A STUDY OF CORPORATE INSOLVENCY RESOLUTION PROCESS UNDER THE INSOLVENCY AND BANKRUPTCY CODE: IT’S IMPACT ON THE COMPANIES

Abstract

Corporate Insolvency Resolution Process (“CIRP”) is enshrined under IBC, 2016 which majorly involves repercussions to the Companies. The IBC, 2016 brought about a paradigm shift in the Indian Corporate World by just offering a structured framework for resolving Insolvency issues which aims to enhance the ease of doing business, promote rights of creditors and to ensure a robust mechanism for distressed companies. It has been observed that the stakeholders are initiating insolvency proceedings in the garb of Recovery proceedings. Through extensive research it has done analysis of legal provisions, case studies which assess the multifaceted impact of the CIRP on companies undergoing insolvency proceedings. It scrutinizes both negative and positive consequences by considering some financial, operational and reputational dimensions which also involve the liability of statutory dues and employment dues if the Corporate Debtor is a successful apprehension.

Further, it sheds light on the broader economic implications of the said process. It investigates its role in preserving and potentially enhancing the value of distressed companies, safeguarding the interests of various stakeholders, and contributing to economic stability. The study identifies the factors that have driven effectively insolvency resolution and highlight areas where the Company has suffered in the garb of Recovery Proceedings and where the Company has been liquidated as an ultimate resort since creditors or the other person purport to destroy the reputation of the Company.

The Real Estate companies are further endangered since homebuyers as financial creditors can also initiate CIRP however; they tend to initiate proceedings in different fora too. The study also addressed potential challenges and shortcomings within the CIRP framework which are delays, ambiguities, complexities. It also explores that how the said process impacts the viability of businesses and offers insights the best practices that can be adapted to enhance the Indian law.