Passage of Bankruptcy Code; Code is a comprehensive and systemic reform, which will give a quantum leap to the functioning of the credit market and would take India from among relatively weak insolvency regimes to becoming one of the world’s best insolvency regimes; Vision of the new law is to encourage entrepreneurship and innovation.
‘Insolvency and Bankruptcy Code,2016’-With the passing of this Bill, India has crossed an important milestone in becoming a world class economy.
Hitherto India was lacking the legal and institutional machinery for dealing with debt defaults as per the global standards. The recovery proceedings by creditors, either through the Contract Act or through special laws such as the Recovery of Debts due to Banks and Financial Institutions Act, 1993 and the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, has not had desired outcomes.
Similarly, action through the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) and the winding up provisions of the Companies Act, 1956 have neither been able to aid recovery for lenders nor restructuring of firms.
Laws dealing with individual insolvency, the Presidency Towns Insolvency Act, 1909 and the Provincial Insolvency Act, 1920, were almost a century old. This has hampered the confidence of the lender and development of the credit markets in India. Resultantly, credit by banks is the largest component of the credit market in India and corporate bond market has not yet developed to the desired level.
The Government decided to embark on a fundamental and systemic reform which would address this problem, both commercially and judicially. The idea was to come up with a comprehensive solution, which would encompass borrowing by firms and by individuals. In recognition of the fact that major sub-components of lending are done by non-banks, in particular the corporate bond market which serve infrastructure projects, bankruptcy reforms needed to have a consistent treatment of default. While the systems of well-functioning advanced economies were studied, the design that was implemented for India reflects a careful judgment about what would work under India conditions.
The new law aims to consolidate the laws relating to insolvency of companies and limited liability entities (including limited liability partnerships and other entities with limited liability), unlimited liability partnerships and individuals, presently contained in a number of legislations, into a single legislation and provide for their reorganization and resolution in a time bound manner for maximization of value of their assets. Such consolidation will provide for a greater clarity in law and facilitate the application of consistent and coherent provisions to different stakeholders affected by business failure or inability to pay debt. This law will thus promote entrepreneurship, availability of credit and balance the interest of all stakeholders.
The vision of the new law is to encourage entrepreneurship and innovation. It is true that some business ventures will always fail, but such failures will be handled rapidly and swiftly. Entrepreneurs and lenders will be able to move on, instead of being bogged down with decisions taken in the past. The Code empowers the operational creditors (workmen, suppliers etc.) also to initiate the insolvency resolution process upon non-payment of dues. In order to develop the credit market in India, in case of liquidation, financial debts owed to unsecured creditors have been kept above the Government’s dues in the list of priorities (waterfall).
Facilitating early resolution and exit is as important as facilitating investment. The essential idea of the new law is that when a corporate entity defaults on its debt, control shifts from the shareholders/promoters to a committee of creditors, who have 180 days (extendable by 90 days in deserving cases) to evaluate proposals from various players about resuscitating the company or taking it into liquidation. When decisions are taken in a time-bound manner, there is a greater chance that the corporate entity can be saved as a going concern, and the productive resources of the economy (labour and capital) can be put to the best use. This is in complete departure from SICA regime where there were delays leading to destruction of the value of the firm.
The Code separates commercial aspects of the insolvency proceedings from judicial aspects. While Insolvency Professionals (IPs) will deal with commercial aspects such as management of the affairs of the corporate debtor, facilitating formation of committee of creditors, organising their meetings, examination of the resolution plan, etc., judicial issues will be handled by proposed Adjudicating Authorities (National Company Law Tribunal / Debt Recovery Tribunal). One more important institution created under the Code is the ‘Information Utility’ which would store financial information and data and terms of lending in electronic databases. This would eliminate delays and disputes about facts when default does take place.
The Code also provides a fast track insolvency resolution process for corporates and LLPs. This will be an enabler for start-ups and small and medium enterprises (SMEs) to complete the resolution process in 90 days (extendable to 45 days in deserving cases).
The Code also addresses the important issue relating to cross border insolvency by providing the enabling mechanism on the subject. The Government, at an appropriate time, will come out with a detailed framework for cross border insolvency.
The Insolvency and Bankruptcy Code is thus a comprehensive and systemic reform, which will give a quantum leap to the functioning of the credit market. It would take India from among relatively weak insolvency regimes to becoming one of the world’s best insolvency regimes. It lays the foundations for the development of the corporate bond market, which would finance the infrastructure projects of the future. The passing of this Code and implementation of the same will give a big boost to ease of doing business in India.
Darknet, also known as dark web or darknet market, refers to the part of the internet that is not indexed or accessible through traditional search engines. It is a network of private and encrypted websites that cannot be accessed through regular web browsers and requires special software and configuration to access.
The darknet is often associated with illegal activities such as drug trafficking, weapon sales, and hacking services, although not all sites on the darknet are illegal.
Examples of darknet markets include Silk Road, AlphaBay, and Dream Market, which were all shut down by law enforcement agencies in recent years.
These marketplaces operate similarly to e-commerce websites, with vendors selling various illegal goods and services, such as drugs, counterfeit documents, and hacking tools, and buyers paying with cryptocurrency for their purchases.
Anonymity: Darknet allows users to communicate and transact with each other anonymously. Users can maintain their privacy and avoid being tracked by law enforcement agencies or other entities.
Access to Information: The darknet provides access to information and resources that may be otherwise unavailable or censored on the regular internet. This can include political or sensitive information that is not allowed to be disseminated through other channels.
Freedom of Speech: The darknet can be a platform for free speech, as users are able to express their opinions and ideas without fear of censorship or retribution.
Secure Communication: Darknet sites are encrypted, which means that communication between users is secure and cannot be intercepted by third parties.
Illegal Activities: Many darknet sites are associated with illegal activities, such as drug trafficking, weapon sales, and hacking services. Such activities can attract criminals and expose users to serious legal risks.
Scams: The darknet is a hotbed for scams, with many fake vendors and websites that aim to steal users’ personal information and cryptocurrency. The lack of regulation and oversight on the darknet means that users must be cautious when conducting transactions.
Security Risks: The use of the darknet can expose users to malware and other security risks, as many sites are not properly secured or monitored. Users may also be vulnerable to hacking or phishing attacks.
Stigma: The association of the darknet with illegal activities has created a stigma that may deter some users from using it for legitimate purposes.
AI, or artificial intelligence, refers to the development of computer systems that can perform tasks that would normally require human intelligence, such as recognizing speech, making decisions, and understanding natural language.
Virtual assistants: Siri, Alexa, and Google Assistant are examples of virtual assistants that use natural language processing to understand and respond to users’ queries.
Recommendation systems: Companies like Netflix and Amazon use AI to recommend movies and products to their users based on their browsing and purchase history.
Efficiency: AI systems can work continuously without getting tired or making errors, which can save time and resources.
Personalization: AI can help provide personalized recommendations and experiences for users.
Automation: AI can automate repetitive and tedious tasks, freeing up time for humans to focus on more complex tasks.
Job loss: AI has the potential to automate jobs previously performed by humans, leading to job loss and economic disruption.
Bias: AI systems can be biased due to the data they are trained on, leading to unfair or discriminatory outcomes.
Safety and privacy concerns: AI systems can pose safety risks if they malfunction or are used maliciously, and can also raise privacy concerns if they collect and use personal data without consent.