EARLY MARKET EXIT IN INSOLVENCY AND BANKRUPTCY ACT 2016 AND PROSPECTIVE IMPACT ON START-UP REGIME IN INDIA

With the objective of providing a certain degree of assurance to the creditors and the investors, the Bankruptcy and Insolvency Code, 2015 was passed by the NDA government which became an act on 28th of May 2016 with the purpose of helping investors and creditors in recovering investments.1 The fact that India is a capital starved nation and is facing a major debt crisis continues to be a major impediment in its economic progress and development. The presence of legislations like SARAFESI and Debts Recovery Act have been unsuccessful in recovery of money by the creditors and therefore the new Code aims to make recovery of debts hassle free and also ensure easy voluntary liquidation of companies. Under the aegis of Prime Minister Narendra Modi, and Department of Industries and Commerce, the Start-up India action plan was launched in January 2016. The policy which aims for the development of entrepreneurial culture in India aims to encourage investors from India and abroad by making both domestic and Foreign Direct Investments hassle free. In addition to that, the policy also intends to make use of the Bankruptcy and Insolvency Code and ensure that the investors can recover the money easily when the investments made do not earn the desired amount of profits. Moreover, the start-up entities are also to be provided hassle free exit from the market in case they incur losses.

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Rajiv Gandhi National University of Law, Punjab

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 ISSN(O): 2347-3827

© Rajiv Gandhi National University of Law Punjab, 2020