Doing business in India: Why foreign businesses should care about IBC

Foreign businesses should carefully evaluate all contractual or other business dealings in India to avoid or mitigate the risks of being subject to an IBC process, either as a debtor or as a creditor

The Insolvency and Bankruptcy Code (IBC), together with its implementing regulations, introduced in December 2016 is a uniform, comprehensive code dealing with financial failure, debt restructurings and insolvencies. It represents a game-changing shift towards a creditor-friendly and timeline-driven regime with limited scope for judicial discretion.

The IBC empowers certain creditors with a very powerful tool — the ability to initiate a debt restructuring process in respect of a debtor who has failed to pay an outstanding amount as low as Rs 1,00,000.

The initiation of IBC proceedings in respect of a debtor has certain drastic consequences on both day-to-day running of the