Guest Lecture on Insolvency and Bankruptcy Code (IBC)

Event Date: 26^th October 2024

Guest lecture on the Insolvency and Bankruptcy Code (IBC) provided an in-depth look at India’s corporate insolvency process. It covered the IBC ecosystem, including entities like the Insolvency and Bankruptcy Board (IBBI), Insolvency Agencies (IAs), and Information Utilities (IUs). The role of the National Company Law Tribunal (NCLT)as the Adjudicating Authority in handling insolvency cases was emphasized, helping students understand the legal and procedural backbone of the IBC.

In discussing the Corporate Insolvency Resolution Process (CIRP), the speaker outlined key steps such as the appointment of a Resolution Professional (RP), the authority of the Committee of Creditors (CoC), and the option for fast-track insolvency cases. This process empowers financial creditors and promotes efficient debt recovery, critical insights for students pursuing finance and corporate law.

The distribution waterfall for claims was also highlighted, illustrating the priority order for repayments, from insolvency costs to unsecured creditors and shareholders, ensuring fair asset distribution.

This session offered practical insights into the IBC's role in promoting financial stability and responsible corporate governance. We hope these insights support your academic and professional growth.

School of Business pleased to report the successful completion of the recent guest lecture on the Insolvency and Bankruptcy Code (IBC), which offered an in-depth understanding of India’s insolvency framework. The session was highly informative and covered critical components of the IBC ecosystem, the corporate insolvency resolution process, and the prioritization of claims in liquidation proceedings.

Session Highlights

1. IBC Ecosystem Structure
   • The lecture began with an overview of the key entities involved in the IBC ecosystem, including the Insolvency and Bankruptcy Board of India (IBBI), Insolvency Agencies (IAs), Information Utilities (IUs), and Insolvency Professionals (IPs).
   • The Adjudicating Authority (AA), primarily the National Company Law Tribunal (NCLT), was explained as the authority responsible for processing insolvency applications and overseeing the rights and resolutions of creditors.
   • Student Takeaway: This segment provided students with foundational knowledge of the regulatory bodies and roles in the IBC, enhancing their understanding of corporate governance and legal compliance, which are essential in finance, corporate law, and management careers.
2. Corporate Insolvency Resolution Process (CIRP)
   • The CIRP process was detailed, covering essential steps and roles:
     • Initiating CIRP: Financial and operational creditors, as well as corporate debtors, can initiate the insolvency process.
     • Role of Resolution Professionals (RP): RPs manage the debtor's operations during the moratorium period and guide the restructuring or liquidation process.
     • Committee of Creditors (CoC): Comprising financial creditors, the CoC has decision-making power to approve or reject resolution plans, with 75% approval needed for major decisions.
     • Fast-Track Insolvency: The IBC allows for a fast-track resolution option, completed within 90 days, for eligible cases.
   • Student Takeaway: This section highlighted the decision-making processes and the importance of creditor involvement, providing valuable insights for students interested in corporate restructuring, financial advisory, and insolvency management.
3. Distribution Waterfall for Claims
   • A significant part of the lecture focused on the priority distribution of claimsin liquidation under Section 53 of the IBC:
     • First Priority: Insolvency resolution and liquidation costs.
     • Second Priority: Secured creditors and workmen’s dues.
     • Third Priority: Unsecured creditors and operational creditors, followed by government dues and equity shareholders.
   • The priority structure ensures transparency and fair treatment of all creditors during asset distribution.
   • Student Takeaway: Understanding the hierarchy of claims deepens students' knowledge of debt structuring and stakeholder rights, critical in fields like corporate finance, asset management, and legal consultancy.

Broader Impact of IBC

• Stability and Economic Growth: The IBC framework has enhanced financial stability, promoting responsible lending and timely debt recovery, which drives economic growth and attracts investment.
• Career Readiness: With IBC knowledge, students are better prepared for careers in finance, law, and corporate restructuring, where familiarity with insolvency processes is increasingly valued.

The guest lecture was a highly engaging session that added practical insights to students’ academic learning. We hope the knowledge gained will serve as a valuable foundation for their future professional pursuits.

Event Outcome

 guest lecture on the Insolvency and Bankruptcy Code (IBC) yielded several valuable outcomes, providing students with practical insights into corporate insolvency and financial restructuring in India:

1. Understanding of the IBC Ecosystem:
   • Students gained clarity on the IBC framework, including the roles of key institutions like the Insolvency and Bankruptcy Board of India (IBBI), Insolvency Professionals (IPs), and the National Company Law Tribunal (NCLT). This understanding is foundational for students pursuing careers in finance, law, or corporate governance.
2. Insight into the Corporate Insolvency Resolution Process (CIRP):
   • The lecture offered a step-by-step breakdown of the CIRP, covering essential roles such as the Resolution Professional (RP)and the Committee of Creditors (CoC). Understanding the process equips students with knowledge about debt restructuring and creditor rights, vital for future roles in financial and corporate restructuring.
3. Awareness of Priority Waterfall for Claims:
   • Students learned about the distribution waterfall for claims under Section 53 of the IBC, which defines the order of asset distribution during liquidation. This concept highlights fairness in repayment and the legal protection of creditor rights.
4. Broader Economic Context:
   • The session emphasized how the IBC promotes financial stability, responsible lending, and economic growth, offering students a broader perspective on policy impact in the business world.

Overall, this lecture equipped students with essential knowledge on IBC processes and implications, preparing them for informed decision-making in their careers.

Mentor Name – Vijay Patil

Department Name – School of Business

Related Goal