BANKRUPTCY LAWS AND THEIR IMPACT ON CREDITORS AND DEBTORS
AUTHOR – JAYANI D. TRIVEDI, STUDENT AT UNITEDWORLD SCHOOL OF LAW, KARNAVATI UNIVERSITY
BEST CITATION – JAYANI D. TRIVEDI, BANKRUPTCY LAWS AND THEIR IMPACT ON CREDITORS AND DEBTORS, INDIAN JOURNAL OF LEGAL REVIEW (IJLR), 5 (4) OF 2025, PG. 742-755, APIS – 3920 – 0001 & ISSN – 2583-2344.
ABSTRACT
Bankruptcy laws are an important mechanism of foreclosure play in managing the insolvency of a company which offers the structured platform for creditors and debtors alike to navigate through an insolvency process. The development of bankruptcy legislation has been historic and has moved from penalistic codes to the more recent codes who have taken rehabilitation and fairness as the main concern. The first bankruptcy laws evolved in India with 1828, in 1848 and comprehensive ones in 1909. Nevertheless, the main point of change was the Insolvency and Bankruptcy Code (IBC) of 2016 which streamlined insolvency process and increased financial stability by reducing non-performing assets (NPAs) and credit discipline. The IBC is designed to balance creditors’ rights and debtors’ dignity and dignity of the exit or restructuring opportunity. Furthermore, working towards these standards not just helps the financial sector and improve investor confidence, reduce systemic risks, but also fosters growth by making economic environment more resilient. Bankruptcy laws are important, because they are a way to balance the interest of the creditors and the debtors at all, giving, at the same time, a fresh start to individuals and companies, but preserving the financial system itself. These laws help carve out a well-disciplined culture of accountability and transparency in finance to enable individuals to operate in an economically healthy environment, while taking care of their financials and obviating the stigma that bankruptcy entails. In general, bankruptcy laws are important to ensure economic stability and a realistic financial practice.
Keywords: Bankruptcy Laws, Insolvency and Bankruptcy Code (IBC), Creditors, Debtors, Financial Stability, Economic Growth.