Which of the following statement s is are correct regarding the Insolvency and Bankruptcy Code...........

Economic Affairs Industrial Policy and Industrial Growth

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Which of the following statement (s) is/ are correct regarding the Insolvency and Bankruptcy Code, 2016?

The new Insolvency and Bankruptcy Code will give the banks “more confidence” to lend for long-term projects such as roads, ports and power plants.
The new Insolvency and Bankruptcy Code aims to slash the time it takes to wind up a company or recover dues from a defaulter.

Select the correct answer using the code given below

1 Only

2 Only

Both 1 and 2

Neither 1 nor 2

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Explanation:

Both statements are correct.

The Code outlines separate insolvency resolution processes for individuals, companies and partnership firms.The process may be initiated by either the debtor or the creditors. A maximum time limit, for completion of the insolvency resolution process,has been set for corporates and individuals.

For companies, the process will have to be completed in 180 days, which may be extended by 90 days, if a majority of the creditors agree. For start ups (other than partnership firms), small companies and other companies (with asset less than Rs. 1 crore), resolution process would be completed within 90 days of initiation of request which may be extended by 45 days