The Creditor’s Bargain In Indian Insolvency Law: A Study Of Efficiency, Fairness And Reform

Written by: Aakhya Singh, B.A.LL.B( 4^th Year ) , Lovely Professional University

Abstract

The Insolvency and Bankruptcy Code, 2016 (IBC) constituted a paradigm shift in the corporate and financial laws of India, creating an integrated, time-bound, and creditor-friendly process for resolving insolvency. Analytically, this paper traces the developmental path of the IBC through the lens of the real estate industry, comprehending the evolution of entity-wide insolvency to project-specific corporate insolvency resolution processes (CIRP) and the resultant effect on homebuyer safety. The paper charts the evolution of homebuyers as unrecognized consumers to financial creditors post the 2018 Amendment of Section 5(8)(f) of the Code. By doctrinal and policy analysis, the paper assesses the Code's efficiency, inclusivity, and fairness, pointing to the successes of increased creditor confidence and market discipline, but identifying perennial challenges procedural lags, unequal recoveries, and the lack of statutory recognition of the CIRP for projects. The paper concludes the IBC has become a living economic legislation balancing financial rationality and social justice. It advocates codification of the project-specific insolvency, the enhancement of institutional capacity, and inter-connection of the IBC and RERA to achieve sustainable and equitable insolvency resolution in India.

Keywords: Insolvency and Bankruptcy Code, Project-Specific CIRP, Homebuyers, Insolvency of Real Estate.

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