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SC UPHOLDS IBC’S SECTION 32A

SC UPHOLDS IBC’S SECTION 32A

Context

The Supreme Court recently upheld the validity of Section 32 A of the IBC.

Details

  • The SC held that the successful bidders for a corporate debtor under the IBC would be immune from any investigations being conducted either by any investigating agencies such as the Enforcement Directorate (ED) or other statutory bodies such as SEBI.
  • Section 32A of Insolvency and Bankruptcy Code (IBC)----- provides immunity to the corporate debtor and its property when there is approval of the resolution plan resulting in the change of management of control of the corporate debtor.
  • Bankruptcy is a legal process for liquidating what property and assets a debtor owns to pay off their debts. Insolvency is a financial state in which a person's (or company's) debts exceed their assets.
  • Someone who's bankrupt is insolvent, but someone who's insolvent isn't necessarily bankrupt.
  • The Insolvency and Bankruptcy Code, 2016 is the bankruptcy law of India which seeks to consolidate the existing framework by creating a single law for insolvency and bankruptcy.
  • The Insolvency and Bankruptcy Code, 2015 was introduced in Lok Sabha in December 2015.

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