The insolvency and bankruptcy framework in India has significantly evolved in recent years, aiming to create a more efficient approach to financial distress. With the introduction of the Insolvency and Bankruptcy Code (IBC), various authorities have taken on essential roles in the adjudication processes for both individuals and partnership firms. This post dives into the adjudicating authorities, their powers, the functions of the Insolvency and Bankruptcy Board of India (IBBI), the role of insolvency professionals, and the mechanisms for inspections and investigations.

Adjudicating Authorities for Individual and Partnership Firms

The IBC designates specific adjudicating authorities to oversee insolvency proceedings involving individuals and partnerships. The National Company Law Tribunal (NCLT) is the primary body for corporate insolvencies under the code. In contrast, the Debt Recovery Tribunals (DRTs) handle cases involving individuals and partnership firms.

Both NCLT and DRT are crucial in adjudicating petitions filed by creditors or debtors declaring insolvency. These authorities ensure that the law is applied consistently and disputes are resolved efficiently. Their procedures are designed to be transparent and timely, reducing the average time from application to resolution.

For example, a recent report highlighted that cases handled by the NCLT typically take around 270 days to resolve, significantly reducing the past averages of multiple years. This reflects the system's efficiency and commitment to timely justice.

The two authorities can initiate proceedings based on requests from both creditors and debtors. Once they accept jurisdiction, they assess the claims' authenticity and determine how assets will be distributed. The NCLT has the authority to appoint insolvency professionals to manage corporate insolvency processes, and similarly, DRT engages professionals for individual and partnership cases.

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