The Insolvency and Bankruptcy Code, 2016

Comprehensive vocabulary list covering definitions, legal terms, and procedural components of the Insolvency and Bankruptcy Code, 2016.

Insolvency

A state where a default in payment occurs and it is not paid; it can lead to bankruptcy for non-corporates and liquidation for corporates.

Bankruptcy

A legal proceeding and conclusive state of insolvency involving an individual or business that is unable to repay outstanding debts.

Liquidation

The winding up of a corporation or incorporated entity where assets are measured, evaluated, and used to repay outstanding debt.

Default

As per Section $3(12)$, the non-payment of debt when the whole or any part or instalment of the amount of debt has become due and payable and is not paid.

Financial Failure

A persistent mismatch between payments by an enterprise and receivables, even if the business model is generating revenues.

Business Failure

A breakdown in the business model of an enterprise, resulting in an inability to generate sufficient revenues to meet payments.

Avoidance Transactions

Transactions including Preferential (Sec $43$ and $44$), Undervalued (Sec $45$ to $48$), Defrauding Creditors (Sec $49$), and Extortionate Credit Transactions (Sec $50$ and $51$).

Corporate Person

A company as defined under the Companies Act, $2013$, a Limited Liability Partnership, or any other person incorporated with limited liability, excluding financial service providers.

Corporate Debtor

A corporate person who owes a debt to any person.

Claim

A right to payment or a right to remedy for breach of contract that gives rise to a right to payment, whether fixed, disputed, secured, or unsecured.

Financial Debt

A debt along with interest disbursed against the consideration for the time value of money, including money borrowed against interest and amount raised under any acceptance credit facility.

Operational Debt

A claim in respect of the provision of goods or services including employment or a debt in respect of the payment of dues arising under any law and payable to the Government.

Creditor

Any person to whom a debt is owed, including financial, operational, secured, and unsecured creditors, as well as decree holders.

Financial Service Provider

A person engaged in providing financial services, such as banks, insurance companies, or mutual funds, under authorisation from a financial sector regulator.

Insolvency Professional (IP)

An individual enrolled with an insolvency professional agency and registered with the Board to play a key role in the implementation of the Code.

Insolvency Professional Agency (IPA)

A person registered with the Board to develop professional standards and act as a first-level regulator for insolvency professionals.

Information Utility (IU)

A person registered with the Board to collect, collate, authenticate, and disseminate financial information electronically for use in insolvency proceedings.

Charge

An interest or lien created on property or assets as security, including a mortgage.

Security Interest

Right, title, or interest created in favour of a secured creditor by a transaction that secures payment or performance of an obligation.

Adjudicating Authority (for Corporate Persons)

The National Company Law Tribunal (NCLT) where corporate insolvency matters are heard.

National Company Law Appellate Tribunal (NCLAT)

The appellate authority over decisions made by the NCLT.

Minimum Default Threshold (CIRP)

The minimum default amount required to initiate CIRP, raised from $100,000$ rupees to $10,000,000$ rupees ($1$ crore) by notification on March $24$, $2020$.

Moratorium

A calm period imposed during CIRP where suits or proceedings against the corporate debtor are stayed, typically lasting $180$ days.

Committee of Creditors (CoC)

A body comprising all financial creditors of a corporate debtor that assesses business feasibility and makes key decisions during CIRP.

Mandatory Completion Period (CIRP)

A total period of $330$ days from the insolvency commencement date, including extensions and time taken in legal proceedings.

Resolution Plan

A plan proposed by an applicant for the insolvency resolution of the corporate debtor as a going concern, presented to the CoC for approval.

Fast Track Corporate Insolvency Resolution Process

An insolvency process applicable to small companies, start-ups, or unlisted companies with total assets not exceeding $1$ crore rupees.

Voting Share

The share of voting rights of a single financial creditor in the CoC, based on the proportion of financial debt owed to them relative to the total financial debt.

Public Announcement

An announcement made immediately (within $3$ days) after the appointment of an IRP to call for the submission of claims.

Resolution Applicant

A person who individually or jointly submits a resolution plan to the resolution professional after an invitation is made.

Pre-Packaged Insolvency Resolution Process (PPIRP)

An alternative insolvency resolution framework introduced by the $2021$ amendment specifically for corporate persons classified as MSMEs.