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2) The endorsement of bankruptcy law and its provisions by supreme court marks an end of “defaulter’s paradise”. Examine.(250 words)

Topic-Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

2) The endorsement of bankruptcy law and its provisions by supreme court marks an end of “defaulter’s paradise”. Examine.(250 words)

Indianexpress

Financialexpress

Why this question

The article focuses on what it means now that the supreme court has upheld the insolvency and bankruptcy code in its entirely. The code has made a marked improvement in improving the insolvency proceedings in our country and the article examines how the verdict will make it even better.

Key demand of the question

The question expects us to explain how IBC helps in dealing with defaulters, the reason why it was challenged in the court, details of the SC verdict and the implications of the same.

Directive word

Examine – When you are asked to examine, you have to probe deeper into the topic,  get into details, and find out the causes or implications if any .

Structure of the answer

Introduction – Explain about the IBC.

Body

  • Discuss the issues with the code that were bring challenge
    • Section 29A of IBC
    • Section 12A of IBC etc
  • Discuss the verdict of the supreme court and how it helps in putting an end to defaulter’s paradise
    • tightening of section 29A which ensures that wilful defaulters or those who have been classified as NPAs for more than a year will not be eligible to submit a resolution plan. This means bankers will now be able to recover their dues faster.
    • apex court’s ruling establishes the hierarchy of creditors with bankers now right on top and operational creditors (OCs) below them; OCs were seeking a status equal to that of financial creditors and a seat on the Committee of Creditors. The judges noted that OCs had enough safeguards to protect their interests.
    • This ruling has far-reaching implications for the promoters of big defaulting companies on the block such as Essar Steel and Bhushan Power & Steel

Conclusion – Give your view and discuss way forward.