Waterfall Mechanism: Basic structure of the Insolvency and Bankruptcy Code, 2016 – By Harshit Gupta
It can be concluded that a little deviation from the waterfall mechanism can create conundrum between the legislative intent and effectiveness of the law. The deviation leads to prolonged litigation and takes valuable time of courts and tribunals. Safeguarding the interests of stakeholders must not jeopardize the effectiveness of the insolvency resolution process. Any interventions by the judiciary or legislature should be cautious not to disrupt the delicate balance established under the IBC through thorough deliberation. Incremental weakening of the Section 53 increases risks destabilizing the fundamental principles of the IBC.