Insolvency & Bankruptcy Board of India (IBBI) Chairman MS Sahoo on Friday said the new Insolvency and Bankruptcy Code provided the ultimate economic freedom,the freedom to exit, and described it as the ‘biggest’ economic reform in recent years. The code seeks to consolidate and amend laws relating to reorganisation as well as insolvency resolution of corporate persons, partnership firms and individuals in a time-bound manner.
The economy witnessed freedom of entry in 1990's, freedom of competition in 2000's and the code now provided the ultimate economic freedom- freedom to exit, and also a mechanism to address honest, relative failures, Sahoo said. He said it enables honest firms inundated by fear of failure to come in, get out including institutions and thereby realise full potential of every person.
“In the process, the code also improves ease of doing business, promotes entrepreneurship, develops corporate debt market, increases options for corporate debt financing and much more to improve growth, promote inclusive growth and addresses key legal economic problems,” he added.
Sahoo was speaking at the National Conference on Insolvency and Bankruptcy Code organised by the ASSOCHAM).
Under the new law, employees, creditors and shareholders would have powers to initiate winding up process at the first sign of financial stress such as serious default in repayment of bank loan. Stating that ‘all of us seem to be in a great hurry’ to implement this reform, Sahoo pointed out that this code came into force on May 28 last year and almost the entire ecosystem was in place.