ASM’S INSTITUTE OF BUSINESS MANAGEMENT A N D

RESEARCH CHINCHWAD,PUNE-411019

TOPIC: I N S O L V E N C Y A N D B A N K R U P T C Y
CODE

N A M E & ROLL N O :
S
SO NH
UD AA
W ARAJARAM
N E NIKITA
P UBNADLEA S A H E B- - 201507
201510
K O T W A L S W A P N I L KALYAN -
201515
T H A K A R E VA IB HA V RAJESH -
201517
R A U T V A I S HN A V I -
201524
ADSUL POONAM -
 INSOLVENCY

• Generally speaking, insolvency refers to situations where a debtor cannot pay the debts
they owe. For instance, a troubled company may become insolvent when it is unable to
repay its creditors money owed on time, often leading to a bankruptcy filing. There are
two forms: cash-flow insolvency and balance-sheet insolvency.
• Cash-flow insolvency is when a person or company has enough assets to pay what is owed,
but does not have the appropriate form of payment. For example, a person may own a large
house and a valuable car, but not have enough liquid assets to pay a debt when it falls due.
Cash-flow insolvency can usually be resolved by negotiation. For example, the bill collector
may wait until the car is sold and the debtor agrees to pay a penalty.
• Balance-sheet insolvency is when a person or company does not have enough assets to pay all
of their debts. The person or company might enter bankruptcy, but not necessarily. Once a
loss is accepted by all parties, negotiation is often able to resolve the situation without
bankruptcy.
 BANKRUPTCY

A legal proceeding involving a person or business that is unable to repay outstanding debts
All of the debtor’s assets are measured and evaluated, where upon the assets are used to repay
a portion of outstanding debt
• Types of Bankruptcy
Voluntary bankruptcy: A bankruptcy petition filed in federal court by the distressed
firm’s
management.
Involuntary bankruptcy: A bankruptcy petition filed in federal court by the distressed firm’s
creditors.
THE INSOLVENCY A N D BANKRUPTCY
CODE
The insolvency and bankruptcy code 2016 (IBC) is the bankruptcy law of India which seeks to
consolidate the existing framework by creating a single kaw for insolvency and bankruptcy.
. Its key point are:
⚫ Insolvency Resolution.

⚫ Insolvency Regulator

⚫ Insolvency Professionals. Bankruptcy and insolvency adjudicator.

 FE MA A C T

The Foreign Exchange Management Act. 1999 (FEMA). is an Act of the Parliament of India "to
consolidate and amend the law relating to foreign exchange with the objective of facilitating
external trade and payments and for promoting the orderly development and maintenance of
foreign exchange market in India. It was passed on 29th December 1999 in parliament, replacing
the Foreign Exchange Regulation Act (FERA).
Objective:
1.To help in external trade and payment
2.To promote systematic development of foreign exchange market in India
3.To regulated the foreign capital in India
4.To remove imbalance of payment

5.To make strong and development foreign exchange market

6.To regulate the employment business and investment of non-residences

7.To regulated the foreign payment

8.To ensure transparency in the application by the

specifying the area where special permissions of the reserve
bank/government of India is required
 FERA A C T

It was a legislation passed by the Indian Parliament in 1973 and came into force with effect
from January 1, 1974. FERA emphasized strict exchange control over everything that was
specified,relating to foreign exchange.
Law violators were treated as criminal offenders. Aimed at minimizing dealings in
foreign
exchange and foreign
 OBJECTIVES

• To regulate certain payments.

• To regulate dealings in foreign exchange and securities. To regulate transactions,
indirectly affecting foreign exchange.
• To regulate the import and export of currency.
• To conserve precious foreign exchange. The proper utilization of foreign exchange so
as
to promote the economic development of the country.
Features of the Insolvency and Bankruptcy Code

The Insolvency and Bankruptcy Code. 2016 has following features: i.Comprehensive Law:
Insolvency Code is a comprehensive law which envisages and regulates the process of
insolvency and bankruptcy of all persons including corporates, partnerships. LIP’s and
individuals.

Ii.No Multiplicity of Laws: The Code has withered away the multiple laws. Covering the
recovery of debts and insolvency and liquidation process and presents singular platform for all
the relicts relating to re covery of debts and insolvency.

Iii.Low Time Resolution: The Code provides a low time resolution and defines fixed time
frames for insolvency resolution of companies and individuals. The process is mandated to be
completed within 180 days. Extendable to maximum of 90 days. Further, for a speedier
process there is provision for fast-track resolution of corporate insolv ency within 90 days. If
insolvency cannot be resolved the assets of the borrowers may be sold to repay creditors.
iv.One Window Clearance: It has been drafted to provide one window clearance to the
applicant whereby he gets the ap propriate relief at the same authority un like the earlier
position of law where in case the company is not able to revive the procedure for winding
up and liquida tion has to be initiated under separate laws governed by separate
authorities.

v.One Chain of Authority: There is onechain of authority under the Code. It does not even
allow the civil courts to interfere with the application pending before the adjudicating
authority, thereby reducing the multiplicity of litigations. The National Company Law
Tribunal (NCLT) will adju dicate insolvency resolution for companies. The Debt Recovery
Tribunal (DRT) will adjudicate insolvency resolu tion for individuals.
 Key Differences Between Insolvency and Bankruptcy

1) Insolvency refers to a state of financial distress wherein a person or enterprise

is no longer able to pay the debts when they fall due for payment. On the other
hand, Bankruptcy is a legal declaration by the court, on the failure of the
insolvency resolution process to settle the debts of the person.

2) Insolvency can be temporary and the initial stage defines the incapability to
clear dues, whereas bankruptcy is permanent and the final stage, wherein the
assets of the individual are sold to recover the debt.
3) Insolvency is not the last resort, but bankruptcy is.

4) Insolvency can be reversed by reducing cost, selling assets at reasonable

prices, raising finance, negotiating debt, and getting acquired by a larger
corporation. In contrast, once the bankruptcy is declared, there is no going back.
THANK YOU