
How does Insolvency and Bankruptcy code 2016 help creditors?
Before knowing about Insolvency and Bankruptcy code 2016, let us know what is bankruptcy and Insolvency. Bankruptcy is a state of an individual or business where the debtor is unable to pay the loan or debt amount to the creditor. This state of bankruptcy is usually initiated or declared by the debtor when under losses and the court approves or imposes the bankruptcy order. Insolvency is a state where the debtor whether it is an individual or business is unable to pay the loan on time.
The financial institutions or individuals which provide loans to the business face a lot of trouble when the debtors are not able to repay the loan amount o time. The loan amount becomes struck and stagnant when the business in which the loan amount is invested is discontinued. The creditor is in trouble even when the business is continued but without any considerable profits where or zero profit where the debtor is not able to repay the loan amount.
To solve the problems faced by the creditors and safeguard them, the Parliament of India has approved the Bankruptcy and Insolvency code in 2016. This act is helpful to the companies, group of individuals or individuals that provide loans to the individual or business.
The Insolvency and Bankruptcy code 2016 overwrites all other laws related to companies, businesses or individuals. This code of law established Insolvency and Bankruptcy Board of India and Insolvency professional agencies, insolvency professional agents, and utilities. The insolvency professional agencies help in the process of insolvency, take claim of the management of the business, helps the creditors to get informed about the liquidation of the business or company.
