Procedure for Voluntary Winding Up of a Company Under IBC The voluntary winding up of a company that is solvent can be accomplished under the Insolvency and Bankruptcy Code, 2016. Under the Insolvency Act 1986 is the Insolvency Rules 2016 that apply in England and Wales which sets out the procedure for the voluntary winding up of a company.
The Insolvency and Bankruptcy Code (IBC) 2016, which also covers individual bankruptcy, incorporates the Insolvency Act 1986 rules as well as the latest legislation that have modernised the liquidation process.
What is the IBC? The IBC was brought in via an Act of Parliament and is designed to resolve claims and shorten the process of liquidating insolvent companies. The aim of the code is to make the process easier to understand, deal with the bad loan problems, as well as protect the interests of the small investor in a company. Other key areas under IBC include: ● The relationship between the debtor and creditor has changed ●The process is now time-bound in resolving insolvency – upon default of an agreed repayment, the creditor can take control of the debtor’s assets but must also make decisions to resolve the insolvency situation ● The debtor and the creditor can commence recovery proceedings against each other ●The insolvency process must be completed within 180 days for larger companies, which can be extended if the creditors do not object. For smaller businesses and start-ups, the