India's new insolvency & bankruptcy code-lessons and insights from foreign jurisdictions

Insolvency, a Financial Condition, is the situation where the debtor is not in a position to pay back the creditor. Bankruptcy, a Legal Position, is the legal declaration of Insolvency. The new Insolvency and Bankruptcy Code 2016 covering insolvency, liquidation, voluntary liquidation and bankruptcy, has a sequential procedure of Insolvency resolution, failing which, it leads to Bankruptcy. Under the new law, there are five stages in all, through which the “resolution” process must pass from the time, a company files for bankruptcy. Our Code (IBC 2016) draws a demarcation between the financial institutions and others. Furthermore, a natural person (one who has its own legal personality) can evoke bankruptcy law in India. Individual bankruptcy cases emphasize more towards the economic rehabilitation of the debtor as compared to their corporate counterparts. India is one of the eminent countries where bank can give loan to the entrepreneur to pay back the loan.