Abstract
The Insolvency and Bankruptcy Code, 2016 (IBC) was introduced as a comprehensive legislation to consolidate and amend laws relating to reorganization and insolvency resolution in India. The Corporate Insolvency Resolution Process (CIRP) under the IBC aims to ensure the revival of financially distressed companies while maximizing the value of assets. However, the dichotomy between resolution and liquidation remains central to its efficacy. This dissertation critically examines the legal framework, procedural dynamics, and judicial interpretations concerning CIRP with a special focus on the balance between achieving resolution versus ordering liquidation.
Through an analysis of key cases, timelines, and outcomes under the IBC, the study explores whether the intent of corporate rescue is effectively realized or whether liquidation remains the default outcome. It also highlights bottlenecks such as delays, capacity issues with resolution professionals and adjudicating authorities, and challenges in attracting effective resolution applicants. The paper further draws comparative insights from global insolvency regimes to assess whether the Indian model aligns with international best practices.
The research concludes with recommendations to strengthen the resolution framework, incentivize sustainable revival plans, and minimize the preference for liquidation, thereby reinforcing the IBC’s role as a reformative legislation in India’s economic and legal landscape.
Keywords: Insolvency and Bankruptcy Code, CIRP, Corporate Insolvency, Resolution vs. Liquidation, NCLT, Resolution Professional, Insolvency Jurisprudence, Revival of Companies, Insolvency Framework, Corporate Rescue.
Introduction
The IBC, 2016 represents a landmark reform in India’s insolvency and bankruptcy regime, aiming to expedite the resolution of corporate distress while maximizing value for creditors. A cornerstone of the IBC is the CIRP Process, a time-bound framework designed to facilitate the revival of viable companies through debt restructuring or rehabilitation. However, despite its ambitious goals, concerns have been raised regarding the IBC’s effectiveness in achieving resolution over liquidation.
This chapter delves into the intricacies of the CIRP under the IBC, 2016, critically examining its provisions and procedures. It will analyze the factors that influence the outcome of CIRP proceedings, particularly focusing on the interplay between resolution and liquidation.
Furthermore, this chapter will examine the challenges and shortcomings of the CIRP in achieving successful resolutions. It will analyze the factors that contribute to the high incidence of liquidation outcomes, such as delays in the CIRP process, inadequate valuation of assets, and disputes among stakeholders. The chapter will also discuss the impact of judicial pronouncements and amendments to the IBC on the resolution vs. liquidation landscape. By critically analyzing the CIRP under the IBC, 2016, this chapter aims to provide valuable insights into the effectiveness of the Code in achieving its objectives and to identify potential areas for improvement in the future.