International Journal For Multidisciplinary Research

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A CRITICAL ANALYSIS OF THE ROLE OF THE INSOLVENCY AND BANKRUPTCY CODE, 2016 IN RESTRUCTURING FAILING BUSINESSES IN INDIA

Author(s) Mr. Sambhav Jain, Ms. Smita Tyagi
Country India
Abstract The Insolvency and Bankruptcy Code, 2016 (IBC) marked a transformative shift in India’s insolvency framework by consolidating fragmented laws into a unified, time-bound mechanism for insolvency resolution. Prior to the enactment of the Code, insolvency proceedings in India were governed by multiple legislations such as SICA, RDDBFI Act and SARFAESI Act, resulting in delays, jurisdictional conflicts and inefficient recovery processes. The IBC introduced a creditor-in-control model and established the Corporate Insolvency Resolution Process (CIRP) with the objective of maximizing the value of assets and promoting business restructuring instead of liquidation.

This research paper critically examines the effectiveness of the IBC in restructuring distressed businesses in India. It analyses the institutional framework under the Code, the role of the Committee of Creditors (CoC), the significance of judicial interpretation, and the practical challenges faced during implementation. The paper also evaluates landmark judgments including Innoventive Industries Ltd. v. ICICI Bank, Swiss Ribbons Pvt. Ltd. v. Union of India and Essar Steel India Ltd. v. Satish Kumar Gupta which have shaped insolvency jurisprudence in India.

The study further highlights concerns such as procedural delays, high liquidation rates, excessive haircuts accepted by creditors, infrastructural deficiencies in NCLTs, and limited participation of operational creditors. Comparative analysis with the insolvency frameworks of the United States and the United Kingdom demonstrates the strengths and weaknesses of the Indian model. The paper concludes that while the IBC has significantly improved India’s insolvency ecosystem and promoted financial discipline, continuous reforms and stronger institutional capacity are necessary to ensure effective restructuring of failing businesses in the long run.
Keywords # KEYWORDS * Insolvency and Bankruptcy Code, 2016 (IBC) * Corporate Insolvency Resolution Process (CIRP) * Business Restructuring * Committee of Creditors (CoC) * Insolvency Resolution Professional (IRP/RP) * National Company Law Tribunal (NCLT) * Corporate Debtor * Financial Creditors * Operational Creditors * Moratorium under Section 14 * Resolution Plan * Liquidation * Commercial Wisdom * Section 29A * Insolvency Jurisprudence * Non-Performing Assets (NPAs) * Creditor-in-Control Model * Bankruptcy Reforms * Asset Value Maximization * Indian Insolvency Framework
Field Sociology > Education
Published In Volume 8, Issue 3, May-June 2026
Published On 2026-05-18
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