[BANKRUPTCY, INSOLVENCY & REHABILITATION PROCEEDINGS IN INDIA]
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initiation stage is formal. The informality at pre- initiation stage offers flexibility for the corporate debtors and its creditors to swiftly explore and negotiate the best possible outcome to resolve stress in the business, while the post-initiation is focused on maximization of value and bestows the resolution plan with the statutory protection. Bankruptcy for Individuals and Partnership firms: The provisions of the Code concerning insolvency and liquidation of individuals and firms are being brought into effect in a phase wise manner. The provisions are still in their infancy and will evolve in due course. Conclusion : The Code has arguably tilted the debtor-creditor balance in favour of the creditor, as one of the consequences of admission of proceedings under the Code is that the erstwhile management of the company is ousted, even if the company is rehabilitated. In cases of small and medium enterprises, the promoters can still lay reclaim the ownership and control of their company, provided they are not declared willful defaulters by the financial institution(s). The pre-packaged insolvency may provide the much- needed respite to the genuine promoters. Within a short span since its implementation, and despite Coronavirus given business adversities, the Code is proving to be a more effective tool for rehabilitation and liquidation as compared to the winding up provisions of the (Indian) Companies Act and the Sick Industrial Companies Act, 1985, it repealed and replaced.
ILN Restructuring & Insolvency Group – Bankruptcy, Insolvency & Rehabilitation Series
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