Study of IBC and its impact on India’s macro environment

 uthor; Prateek Gupta

Abstract

IBC is the second most important change to the Indian legal system. It's because IBC not only makes India more powerful in the legal field, but it also gives India a new economic identity and recognition on the global stage. India's bankruptcy law is called the Insolvency and Bankruptcy Code, 2016.

tries to make things easier by making insolvency and bankruptcy governed by the same law. The paper looks at the code's different parts and how the law applies to them. The purpose of the study is to describe. In keeping with this, the paper also talks about how the Insolvency and Bankruptcy Code has affected India's macro environment. IBC is the second most important change to the Indian legal system. It's because IBC not only makes India more powerful in the legal field, but it also gives India a new economic identity and recognition on the global stage. The Insolvency and Bankruptcy Code, 2016, is India's bankruptcy law. Its goal is to make insolvency and bankruptcy easier to understand by putting them under a single law. The paper looks at the code's different parts and how the law applies to them. The purpose of the study is to describe. In keeping with this, the paper also talks about how the Insolvency and Bankruptcy Code has affected India's macro environment.

i. Introduction

Any nation's legal system is always crucial to its ability to thrive economically. If the nation's legal system is well-designed and well implemented, the nation's international standing will undoubtedly be solid.

The implementation of the IBC is India's second-most important legal change after the Goods and Services Tax.

It's because the IBC gives India a new sense of identity and economic respect on a global scale while also making India a force to be reckoned with in the legal arena. This code has a good effect on all fronts, including the economic and non-economic ones. Since the code has been approved, India's economic standing has improved significantly due to increased FDI, more M&A transactions, higher rankings for ease of doing business, etc.

One of India's most significant economic changes, the Insolvency and Bankruptcy Code, 2016 is thought to have had a substantial impact on credit risk management. IBC, 2016 unifies and updates the Indian law governing the insolvency resolution process. Lenders, financial institutions, corporations, and professionals all seem to be affected by the Code's introduction, offering them the opportunity to work as resolution professionals. Insolvent entities are intended to be wound up more quickly, distressed entities are intended to be saved, and investors are intended to have an easier exit.

ii. OBJECTIVES OF THE STUDY

The study has been undertaken to contribute towards the following broad objectives:

1. To study the distinguish features and regulatory framework of the Insolvency and Bankruptcy Code, 2016.

2. To find out the impact of Insolvency and Bankruptcy code on macro environment of India.

iii. Need of the study

This author's main goal is to explore the 2016 Insolvency and Bankruptcy Code's key sections. This paper highlights diverse stakeholders' points of view, difficulties encountered, and multiple benefits of the reform's implementation in India. This report also demonstrates how IBC is very creative in enhancing India's reputation on the international stage.

Insolvency and bankruptcy code ,2016

A. Background

The legal and administrative framework in India for handling debt defaults is still not up to par with international norms. The recovery actions of the creditors have not been successful in obtaining the desired results, whether through the Contract Act or through the special laws such as the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act of 2002 and the Recovery of Debts Due to Banks and Financial Institutions Act of 1993. Similarly, the Sick Industrial Companies (Special Provisions) Act of 1985 and the provisions of the Companies Act of 1956/Companies Act of 2013 governing winding up have not been able to assist in either the recovery of loans or the restructuring of businesses. The Presidential Towns Insolvency Act of 1909 and the Provincial Insolvency Act of 1920 are two nearly 100-year-old pieces of legislation that address individual insolvency. Because of this, the lenders' faith has gradually declined.

The "Insolvency and Bankruptcy Code, 2016" is regarded as the most significant economic change after the GST. The groundbreaking Insolvency and Bankruptcy Code 2016 unifies the legal framework governing individual reorganisations and liquidations (including incorporated and unincorporated entities).

By combining and amending the laws relating to the timely reorganisation and insolvency resolution of corporations, partnership firms, and individuals, as well as for the maximisation of the value of such persons' assets, and matters related to or incidental thereto, the new law seeks to encourage entrepreneurship, increase credit availability, and strike a balance between the interests of all stakeholders. It seeks to harmonise the regulations governing company and limited liability company insolvency.

liability entities (such as limited liability partnerships and other companies with limited liability), partnerships with unlimited liability, and individuals, who are now covered by multiple pieces of legislation, into a single piece of legislation. Greater legal clarity will result from this consolidation, which will also make it easier to apply consistent, logical rules to all stakeholders who may be impacted by a company failing or being unable to pay its debt.

B. Earlier Insolvency and Bankruptcy Regimes in India:

 • Individual Insolvency: Presidency Towns Insolvency Act, 1909 (for inhabitants of Mumbai, Kolkata, and Chennai) and Provincial Insolvency Act, 1920 (for other citizens) have traditionally governed and administered this; both are century-old pieces of legislation that have since outlived their usefulness.

Corporate and Firm Insolvency: Up to this point, India has always been governed and regulated by numerous, occasionally conflicting laws, as follows:

• INDIAN PARTNERSHIP ACT, 1932

• COMPANIES ACT, 1956

• SICK INDUSTRIAL COMPANIES ACT, 1985

• RECOVERY OF DEBTS DUE TO BANKS AND FINANCIAL INSTITUTIONS ACT, 1993

• SRFAESI ACT, 2002

• COMPANIES ACT, 2013

The aforementioned rules had numerous flaws, conflicting clauses, and no time resolution clauses or provisions that empowered operational creditors or encouraged entrepreneurship. These aforementioned laws led to the introduction of the Insolvency and Bankruptcy Code.

C. Distinguish Features of the Code: The code has the following salient characteristics. encompassing law The Insolvency Code is a comprehensive piece of legislation that covers all aspects of insolvency and bankruptcy for businesses, partnerships, limited liability companies, and private people.

no overlap of laws: The code has abandoned the numerous laws governing the process of debt recovery, insolvency, and liquidation in favour of a single framework that provides access to all debt recovery and insolvency-related relief.

Low time resolution: The code stipulates specified time limits for the resolution of corporate and individual insolvency. The procedure must be finished within 180 days, however this deadline may be extended by a maximum of 90 days.

There is also a mechanism for fast track resolution of corporate insolvency within 90 days for a quicker process. The borrowers' assets may be sold to pay creditors if insolvency cannot be settled.

One window clearance: It has been written to give the applicant a one-window clearance, allowing him to receive the necessary relief from the same authority, as opposed to the previous legal position, which required that, in the event that the company is unable to be revived, a separate legal process involving separate authorities be started in order to wind up and liquidate the business.

Process clarity: The code stipulates a straightforward insolvency and bankruptcy procedure. The code's framework is quite detailed, and the entire insolvency resolution process must be completed within 180 days.

One chain of authority: The code only recognises one chain of authority. The amount of litigation is decreased because it forbids civil courts from interfering with an application that is currently before an adjudicating authority. Both the Debt Recovery Tribunal (DRT) and the National Company Law Tribunal (NCLT) will make decisions regarding insolvency resolution for businesses and individuals, respectively.

putting the needs of workers and employees first: Additionally, the code safeguards workers' and employees' interests. The provident fund, pension fund, and gratuity fund contributions that are owed by employees are excluded from the debtor's assets during liquidation.

iv. a new regulatory body It calls for the creation of a new regulatory body called the "Insolvency and Bankruptcy Board of India" to oversee professionals, organisations, and information services involved in resolving the insolvencies of businesses, partnership firms, and individuals. The board is already operational and has been established.

v. Encourage entrepreneurship: The code encourages entrepreneurship in India due to its quick resolution time and revival mechanism.

V. REGULATORY FRAMEWORK OF INSOLVENCY AND BANKRUPTCY CODE, 2016

The Insolvency and Bankruptcy Code of 2016 is expected to be very important to the country's economy. The law is meant to cover the insolvencies of "corporate persons," which includes companies, limited liability partnerships, and any other entity with limited liability, as well as individuals, firms, and other types of organisations. Even though the law is a code for companies that aren't making money, it also covers the liquidation of companies that are making money. As a result, it is a complete code for liquidating companies. The Code is split into five parts, with 255 sections and 11 schedules in each (Shown in figure 1). The code calls for the creation of a regulator who will keep an eye on these organisations and perform legislative, executive, and quasi-judicial tasks related to insolvency professionals, insolvency professional agencies, and information utilities.

CORPORATE INSOLVENCY RESOLUTION PROCESS

Corporate insolvency resolution is the process by which the debtor's creditors figure out if the debtor's business can be saved and brought back to life. If a plan to get out of debt fails or if the debtor's creditors decide that the business can't be run profitably and should be shut down, the debtor will be insolvent. The debtor will go through the liquidation process, and the liquidator will get the debtor's assets and give them to the right people.

The insolvency resolution process gives lenders a way to deal with the troubled situation of the corporate debtor as a whole. This is a big change from the way the law works now, where the debtor is mostly responsible for starting the reorganisation process and lenders can take different steps for recovery, security enforcement, and debt restructuring.

The rules for "The Corporate Insolvency Resolution Process" are as follows:

i. The corporate insolvency resolution process can be started by submitting a request to the NCLT:

By a financial creditor, either by itself or with another financial creditor. This means a creditor for the financial facility, which is a broad term that includes financial lease and hire purchase transactions, which are treated as financial transactions under applicable accounting standards.

By an operational creditor, which is a creditor other than a financial creditor or a person who owes an operational debt. By the corporate debtor himself, which is the company itself.

ii. The event of "default": "default" means that a debt is not paid when all or part of an instalment is due and the debtor does not pay it. The debtor has to pay at least Rs 1 lakh if they don't pay on time.

iii. Steps to take after an application is accepted: After an application has been accepted by the judge, the following steps will make up the insolvency resolution process:

• Declare a moratorium period. This will stop things like starting or continuing lawsuits or legal proceedings against the corporate debtor, including the execution of any judgement, decree, or order; selling or giving away the corporate debtor's assets or rights or interests in them; and taking action to foreclose, recover, or enforce any security interest created by the corporate debtor, among other things.

One of the most important parts of bankruptcy law is the moratorium. During this time, creditors can't take any action against the debtor while the bankruptcy court decides if the debtor can be rehabilitated. In the section of the Companies Act 2013 about "Sick Companies," there is no automatic moratorium. Instead, the NCLT has the power to grant a moratorium for up to 120 days.

The Code talks about a mandatory moratorium, which is almost the same thing as the automatic moratorium that comes with global bankruptcy laws. The ban will stay in place until the resolution process is over, which will take 180 days, as was already said. But if the creditors' committee decides in the meantime that the entity should be liquidated, the moratorium will no longer be in place.

The SARFAESI Act makes it clear that the moratorium before liquidation also applies to the enforcement of security interests. A moratorium is also in place when the deciding body has given an order for liquidation.

• Appointment of an interim insolvency practitioner (IP) and public announcement of the start of the insolvency resolution process and call for claims. Interim IP, among other things, takes over the management and powers of the corporate debtor's board of directors. It also gathers all information about the corporate debtor's assets, finances, and operations in order to figure out its financial situation. It also collects all claims from creditors and forms a Committee of Creditors ("COC").

After that, the Committee of Creditors either decides to make the interim IP the IP or replaces the interim IP with a new IP according to the rules. This IP will be chosen as the person in charge of ending the process.

The IP will then take over the management and assets of the company in debt, and it will be able to use the wide range of powers that the Code gives it. It will make a "memorandum of information" about the corporate debtor. The resolution applicant will use this information to make a "resolution plan." IP will look over the plan for resolving the problem and give it to the Committee of Creditors.

The plan that has been approved by the Committee of Creditors will be sent to the adjudicating authority for final approval. Only when the adjudicating authority gives its final approval will the resolution plan be binding on all parties, and the corporate debtor's insolvency resolution process will begin. If the plan is turned down by the authority making the decision, the corporate debtor will be put out of business.

• A schedule for the whole thing: Figure 2 shows that after the adjudicating authority accepts an application, a Resolution Professional is hired to handle the whole corporate insolvency resolution process and manage the corporate debtor during the time. The resolution professional will make an information memorandum so that the resolution applicant can make a plan. A "resolution applicant" is anyone who sends a "resolution plan" to the "resolution professional." Once the "resolution professional" gets the "resolution plan," it will be sent to the "creditors' committee" for approval. Once a resolution is passed, the creditors' committee has to decide how the company will be restructured. This could involve a new plan for the company to pay back its debts or the sale of the company's assets. During the resolution process, if no decision is made, the debtor's assets will be sold to pay back the debt.

The plan to solve the problem will be sent to NCLT for final approval. Once approved, it will be put into action.

▪ CORPORATE LIQUIDATION PROCESS

The Corporate Liquidation Procedure is shown in figure 3 as a diagram. The process starts with the appointment of a Liquidator. The process starts with a "winding up order," which means that the assets are sold and the money is split among creditors and other interested parties. As shown in the figure, Section 14 of the IBC says that no suit can be brought against the Corporate Debtor. Depending on the priority, a security creditor may be able to get money from the sale of assets by using the secured assets to get them. As long as there is a deficit, the creditor's claims will come after those of the unsecured creditors. All of the giving out must follow the rules set out in the Code. Once all of the Corporate Debtor's assets have been sold, the NCLT makes an order to dissolve the company.

VI. IMPACT OF IBC ON MACRO ENVIRONMENT OF INDIA:

The main reason the Insolvency and Bankruptcy Code was made was to help the Indian Banking System make up for the losses caused by NPAs. Even though it is unlikely to be able to bring back the money that is already stuck in stressed assets in the form of NPAs, it can help a lot to stop the crisis as a whole. IBC has had an effect on the law, but it has also helped India reach its macroeconomic goals and give it a strong position on the world stage. The Insolvency and Bankruptcy Code (IBC) of India, 2016, has had some of the following bigger effects:

Non-Economic Effects

Easy Exit and Reduced

Duration of Liquidation

Cross-Border Insolvency

Right to Foreign

Operational Creditors

Relation with Trading

Blocks

Economic Effects

Management of NPA’s

Increase in FDI and FIIs

Increase in M & A Deals

Improved ‘Ease of Doing

Business’ Ranking

Development of Credit

Market of India

Reduction of Crony

Capitalism in India

Taking care of NPAs: The Indian Banking Structure is currently dealing with the long-term problem of rising NPAs. Since then, managing this problem has been one of the banks' main priorities. In this case, the Insolvency and Bankruptcy Code could be a big step toward easing the stress that is building up on the Indian Banking System because of NPAs. Corporate Affairs Secretary Injeti Srinivas says that the Insolvency and Bankruptcy Code (IBC) has helped resolve stressed assets worth Rs 3 lakh crore in a direct or indirect way and has closed about half (4,400) of the 9,000 or so cases it has received in the last two years, including those transferred from the Board for Industrial and Financial Reconstruction (BIFR).

More FDI- The amount of FDI has grown by a large amount. India's FDI was 34298 US$ Million in 2012-13. After the code was passed, it went up to 61463 US$ Million in 2017-18, which is a growth of about 80%.

There are many reasons for this growth, but one of them is the IBC. This is because the Code gives a very clear process for Insolvency and Bankruptcy and gives employees, workers, and creditors priority. It also gives India a strong legal framework.

• More M&A deals. According to Mint, the number of mergers and acquisitions (M&A) in the country has grown exponentially, and deals worth $14.3 billion have been done in the last two years. This rush of mergers and acquisitions has been blamed on the Insolvency and Bankruptcy of India Act (IBC).

India's Insolvency and Bankruptcy Code (IBC) has sped up distressed mergers and acquisitions (M&As) in the country, with deals involving Bhushan Steels ($7.4 billion), Reliance Communications ($3.7 billion), and Fortis Healthcare ($1.2 billion) leading the way. In 2018, transactions involving Indian companies reached $104.5 billion.

• Improved "Ease of Doing Business" Ranking: Along with the introduction and implementation of Goods and Services Tax, which is seen as one of the biggest economic reforms in the country, the Insolvency and Bankruptcy Code is next. These have had a big impact on India's "World Bank's Ease of Doing Business (EODB)" ranking, which has gone up 23 spots in the last two years and is now 77th out of 190 global economies. India is also on the World Bank's list of the "top 10 improvers" for the second year in a row. It is number five, while China is number three.

• The growth of India's credit market- Information Utilities was set up by the code (IUs). It is a central database of information about borrowers' finances and credit, and it would verify the information and claims of creditors as they relate to borrowers. So, when IUs was set up, the Indian credit market grew and became more efficient.

• Stopping "crony capitalism" in India:

CEO of NitiAayog Amitabh Kant said this. "IBC will make sure that crony capitalism goes away for good. Before, you could borrow money and not pay it back. Now, you'll lose your business if you don't pay." (htt1) Crony capitalism is an economic system in which businesses do well not because they take risks but because they get money back from the government or other powerful people.

With the introduction of IBC and its stricter laws, it has become very hard for promoters, whether they are honest or not, to regain control of their companies after they have gone bankrupt or to overleverage their balance sheets. The new law says that people must perform or die.

• Easy to leave and shorter time for liquidation: According to data from the World Bank, it takes India much longer to solve insolvency problems than it does in other developed countries (An average of four years). With the help of the Insolvency and Bankruptcy Code, it is now easier for businesses to leave or close (180+90 days resolve-or-liquidate measure), which wasn't the case before in the Indian Corporate Structure (on an average of 3-4 years). This would help India get more business from people outside of the country. It would also cause India to come up with more new ideas.

• Cross-Border Insolvency-Cross-Border Issues is about Indian companies that have claims against global companies that have gone bankrupt, or vice versa. Due to the complexity of the problem, the IBC has been trying to combine some of the best Cross-Border Insolvency efforts from around the world. However, these efforts are not enough to deal with the default cases in an effective way. But in a situation where domestic bankruptcy laws have just been changed, it is best to take things one step at a time. A draught bill is being made, and if everything goes well, it should be passed soon.

• Operational creditors have the right to file a lawsuit against the default. In the past, there was no law that stopped operational creditors from doing so, but the code says that operational creditors (both domestic and international) have the right to do so. So, the code gives rights to foreign creditors, which will help India and other countries do business better.

• Relationships with Trading Blocks: If a country's legal system is strong, well-organized, and suitable for other countries, then it will have good relationships with trading blocs like SAARC, ASEAN, EU, NAFTA, etc. Because IBC is the only code that meets all of the above requirements, we can say that it will improve India's relationships with the trading blocs.

CORPORATE INSOLVENCY RESOLUTION PROCESS

Corporate insolvency resolution is the process by which the debtor's creditors figure out if the debtor's business can be saved and brought back to life. If a plan to get out of debt fails or if the debtor's creditors decide that the business can't be run profitably and should be shut down, the debtor will be insolvent. The debtor will go through the liquidation process, and the liquidator will get the debtor's assets and give them to the right people.

The insolvency resolution process gives lenders a way to deal with the troubled situation of the corporate debtor as a whole. This is a big change from the way the law works now, where the debtor is mostly responsible for starting the reorganisation process and lenders can take different steps for recovery, security enforcement, and debt restructuring.

The rules for "The Corporate Insolvency Resolution Process" are as follows:

i. The corporate insolvency resolution process can be started by submitting a request to the NCLT:

By a financial creditor, either by itself or with another financial creditor. This means a creditor for the financial facility, which is a broad term that includes financial lease and hire purchase transactions, which are treated as financial transactions under applicable accounting standards.

By an operational creditor, which is a creditor other than a financial creditor or a person who owes an operational debt. By the corporate debtor himself, which is the company itself.

ii. The event of "default": "default" means that a debt is not paid when all or part of an instalment is due and the debtor does not pay it. The debtor has to pay at least Rs 1 lakh if they don't pay on time.

iii. Steps to take after an application is accepted: After an application has been accepted by the judge, the following steps will make up the insolvency resolution process:

• Declare a moratorium period. This will stop things like starting or continuing lawsuits or legal proceedings against the corporate debtor, including the execution of any judgement, decree, or order; selling or giving away the corporate debtor's assets or rights or interests in them; and taking action to foreclose, recover, or enforce any security interest created by the corporate debtor, among other things.

One of the most important parts of bankruptcy law is the moratorium. During this time, creditors can't take any action against the debtor while the bankruptcy court decides if the debtor can be rehabilitated. In the section of the Companies Act 2013 about "Sick Companies," there is no automatic moratorium. Instead, the NCLT has the power to grant a moratorium for up to 120 days.

The Code talks about a mandatory moratorium, which is almost the same thing as the automatic moratorium that comes with global bankruptcy laws. The ban will stay in place until the resolution process is over, which will take 180 days, as was already said. But if the creditors' committee decides in the meantime that the entity should be liquidated, the moratorium will no longer be in place.

The SARFAESI Act makes it clear that the moratorium before liquidation also applies to the enforcement of security interests. A moratorium is also in place when the deciding body has given an order for liquidation.

• Appointment of an interim insolvency practitioner (IP) and public announcement of the start of the insolvency resolution process and call for claims. Interim IP, among other things, takes over the management and powers of the corporate debtor's board of directors. It also gathers all information about the corporate debtor's assets, finances, and operations in order to figure out its financial situation. It also collects all claims from creditors and forms a Committee of Creditors ("COC").

After that, the Committee of Creditors either decides to make the interim IP the IP or replaces the interim IP with a new IP according to the rules. This IP will be chosen as the person in charge of ending the process.

The IP will then take over the management and assets of the company in debt, and it will be able to use the wide range of powers that the Code gives it. It will make a "memorandum of information" about the corporate debtor. The resolution applicant will use this information to make a "resolution plan." IP will look over the plan for resolving the problem and give it to the Committee of Creditors.

The plan that has been approved by the Committee of Creditors will be sent to the adjudicating authority for final approval. Only when the adjudicating authority gives its final approval will the resolution plan be binding on all parties, and the corporate debtor's insolvency resolution process will begin. If the plan is turned down by the authority making the decision, the corporate debtor will be put out of business.

• A schedule for the whole thing: Figure 2 shows that after the adjudicating authority accepts an application, a Resolution Professional is hired to handle the whole corporate insolvency resolution process and manage the corporate debtor during the time. The resolution professional will make an information memorandum so that the resolution applicant can make a plan. A "resolution applicant" is anyone who sends a "resolution plan" to the "resolution professional." Once the "resolution professional" gets the "resolution plan," it will be sent to the "creditors' committee" for approval. Once a resolution is passed, the creditors' committee has to decide how the company will be restructured. This could involve a new plan for the company to pay back its debts or the sale of the company's assets. During the resolution process, if no decision is made, the debtor's assets will be sold to pay back the debt.

The plan to solve the problem will be sent to NCLT for final approval. Once approved, it will be put into action.

▪ CORPORATE LIQUIDATION PROCESS

The Corporate Liquidation Procedure is shown in figure 3 as a diagram. The process starts with the appointment of a Liquidator. The process starts with a "winding up order," which means that the assets are sold and the money is split among creditors and other interested parties. As shown in the figure, Section 14 of the IBC says that no suit can be brought against the Corporate Debtor. Depending on the priority, a security creditor may be able to get money from the sale of assets by using the secured assets to get them. As long as there is a deficit, the creditor's claims will come after those of the unsecured creditors. All of the giving out must follow the rules set out in the Code. Once all of the Corporate Debtor's assets have been sold, the NCLT makes an order to dissolve the company.

VI. IMPACT OF IBC ON MACRO ENVIRONMENT OF INDIA:

The main reason the Insolvency and Bankruptcy Code was made was to help the Indian Banking System make up for the losses caused by NPAs. Even though it is unlikely to be able to bring back the money that is already stuck in stressed assets in the form of NPAs, it can help a lot to stop the crisis as a whole. IBC has had an effect on the law, but it has also helped India reach its macroeconomic goals and give it a strong position on the world stage. The Insolvency and Bankruptcy Code (IBC) of India, 2016, has had some of the following bigger effects:

Non-Economic Effects

Easy Exit and Reduced

Duration of Liquidation

Cross-Border Insolvency

Right to Foreign

Operational Creditors

Relation with Trading

Blocks

Economic Effects

Management of NPA’s

Increase in FDI and FIIs

Increase in M & A Deals

Improved ‘Ease of Doing

Business’ Ranking

Development of Credit

Market of India

Reduction of Crony

Capitalism in India

Taking care of NPAs: The Indian Banking Structure is currently dealing with the long-term problem of rising NPAs. Since then, managing this problem has been one of the banks' main priorities. In this case, the Insolvency and Bankruptcy Code could be a big step toward easing the stress that is building up on the Indian Banking System because of NPAs. Corporate Affairs Secretary Injeti Srinivas says that the Insolvency and Bankruptcy Code (IBC) has helped resolve stressed assets worth Rs 3 lakh crore in a direct or indirect way and has closed about half (4,400) of the 9,000 or so cases it has received in the last two years, including those transferred from the Board for Industrial and Financial Reconstruction (BIFR).

More FDI- The amount of FDI has grown by a large amount. India's FDI was 34298 US$ Million in 2012-13. After the code was passed, it went up to 61463 US$ Million in 2017-18, which is a growth of about 80%.

There are many reasons for this growth, but one of them is the IBC. This is because the Code gives a very clear process for Insolvency and Bankruptcy and gives employees, workers, and creditors priority. It also gives India a strong legal framework.

• More M&A deals. According to Mint, the number of mergers and acquisitions (M&A) in the country has grown exponentially, and deals worth $14.3 billion have been done in the last two years. This rush of mergers and acquisitions has been blamed on the Insolvency and Bankruptcy of India Act (IBC).

India's Insolvency and Bankruptcy Code (IBC) has sped up distressed mergers and acquisitions (M&As) in the country, with deals involving Bhushan Steels ($7.4 billion), Reliance Communications ($3.7 billion), and Fortis Healthcare ($1.2 billion) leading the way. In 2018, transactions involving Indian companies reached $104.5 billion.

• Improved "Ease of Doing Business" Ranking: Along with the introduction and implementation of Goods and Services Tax, which is seen as one of the biggest economic reforms in the country, the Insolvency and Bankruptcy Code is next. These have had a big impact on India's "World Bank's Ease of Doing Business (EODB)" ranking, which has gone up 23 spots in the last two years and is now 77th out of 190 global economies. India is also on the World Bank's list of the "top 10 improvers" for the second year in a row. It is number five, while China is number three.

• The growth of India's credit market- Information Utilities was set up by the code (IUs). It is a central database of information about borrowers' finances and credit, and it would verify the information and claims of creditors as they relate to borrowers. So, when IUs was set up, the Indian credit market grew and became more efficient.

• Stopping "crony capitalism" in India:

CEO of NitiAayog Amitabh Kant said this. "IBC will make sure that crony capitalism goes away for good. Before, you could borrow money and not pay it back. Now, you'll lose your business if you don't pay." (htt1) Crony capitalism is an economic system in which businesses do well not because they take risks but because they get money back from the government or other powerful people.

With the introduction of IBC and its stricter laws, it has become very hard for promoters, whether they are honest or not, to regain control of their companies after they have gone bankrupt or to overleverage their balance sheets. The new law says that people must perform or die.

• Easy to leave and shorter time for liquidation: According to data from the World Bank, it takes India much longer to solve insolvency problems than it does in other developed countries (An average of four years). With the help of the Insolvency and Bankruptcy Code, it is now easier for businesses to leave or close (180+90 days resolve-or-liquidate measure), which wasn't the case before in the Indian Corporate Structure (on an average of 3-4 years). This would help India get more business from people outside of the country. It would also cause India to come up with more new ideas.

• Cross-Border Insolvency-Cross-Border Issues is about Indian companies that have claims against global companies that have gone bankrupt, or vice versa. Due to the complexity of the problem, the IBC has been trying to combine some of the best Cross-Border Insolvency efforts from around the world. However, these efforts are not enough to deal with the default cases in an effective way. But in a situation where domestic bankruptcy laws have just been changed, it is best to take things one step at a time. A draught bill is being made, and if everything goes well, it should be passed soon.

• Operational creditors have the right to file a lawsuit against the default. In the past, there was no law that stopped operational creditors from doing so, but the code says that operational creditors (both domestic and international) have the right to do so. So, the code gives rights to foreign creditors, which will help India and other countries do business better.

• Relationships with Trading Blocks: If a country's legal system is strong, well-organized, and suitable for other countries, then it will have good relationships with trading blocs like SAARC, ASEAN, EU, NAFTA, etc. Because IBC is the only code that meets all of the above requirements, we can say that it will improve India's relationships with the trading blocs.

VII. CONCLUSION

2016 has been the year of changes for sure (GST & IBC). Since a long time ago, India has had a problem with increasing NPAs [10.25 lakh crores INR, or about 150 billion US dollars as of March 31, 2018]. The above study shows that the IBC Code 2016 has set up a framework for time-bound resolution of delinquent debts with the goal of making it easier to do business in India. According to M.S. Sahoo, Chairperson of the Insolvency and Bankruptcy Board of India (IBBI), about 40 cases of corporate debtors have been taken under the IBC terms, and creditors have gotten more than 50,000 crores, which means that on average, they have gotten over 50% of what they were owed. This shows why having this code is helpful.

By the end of January 2018, it was said that at least 2,434 new cases had been filed with the National Company Law Tribunal (NCLT) since November 30, 2017, and at least 2,304 cases from various high courts asking for companies to be shut down had been transferred to the NCLT. Again, this slows down the whole process of finding a solution. Cross-border insolvency and the fact that Indian laws are not recognised in other countries, and vice versa, have caused some problems. It's not clear how these kinds of deals are made.

Few analysts have said that IBC's role in hiring, firing, and inspecting professionals is too much government interference. People have noticed that there is still not enough infrastructure to handle a large number of high-value insolvency cases.

Aside from these problems, the IBC Code has helped India move up in the world rankings for how easy it is to do business. India is now in the top 100 in the world for the first time. This rise is due to changes in the economy, like the IBC and GST. Because of this, we can also expect FDI and GDP to grow in the country. It has also given the M&A drive in India a huge boost. The "Make in India" campaign will only be successful if India creates an environment where entrepreneurs' and investors' failures are handled carefully and on time. When an economy's credit market works well, all of the people who have a stake in it will be able to work together for the success of a country's entrepreneurial growth. One step in this direction is the IBC Code.

The paper looks at the IBC code from many different angles and points out its most important problems and its effects on the Indian economy, both at home and abroad. IBC has been a very important piece of legislation, and it is still changing so.

Figure 1;Structure of the code

PART A Preliminary (Section 1-3)

PART B Insovency Resolution & Liquidation for Corporate Persons (Section 4-77)

PART C Insolvency Resolution & Bankruptcy for Individuals and Partnership Firms (Section 78-187)

PART D Regulation of Insolvency Professional(IP'), Agencies, and Information Utilities (IUs) (Section 188-223)

PART E Miscellaneous (Section 224-255)

Figure 2; Timeline for insolvency resolution process

Figure 3 :Corporate liquadation process

References

• www.mca.gov.in/Ministry/pdf/TheInsolvencyandBankruptcyofIndia.pdf https://www.ibef.org/economy/indian-economy-overview https://timesofindia.indiatimes.com/business/india-business/owners-settle-rs-83k-crore-bankdues/articleshow/64279946.cms https://www.livemint.com/Companies/c17rNOlV4h5i1zTnlUfEVN/IBC-impact-MA-deals-worth-143-billion-signed-in-2- years.html

• https://www.ey.com/en_gl

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• www.rbi.org.in/scriptS/PublicationsView.aspx?id=18060