotive Ltd on 14 August 2017 and the second resolution plan was submitted in the case of Prowess International Private Limited. The plea for insolvency was submitted by company on 23 January 2017. The resolution plan was submitted to NCLT within a period of 180 days as required by the code, and the approval for the same was received on 2 August 2017 from the tribunal. The final order was uploaded on 14 August 2017 on the NCLT website.[8]

Key features

Insolvency Resolution : The Code outlines separate insolvency resolution processes for individuals, companies and partnership firms. The process may be initiated by either the debtor or the creditors. A maximum time limit, for completion of the insolvency resolution process, has been set for corporates and individuals. For companies, the process will have to be completed in 180 days, which may be extended by 90 days, if a majority of the creditors agree. For start ups (other than partnership firms), small companies and other companies (with asset less than Rs. 1 crore), resolution process would be completed within 90 days of initiation of request which may be extended by 45 days.[10]

The Insolvency and Bankruptcy Code (Amendment) Act, 2019 has increased the mandatory upper Time limit of 330 days including time spent in legal process to complete resolution process.[11]

Insolvency regulator: The Code establishes the Insolvency and Bankruptcy Board of India, to oversee the insolvency proceedings in the country and regulate the entities registered under it. The Board will have 10 members, including representatives from the Ministries of Finance and Law, and the Reserve Bank of India.[9]

Insolvency professionals: The insolvency process will be managed by licensed professionals. These professionals will also control the assets of the debtor during the insolvency process.[9]

Bankruptcy and Insolvency Adjudicator: The Code proposes two separate tribunals to oversee the process of insolvency resolution, for individuals and companies: (i) the National Company Law Tribunal for Companies and Limited Liability Partnership firms; and (ii) the Debt Recovery Tribunal for individuals and partnerships.[citation needed]


A plea for insolvency is submitted to the adjudicating authority (NCLT in case of corporate debtors) by financial or operation creditors or the corporate debtor itself. The maximum time allowed to either accept or reject the plea is 14 days. If the plea is accepted, the tribunal has to appoint an Interim Resolution Professional (IRP) to draft a resolution plan within 180 days (extendable by 90 days). following which the Corporate Insolvency Resolution process is initiated by the court. For the said period, the board of directors of the company stands suspended, and the promoters do not have a say in the management of the company. The IRP, if required, can seek the support of the company's management for day-to-day operations. If the CIRP fails in reviving the company the liquidation process is initiated.

Is the Insolvency and Bankruptcy Code a remedy to all Banking issues?

Insolvency and bankruptcy code bill was introduced in the Indian parliament by the NDA government in 2015 but got final clearance in May 2016 parliament session. It was believed that this bill will resolve all the banking issues present in the economy. The main reason to introduce this bill was to fasten up the long insolvency process which it did. After this bill, the insolvency process for the company is 180 days with an extension of 90 days, and for startups and small companies, it is 90 days with an extension of 45 days. The question is will it resolve all banking issues and the answer is no, as India's banking industry is going through a very difficult phase. Banks are merging up due to bad loans and all this hustle can't be simplified with this bill. IBC will only bad debts that are disclosed. Undisclosed bad loans or bad loans that get disclosed after the victim absconds remain untouched. And there are many incidents in past years in which creditors flew away from the country after being unable to pay off the loan that they took. But, the IBC did improve the economic system and the impact can be seen - the economy is clearly stabler. [8][12]

Amendments made by the Insolvency and Bankruptcy Code, 2016 to other Acts

The First Schedule amends the Indian Partnership Act, 1932.

The Second Schedule amends the Central Excise Act, 1944.

The Third Schedule amends the Income-tax Act, 1961.

The Fourth Schedule amends the Customs Act, 1962.

The Fifth Schedule amends the Recovery of Debts due to Banks and Financial Institutions Act, 1993.

The Sixth Schedule amends the Finance Act, 1994.

The Seventh Schedule amends the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.

The Eighth Schedule amends the Sick Industrial Companies (Special Provisions) Repeal Act, 2003.

The Ninth Schedule amends the Payment and Settlement Systems Act, 2007.

The Tenth Schedule amends the Limited Liability Partnership Act, 2008.

The Eleventh Schedule amends the Companies Act, 2013.

Amendments to the Insolvency and Bankruptcy Code

The Act prohibits certain persons from submitting a resolution plan in case of defaults. These include: (i) wilful defaulters, (ii) promoters or management of the company if it has an outstanding non-performing debt for over a year, and (iii) disqualified directors, among others. Further, it bars the sale of property of a defaulter to such persons during liquidation.[13]

High-value cases

Company Debt Date of referral to NCLT Date of Resolution Recovery Amount Notes Reference
Essar Steel 490 billion (US$6.9 billion) June 2017 Dec 2019 42,000 crore (US$5.9 billion) SC delivered its final verdict and cleared way for Arcelor Mittal India and Nippon Steel Japan to form a joint venture to complete the takeover by end of Dec 2019. [16][17]
Bhushan Steel 440 billion (US$6.2 billion) 26 July 2017 May 2018 36,400 crore (equivalent to 390 billion or US$5.5 billion in 2019) Tata Steel, through its wholly owned subsidiary Bamnipal Steel Ltd (BNPL), has acquired 72.65 per cent controlling stake in Bhushan Steel Ltd (BSL) for around Rs 36,400 crore. The company was selected as the highest bidder in March 2018 to buy a controlling stake in Bhushan Steel, as part of bankruptcy proceedings. [18][16][19][20]
Electrosteel 130 billion (US$1.8 billion) July 2017 Acquired by Vedanta India Ltd. [16]
Amtek Auto 12,700 crore (equivalent to 140 billion or US$2.0 billion in 2019) July 2017 July 2020 2,700 crore (US$380 million) NCLT approved a bid by US-based hedge fund Deccan Value Investors LP (DVIL).

Lenders agreed to a 80% haircut and the amount is payable over next seven years.

Bhushan Power & Steel 492 billion (US$6.9 billion) June 2017 March 2021 19,350 crore (US$2.7 billion) After four years of litigation involving ED & previous owners, CoC has voted in favor of JSW Steel. The deal will be completed by end of March 2021. [22]
Alok Industries 290 billion (US$4.1 billion) June 2017 March 2019 5,050 crore (US$710 million) Joint bid by Reliance Industries Limited (RIL) and JM Financial Asset Reconstruction Co was approved by NCLT Ahmedabad last year. [16][23]
Lanco Infra 450 billion (US$6.3 billion) August 2017 Ordered for liquidation. [16]
Jet Airways 146 billion (US$2.0 billion) June 2019 CoC has accepted a ₹1,000-crore bid by a consortium of UK-based Kalrock Capital and UAE-based entrepreneur Murari Lal Jalan on Oct 17, 2020. [24]
Reliance Communications 33,000 crore (US$4.6 billion) June 2019 Jan 2020 23,000 crore (US$3.2 billion) Reliance Jio will get the tower and fiber assets of Reliance Infratel Ltd for Rs 4,700 crore, UV Asset Reconstruction Co Ltd (UVARC) will get assets of RCom and Reliance Telecom (spectrum) for Rs 14,000 crore. [25]
Dewan Housing Finance Ltd 1,000 billion (US$14 billion) Nov 29, 2019 Jan 2021 33% of dues over 5 years First financial company to be referred to NCLT under IBC by RBI. CoC has approved the bid by Piramal for Rs. 38,000 Cr. [26][27]


  1. ^ "Lok Sabha passes bill to fast track debt recovery", The Economic Times, 2 August 2016
  2. ^ "Insolvency and Bankruptcy Code" (PDF). Gazette of India. Retrieved 31 May 2016.
  3. ^ "Notification" (PDF). E-Gazette. Gazette of India. Retrieved 22 August 2016.
  4. ^ "The Bankruptcy Code for India – A step to ease 'Doing Business'?". Centre for Public Policy Research (CPPR). 16 December 2015. Retrieved 7 December 2017.
  5. ^ "PRS | Bill Track | The Insolvency and Bankruptcy Code, 2015". Retrieved 20 February 2018.
  6. ^ "Joint Committee Report Summary" (PDF). PRS Legislative Research. Retrieved 20 February 2018.
  7. ^
  8. ^ a b c "NCLT okays first insolvency resolution scheme under IBC", Live Mint, 16 August 2017
  9. ^ a b c "Legislative Brief of the Code" (PDF). PRS India. Retrieved 18 August 2016.
  10. ^ "India Overhauls Century-Old Bankruptcy Laws in Win for Modi", Bloomberg, 11 May 2016
  11. ^
  12. ^
  13. ^ "PRS | Bill Track | The Insolvency and Bankruptcy Code (Amendment) Bill, 2017". Retrieved 20 February 2018.
  14. ^ "IBC changes: Want to drag realtor to NCLT? Draw in 99 homebuyers". Financial Express.
  15. ^ "Govt clears more amendments to Insolvency code; to ring fence successful bidders from risks". The Financial Express. 11 December 2019. Retrieved 12 December 2019.
  16. ^ a b c d e "Why resolution of these 10 NPA accounts will be a crucial test for IBC", The Economic Times, 14 March 2018
  17. ^ "Essar Steel: Finally bankers expect money next month". The Financial Express. 28 November 2019. Retrieved 1 December 2019.
  18. ^ "L&T moves NCLT to be declared as secured creditor in Bhushan Steel insolvency", Live Mint, 8 March 2018
  19. ^ "Tata Steel subsidiary acquires 72% stake in Bhushan Steel". 19 May 2018. Retrieved 1 December 2019.
  20. ^ "Bhushan Steel Acquisition By Tata Steel: Piyush Goyal Calls It Historic Breakthrough". Retrieved 1 December 2019.
  21. ^ Noronha, Gaurav (10 July 2020). "NCLT approves Amtek Auto resolution plan". The Economic Times. Retrieved 9 July 2020.
  22. ^ Lele, Ishita Ayan Dutt & Abhijit (5 March 2021). "Lenders with majority vote for closing Bhushan Power deal with JSW Steel". Business Standard India. Retrieved 5 March 2021.
  23. ^ "Reliance Industries gets NCLT approval for Alok Industries - Times of India". The Times of India. Retrieved 30 December 2019.
  24. ^ Kundu, Shayan Ghosh,Rhik (19 October 2020). "Jet will need more capital post-rescue". mint. Retrieved 19 October 2020.
  25. ^ "Lenders approve Rs 23,000 crore resolution plan for Reliance Communications". The New Indian Express. Retrieved 6 March 2020.
  26. ^ Reuters, Contributor Chris Thomas. "India cenbank moves to begin bankruptcy proceedings against DHFL". Retrieved 1 December 2019.
  27. ^ Chatterjee, Dev (17 January 2021). "Banks to get 33% of dues spread over five years from DHFL resolution". Business Standard India. Retrieved 17 January 2021.