What is insolvency?
The ‘I’ in IBC 2016 stands for Insolvency.
Insolvency is a time when a company is unable to run its business and complete its responsibilities, for example, when the company is not able to pay bill of its suppliers or salaries to its employees.
What is bankruptcy?
The ‘B’ in IBC 2016 stands for Bankruptcy.
Bankruptcy happens when a person or a company is unable to repay its debt. It is the court who enforces ‘bankruptcy‘, as the legal status, of the same person or company. In the case of a company, this is followed by the process of converting assets into cash to repay any or every debt.
What is IBC 2016?
The Insolvency and Bankruptcy Code (IBC) 2016 is a law to complete the Bankruptcy process in a timely manner. During this process the creditor (a person or a company to whom the money is owed) controls the bankrupt company and has about 6 months to 1 year to complete it.
The services of Insolvency Professionals (I.P) are required for the Bankruptcy process, who are assisted by companies like Aarsh Resolution Professionals Pvt. Ltd.
What are the benefits of IBC 2016
The Insolvency and Bankruptcy code (IBC) 2016, has made the process simpler, faster and stronger by creating a single law, covering all areas of insolvency and bankruptcy for all persons and companies. This has helped to:
- Improve and merge all existing laws relating to insolvency and bankruptcy in India.
- Simplify and make the insolvency and bankruptcy process faster in India.
- Protect the person or the company to whom money is owed.
- Make reviving of the bankrupt company faster.
- Promote entrepreneurship.
- Motivate people and companies to invest further by reducing risk factor of losing money.
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