Print Friendly, PDF & Email

6) Insolvency and Bankruptcy Code should be the preferred option for resolution of bad loans, not the last resort. Debate.(250 words)

Topic: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

6) Insolvency and Bankruptcy Code should be the preferred option for resolution of bad loans, not the last resort. Debate.(250 words)

Indianexpress

Why this question:

The article provides for a detailed analysis of the recent Supreme Court’s verdict in the ArcelorMittal and Essar steel case.

Key demand of the question:

One has to examine the utility of IBC, and explain in what way it is the preferred option for resolution of bad loans, however not the last resort.

Directive:

Debate – Weigh up to what extent something is true. Persuade the reader of your argument by citing relevant research but also remember to point out any flaws and counter- arguments as well. Conclude by stating clearly how far you agree with the original proposition.

Structure of the answer:

Introduction: 

In brief highlight the provisions of IBC and bring out the gist of recent SC’s verdict and its impact.

Body:

Explain that the IBC, 2016 is the bankruptcy law of India which seeks to consolidate the existing framework by creating a single law for insolvency and bankruptcy. The insolvency and bankruptcy code is often hailed as a significant reform in the Indian context for resolving insolvencies which previously was a long process that did not offer an economically viable arrangement.

The code aims to protect the interests of small investors and make the process of doing business less cumbersome. Though there have been a few positive results in its short history given that the recovery rates have improved considerably compared to the time period before its implementation, there is still scope for improving the recovery percentages. 

Comment on the observations made by the court.

Take hints from the article and weigh the pros and cons of the code.

Conclusion:

Conclude with way forward.