ICAI Journal on IBC

‘ICAI Journal on IBC’ Insolvency Practitioners- Expectations and Responsibilities (APRIL 2017 EDITION) Click here

‘ICAI Journal on IBC’ Insolvency and Bankruptcy Code 2016 – Key Implications for Corporate Debtors (APRIL 2017 EDITION) Click here

Insolvency and Bankruptcy Code, 2016 that received the Presidential assent on 28th May 2016, aims
to override other existing laws on the matters pertaining to insolvency and bankruptcy. Being the
bankruptcy law of India, this Code seeks to consolidate and amend the laws relating to reorganisation
and insolvency resolution of corporate persons, partnership firms and individuals. The article
explains how the Bankruptcy Law Reforms Committee was responsible towards formation of a strong
bankruptcy law in form of this Code. The article also deals with the applicability of Code, eligibility
criteria for becoming insolvency professionals, etc., and introduces the readers to the Indian Institute
of Insolvency Professionals of ICAI. Read on…

In today’s new era of stock market where almost every individual foresees revenue by dealing in
shares of listed entities, one would be amazed to know that it is not enough to just be aware about
the Credibility, Brand value and Quantitative ratios indicating strength of the Company, for the
purpose of making investment with the objective of earning returns. Before you plough your hard
earned money in stock market or suggest your client to invest in the listed Companies (majorly listed
in Bombay Stock Exchange Limited and National Stock Exchange Limited), it is imperative for
you as an investor as well as, as an advisor to acknowledge the existence of a rosy devise used by
the Companies in preparing its financial statement generally to hide its financial weaknesses and
misrepresent before the investors and advisors at large. One such perceptive device that is cleverly
used by these companies with malafide intent to woo the readers of their financial statements is the
“Scheme of Mergers and Amalgamations”. Read on to know more…

The Insolvency and Bankruptcy Code, 2015 was introduced in Lok Sabha on 21st December, 2015 and
referred to the Joint Parliamentary Committee. The Committee had presented its recommendations
and modified the Bill based on its suggestions. Later the Insolvency and Bankruptcy Code, 2016
was passed by both the Houses of Parliament in May 2016 and the same has been notified. This is
one of the major economic reforms Bill moved by the Government. The objective of the Insolvency
and Bankruptcy Code, 2016 is to consolidate and amend the laws relating to reorganisation and
insolvency resolution of corporate persons, partnership firms and individuals in a time bound
manner so as to make it easy for the investors to exit within a fixed time frame in an effort to
improve the ease of doing business in India. Since there is no single law in India that deals with
insolvency and bankruptcy, one of the most important reforms envisaged in this bill is to make
substantive changes in eleven enactments and repealing some to avoid conflicting rules, i.e., now
only 1 Act to be followed, instead of 11 different Acts. It also opens up a new window of professional
opportunity for Chartered Accountants as Insolvency Professionals. Read on to know more…

The writing was on the wall; it’s just that no one wanted to acknowledge it. The bad loan crisis that
has gripped India’s banking sector did not happen overnight. The rise in stressed assets is indeed
a reason for concern as it suggests higher probability of credit default that ultimately impacts the
profitability and liquidity of banks. Globally, over the last two decades, the banking regulators
have passed major reforms to reduce NPA’s and India is no exception. It is therefore imperative
to understand the effectiveness of these mechanisms, in achieving bank stability. This article is an
attempt to understand debt restructuring reforms introduced in India and its effectiveness as it
also opens up potential acquisition opportunities for corporates. Read on to know more…

Introduction of Insolvency and Bankruptcy Code 2016 is a welcome step and the need of the hour
to enhance ease of doing business in India. This Code has been passed by both Houses and got
Presidential assent on 28-05-2016 whereby Sick Industries Companies Act, 1985 (SICA) has been
repealed, winding up provisions of Companies Act, 2013 have been restructured and laws relating
to winding up has been consolidated in a single code. This Code offers a uniform, comprehensive
insolvency legislation encompassing all Companies, LLPs, partnerships and individuals. This code
will facilitate a formal and time bound insolvency resolution process and liquidation. Read on to
know more…

Prediction of corporate bankruptcy is one of the most well researched topics in finance as various
stakeholders have an interest in monitoring the firm’s performance. In the present article, the
author duo intends to explore the development of bankruptcy prediction models using the neural
networks for the Indian listed companies. The performance of various models has then been
compared with two existing bankruptcy prediction models: Altman’s Z-Score model (1968) and
Ohlson’s O-Score model (1980). The authors have deduced that the results indicate that neural
network based model is more accurate in the prediction of corporate bankruptcy compared to the
other two models, namely Altman’s (1968) and Ohlson’s (1980) models. Read on…