The Rights of the Deceased: Moral Rights Incidental to Copyright Law
- Vanshika Agrawal
- 2024-04-25
Insolvency Laws- As we all know, nowadays, insolvency has become quite common among individuals, corporate houses, firms, and even multi-national companies.
Insolvency is a state when an individual or company fails to meet their financial obligations which is to pay their debts to the creditors and money lenders.
When a person becomes insolvent, it is called as ‘Bankruptcy’. Bankruptcy is not exactly same as insolvency. ‘Insolvency’ is a financial distress whereas ‘Bankruptcy’ is a legal proceeding which has different procedures than insolvency.[1]
An individual becomes insolvent because of their poor budgeting, finance management, unemployment, failure of business, personal problems (illness, divorce) or overconsumption, but there is a much preferred term for an individual’s insolvency which is “Bankruptcy” because bankruptcy only refers to personal debts and would be inappropriate if used for company debt.[2]
Insolvency occurs when a company is indebted to creditors or cannot pay its bills when due. But being insolvent doesn’t really mean that it’s the end of the company. A firm suffering from poor finance management or a temporary economic downturn can still be turned around. There are laws regarding insolvency and there are also other options for debt relief, company rescue and turnaround.
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1.1 According to this code, steps to resolve insolvency are as follows:-
1.2 Decision to resolve insolvency:
The Insolvency And Bankruptcy Code, 2016
This code applies to:
In 2017, Indian government had done several amendments in the insolvency and bankruptcy code i.e. expanding the scope of insolvency, eligibility criteria of the resolution applicants in order to strengthen the insolvency resolution process.
In 2019 amendment, the government focuses on the promotion of entrepreneurship, amendment of laws relating to reorganization and insolvency resolutions of corporate persons, firms, and individuals, balancing the interests of all shareholders, steps to decrease the mistreatment by certain classes of creditors, etc.
The code should be more clear in order of priority to distribute assets during liquidation;
In a limit span of time, the Code was build and establish its jurisprudence. However, the code expected changes to stay aware of the insolvency over the world and to enable the Indian economy to succeed with territorial boundaries. The Code appeared to be somewhat over-driven. The smooth functioning of the Code depends on the functioning of new entities such as insolvency professionals, insolvency professional agencies and information utilities.
The changes proposed in the 2017 & 2019 amendment will largely influence the insolvency professionals associated with it but the space in the propose amendments will be find in the coming time.
[1] CFI, insolvency, corporate finance institute education inc. (February 03, 2021, 11:02 AM), https://corporatefinanceinstitute.com/resources/knowledge/finance/insolvency/
[2] Simon renshaw, what is insolvency?, COMPANY DEBT, (February 03, 2021, 11:48 AM), https://www.companydebt.com/faqs/what-is-insolvency/
[3] The Insolvency And Bankruptcy Code, 2016
[4] Aravind gay, the insolvency and bankruptcy code: all you need to know, prsindia.org, (February 03, 2021, 02: 00 pm), https://www.prsindia.org/theprsblog/insolvency-and-bankruptcy-code-all-you-need-know
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