Insolvency of Companies – Under Companies Act 1956: A Legal Perspective and Reform

Abstract:     
Corporate (Company) insolvency refers to a situation where the liabilities of a company are more than its assets. The insolvency must be handled with consolidated, robust and highly efficient mechanisms. India has made cardinal changes to its Insolvency and Creditors Right (ICR) since as early as 2000. Amendments to the Companies Act had been also made to overhaul insolvency. The amended Act sought for some provisions for the interests of the creditors, employees and for ensuring effective and efficient insolvency proceedings. An efficient legal and regulatory framework is indispensable for corporate insolvency. While the world is undertaking Fourth-Generation legal reforms, India is yet to implement the First- Generation reforms on insolvency. Unlike other countries, we don’t have a separate Act on Insolvency. The proposed law is a positive step in that direction.

In this paper a humble endeavor has been made to bring fore the present laws regulating insolvency of companies and the lacunas in those law. We will look into the law of insolvency in global perspective, discussing the laws in U.S., UK and Australia. In the paper we will try to high light the present rescue process relating to insolvency. We will discuss the Global Cross-border Insolvency in brief and the UNCITRAL Model law in particular.

To understand the various facets of Insolvency of Companies and the law relating to it, we will refer to the article of Dr. S. D. Israni, Dr. K.S.Ravichandran, Mr. Robin Majumdar, Mr. Neeraj Garg, Mr. Shardul S. Shroff, Mr. Lalit Bhasin and many other experts on this field. To bring clarity in Insolvency law of India, U.S., UK and Australia, we will refer to the Insolvency Act of the respective countries. Many times due to judicial role, the proceedings get delayed. Attempts will be made by the researcher to suggest possible reforms to avoid the unnecessary and long delay and bring efficiency speed, problem solving and maximum growth.

Number of Pages in PDF File: 1

Keywords: corporate, insolvency, company

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