Restructuring and insolvency—India—Q&A guide

The following Restructuring & Insolvency practice note provides comprehensive and up to date legal information covering:

  • Restructuring and insolvency—India—Q&A guide
  • 1. What main legislation is applicable to insolvencies and reorganisations?
  • 2. What entities are excluded from customary insolvency or reorganisation proceedings and what legislation applies to them? What assets are excluded or exempt from claims of creditors?
  • 3. What procedures are followed in the insolvency of a government-owned enterprise? What remedies do creditors of insolvent public enterprises have?
  • 4. Has your country enacted legislation to deal with the financial difficulties of institutions that are considered ‘too big to fail’?
  • 5. What courts are involved? What are the rights of appeal from court orders? Does an appellant have an automatic right of appeal or must it obtain permission? Is there a requirement to post security to proceed with an appeal?
  • 6. What are the requirements for a debtor commencing a voluntary liquidation case and what are the effects?
  • 7. What are the requirements for a debtor commencing a voluntary reorganisation and what are the effects?
  • 8. How are creditors classified for purposes of a reorganisation plan and how is the plan approved? Can a reorganisation plan release non-debtor parties from liability and, if so, in what circumstances?
  • 9. What are the requirements for creditors placing a debtor into involuntary liquidation and what are the effects? Once the proceeding is opened, are there material differences to proceedings opened voluntarily?
  • More...

Restructuring and insolvency—India—Q&A guide

This Practice Note contains a jurisdiction-specific Q&A guide to restructuring and insolvency in India published as part of the Lexology Getting the Deal Through series by Law Business Research (published: June 2021).

Authors: Chandhiok & Mahajan, Advocates and Solicitors—Pooja Mahajan

1. What main legislation is applicable to insolvencies and reorganisations?

The Insolvency and Bankruptcy Code, 2016 (IBC) is the umbrella law for insolvencies and reorganisations in India. It is a relatively new law and the provisions relating to insolvency and liquidation of corporate persons only came into force on 1 December 2016.

The provisions in the IBC relating to personal bankruptcy are not fully notified. The government has recently notified certain provisions of the IBC relating to insolvency resolution of only personal guarantors of corporate debtors, which came into effect on 1 December 2019.

The IBC provides for a two-stage process to deal with insolvency of a corporate person. In stage I, the corporate debtor undergoes a corporate insolvency resolution process where the creditors of the debtor attempt to resolve the insolvency of the corporate in a time-bound manner. To resolve the insolvency, 'resolution plans' for the debtor are invited from eligible persons and thereafter approved by the committee of creditors of the corporate debtor. If the corporate insolvency resolution process fails, the corporate debtor enters stage II for its mandatory liquidation.

Besides this, the Companies Act,

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