Economics • Indian EconomyMedium
What is the primary operational mechanism and economic objective of the Insolvency and Bankruptcy Code enacted in India in 2016?
A. To nationalize failing manufacturing firms and absorb their labor force into public sector undertakings
B. To consolidate insolvency laws into a single time-bound process for rescuing distressed corporate debtors or liquidating unviable assets✓ Correct Answer
C. To provide direct cash bailouts to commercial banks burdened by non-performing agricultural loans
D. To penalize promoters of bankrupt companies through criminal prosecution without asset sales
💡 Solution & Explanation
The Insolvency and Bankruptcy Code, 2016 provides a unified, time-bound framework for resolving insolvency issues for companies and individuals, shifting the legal regime from debtor-in-possession to creditor-in-control. The National Company Law Tribunal acts as the adjudicating authority for corporate insolvency resolution. This reform has improved ease of doing business and credit recovery rates.
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