Part I — Preliminary

Extent, application and the key definitions that determine who and what the Code covers.

Extent and application

The Insolvency and Bankruptcy Code, 2016 applies to corporate persons (companies and LLPs), partnership firms and individuals, and personal guarantors to corporate debtors. Different Parts commence and apply on different timelines — Part II (corporate insolvency) has been operational since 2016-17, while Part III (individual/firm insolvency) has so far been notified only for personal guarantors to corporate debtors, not for firms/individuals generally.

Key definitions

"Corporate debtor" is a corporate person who owes a debt to any person. "Financial creditor" is one to whom a financial debt is owed (money disbursed against consideration for time value of money — loans, debentures). "Operational creditor" is one to whom an operational debt is owed (goods, services, employment dues, government dues). This financial/operational distinction is the single most consequential classification in the Code — it determines the trigger threshold, the admission standard, and the creditor's voting rights in the Committee of Creditors.

Adjudicating authority

The National Company Law Tribunal (NCLT) is the Adjudicating Authority for corporate persons; the Debt Recovery Tribunal (DRT) is the Adjudicating Authority for individuals and partnership firms. Appeals from NCLT orders lie to the National Company Law Appellate Tribunal (NCLAT), and from NCLAT to the Supreme Court on a question of law.

Insolvency and Bankruptcy Board of India (IBBI)

IBBI is the sectoral regulator overseeing insolvency professionals, insolvency professional agencies, information utilities and the regulations governing each process under the Code — broadly analogous to IFSCA's single-regulator role for the IFSC, but for the insolvency ecosystem nationally.

Part II, Chapter II — Corporate Insolvency Resolution Process (CIRP) →