Bankruptcy and Insolvency Code, 2015
Q. Which of the following is/are true about Bankruptcy and Insolvency Code, 2015?
1) Since it does not have mention of taxes, Bankruptcy and Insolvency Code, 2015 is not a money bill.
2) Bankruptcy bill provides for creation of an Insolvency and Bankruptcy Fund.- Published on 15 Mar 16a. Only 1
b. Only 2
c. Both 1 and 2
d. Neither 1 nor 2
ANSWER: Only 2
- The bill is a money bill.
- The bill will provide a framework for time bound resolution of corporate bankruptcy, ensuring that stakeholder interest are protected and the assets are put to use quickly.
- The bill seeks to consolidate and amend the laws relating to reorganization and insolvency resolution and will also apply to partnership firms and individuals.
- The code allows a corporate debtor itself to initiate insolvency resolution process once it has defaulted on a debt.
- In the Insolvency Resolution Process, the creditors and the debtor will engage in negotiations to arrive at an agreeable repayment plan for composition of the debts and affairs of the debtor, supervised by a resolution professional.
- The bankruptcy of an individual can be initiated only after the failure of the resolution process. The bankruptcy trustee is responsible for administration of the estate of the bankrupt and for distribution of the proceeds on the basis of the priority.
