Insolvency & Bankruptcy Code deals with management, insolvency and other complications of private and public limited companies. Under IBC, National Company Law Tribunal was constituted to deal with all these issues such as oppression and mismanagement, diversion of funds, removal and appointment of auditors, any hinderance in smooth running of company from any group, disputes in relation to holding of AGMs and SGMs and disputes in relation to take over and amalgamation of companies.
More so when Debt Recovery Tribunal and Securitisation Act failed to deliver the desired results especially for Banks and financial institutions, there need arises for an Act which can still act faster for the Banks and Financial Institutions who have to recover money from their respective borrower(s).
Need was also felt to take care of big projects and a via media could be found so that Banks, Financial Institutions and other creditors recover their money and yet the project is not shelved for the sake of economy and several other entities who have to recover their money from that project and for the sake of other investors who have put in their hard earned money into that project for buying a property or otherwise had invested in that project.
While earlier acts were dealing more or less with recovery, this IBC give more teeth to the creditors and has a provision for Corporate Insolvency Resolution Process and for this, this new Act has a provision for appointment of Interim Resolution Professional (IRP) so that an alternative management could be found out who can run / take over the project and the creditors could get their money back or the alternative is to find out so as to sell the assets of the project and sale proceeds could be distributed to the creditors.
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