Ram and Suman are 3 rd year law students. During a joint discussion on the process of law making, both of them were debating and discussing on the Insolvency and Bankruptcy Code, 2016 (the Code). Ram said that finance mi

The Insolvency and Bankruptcy Code, 2016 (IBC), was largely based on the recommendations of the Bankruptcy Law Reforms Committee (BLRC) Report. Here are six key suggestions made by the BLRC: Consolidation of Legal Framework: The BLRC recommended consolidating the existing fragmented legal framework for insolvency. This involved repealing outdated laws (like the Presidency Towns Insolvency Act, 1909, and Provincial Insolvency Act, 1920) and amending several others (e.g., Companies Act, 2013, SARFAESI Act, 2002, RDDBFI Act, 1993) to create a unified and comprehensive insolvency law. Creditor-in-Control Model: The Committee proposed establishing a 'creditors committee' (Committee of Creditors - CoC) where financial creditors would have voting rights proportionate to their debt. This committee would be empowered to negotiate with the debtor to formulate a revival or repayment plan, shifting control from the debtor to creditors during insolvency. Inclusion of Operational Creditors: Previously, only secured financial creditors could initiate proceedings for a company's sickness. The BLRC recommended allowing operational creditors (like employees for unpaid salaries, suppliers) to also initiate the insolvency resolution process, broadening the scope of who can trigger insolvency. Time-Bound Resolution Process: To ensure speedy resolution and prevent value erosion, the BLRC recommended strict time limits. A 180-day period for the completion of the insolvency resolution process was proposed, with a possible extension of 90 days for complex cases if approved by a supermajority (75%) of creditors. Establishment of Insolvency Professionals (IPs) and Agencies (IPAs): The report suggested that the entire insolvency resolution process be managed by licensed IPs. It also proposed setting up IPAs to admit IPs as members, develop a code of conduct, and regulate their activities. Creation of Information Utilities (IUs): To address delays caused by lack of data, the BLRC proposed establishing IUs. These entities would maintain a centralized repository of financial information about firms, including debts and defaults, thereby facilitating quicker and more efficient insolvency proceedings. Establishment of a Unified Regulator (IBBI): The Committee recommended creating a single, unified regulator, the Insolvency and Bankruptcy Board of India (IBBI), to oversee the entire insolvency ecosystem. The IBBI would regulate IPs, IPAs, and IUs, and make regulations for insolvency resolution in India. Dedicated Adjudicating Authorities: The BLRC proposed two dedicated tribunals: the National Company Law Tribunal (NCLT) for corporate insolvency and liquidation, and the Debt Recovery Tribunal (DRT) for individual insolvency and bankruptcy. (Any six of the above points would be sufficient.)