The Insolvency and Bankruptcy Code, 2016 (IBC) is a noble law because it relieves stress, be it of a company, a limited liability partnership, a proprietorship or partnership firm or an individual. However, the discussion here is limited to companies as provisions of the IBC relating to individuals, except in relation to personal guarantors to corporate debtors, are yet to come into force. It is based on generalisations though there are notable exceptions.
For reasons sometimes under the control of a company and at times beyond its control, it may experience stress, that is, is unable to repay the debt in time implying that it has assets less than claims against it. Elementary economics tells us that when a company has inadequate assets…
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