DM Harish School of Law hosts Guest Lecture on Insolvency and Bankruptcy Code

The DM Harish School of Law at HSNC University, Mumbai recently hosted a guest lecture focusing on the fundamentals of the Insolvency and Bankruptcy Code (IBC), 2016, with Counsel at the Chambers of Senior Advocate Chetan Kapadia, Pooja Gera as the speaker.

The lecture provided an insight into the corporate insolvency framework, highlighting key aspects of the IBC ecosystem, including entities such as the Insolvency and Bankruptcy Board of India (IBBI), Insolvency Agencies (IAs), Information Utilities (IUs), and the National Company Law Tribunal (NCLT) which acts as the Adjudicating Authority for insolvency cases.

Gera's lecture delved into the Corporate Insolvency Resolution Process (CIRP), covering essential procedures such as the appointment of a Resolution Professional (RP), the powers of the Committee of Creditors (CoC), and the option for fast-track insolvency cases. She also discussed the waterfall distribution system for claims, which outlined the priority order for repayment, ensuring fair and transparent asset distribution among creditors.

The session provided students with crucial insights into the Insolvency and Bankruptcy Code, emphasizing its role in financial stability, corporate governance, and efficient debt recovery.

Session Highlights

1. Key Entities of the IBC Ecosystem

Gera began the lecture by introducing the main entities involved in the IBC ecosystem, including the IBBI, IAs, IUs, and insolvency professionals. She emphasized on the role of the NCLT as the Adjudicating Authority, responsible for processing the insolvency applications and ensuring that creditors' rights are upheld. This provided a comprehensive understanding of the regulatory framework and the roles of different stakeholders.

2. Corporate Insolvency Resolution Process (CIRP)

Gera offered a step-by-step explanation of the CIRP, outlining critical stages and the responsibilities of key players:

• Resolution Professional: The RP manages the debtor's

  operations during the moratorium period and leads efforts to

  restructure or liquidate the company.

• Committee of Creditors: The CoC, composed of financial creditors, holds the power to approve or reject resolution plans, with

  75 per cent approval required for major decisions.

• Fast-Track Insolvency: For eligible cases, the IBC allows for a fast-

  track resolution process, typically completed within 90 days.

This provided students studying IBC and aiming to specialise in the area, an insight into the importance of timely decision-making in order to resolve insolvency cases.

3. Waterfall Distribution for Claims

Towards the end of the lecture, Gera discussed the priority distribution of claims in liquidation under Section 53 of the IBC. The hierarchy of claims ensures fairness in the repayment process.

• First Priority: Insolvency resolution and liquidation costs.

• Second Priority: Secured creditors and workmen's dues.

• Third Priority: Unsecured creditors, operational creditors, government dues and equity shareholders.

By explaining the claims distribution system, the speaker helped students gain better understanding of the importance of debt structuring and stakeholder rights—critical concepts for those working in corporate finance, legal consultancy and asset management.

4. Broader Economic Impact of the IBC

Gera concluded by highlighting the broader economic impact of the IBC. She emphasised that the framework plays a key role in enhancing financial stability, fostering responsible lending and promoting economic growth by enabling efficient debt recovery. The IBC helps attract investment by ensuring a predictable and fair insolvency process, which is essential for a thriving business environment in Indian economy.

The session provided students with an opportunity to learn CIRP, claims distribution, and the broader impact of IBC through contemporary case studies. It also provided an opportunity for students to interact with Gera and gain practical skills for their future professional careers.