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Module: General Practice

Q131: Which of the following statements best describes the fundamental shift in the Indian insolvency regime introduced by the IBC, 2016, compared to the earlier SICA regime?

A
It shifted the regime from "Creditor-in-Possession" to "Debtor-in-Possession," allowing promoters to retain control during resolution.
B
It shifted the regime from "Debtor-in-Possession" to "Creditor-in-Control," where the management of the affairs of the corporate debtor vests in the Resolution Professional.
C
It mandated that the Government must intervene and nationalize any stressed company to protect employment.
D
It established a system where only the High Courts have the jurisdiction to adjudicate insolvency matters, removing Tribunals from the process.
✅ Correct Answer: B
Core Concept: The Insolvency and Bankruptcy Code, 2016 marked a paradigm shift from "Debtor-in-Possession", where promoters kept control while delaying payments, to "Creditor-in-Control." Mechanism: Upon the admission of a Corporate Insolvency Resolution Process (CIRP) application, the powers of the Board of Directors are suspended and vest in the Interim Resolution Professional (IRP). Objective: This ensures that the assets are protected from value erosion by the defaulting management and that the Committee of Creditors drives the resolution process.
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