When a company becomes insolvent, numerous issues arise. Insolvency law is meant to address some of them, but not all. Photo: iStockphoto
When a company becomes insolvent, numerous issues arise. Insolvency law is meant to address some of them, but not all. For the others, the solution must be found in non-insolvency laws. This distinction has been overlooked by Indian policymakers in their attempts to reform the Insolvency and Bankruptcy Code, 2016 (IBC). The recently submitted report of the insolvency law committee (ILC) also reflects this oversight. This may hamper the desired outcomes of the IBC.
The proper purpose
In the absence of an insolvency law, if a company defaults on a loan to a creditor (i.e. becomes cash flow insolvent), every…
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